Reckitt Benckiser Ratchets Up Spending, Posts 8% Jump in Organic Sales Growth

Wagers $20 Million in Online Video, Making It Biggest Spender There

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1. Includes Eletrasol and Jet Dry brands being merged into Finish.
Source: TNS Media Intelligence

BATAVIA, Ohio ( -- The media spending that made Reckitt Benckiser perhaps the most consistently successful package-goods player in terms of sales growth in the good times of the past five years is working pretty well in bad times, too. Now, however, the company is taking a calculated risk by betting big on online video ads as an alternative to TV, which has been its mainstay.

Reckitt posted an upside surprise on the top line last week, with 8% organic sales growth, backed by an 8% increase in global media spending on a constant currency basis, or a 26% increase without the adjustment. That includes the North America and Australia region, which saw 9% organic sales growth.

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"We keep spending above the line, whereas we see some competitors pulling back," said Alexander Lacik, Reckitt's general, U.S. household marketing.

Like others in the industry, Reckitt has stepped up promotions, but not at the expense of media advertising.

"It's not like we are not spending on trade [promotion]," Mr. Lacik said. "That's what the environment is. ... But fundamentally we believe in driving the equities of our brands."

Shift to digital
At the same time, Reckitt isn't exactly sure its TV-heavy spending will keep delivering results. It's launched a $20 million shift of TV spending to online video this year.

That amounts to less than 5% of the $428 million Reckitt spent on TV last year, according to TNS Media Intelligence. But it will likely make the company into the biggest spender on online video in the U.S. overnight, said Tod Sacerdoti, CEO of online video network BrightRoll, through which Reckitt will be spending much of that money. By comparison, Reckitt ranked No. 66 in 2007 in Ad Age's Leading National Advertisers. Its $20 million singlehandedly amounts to about 4% of the $531 million all advertisers spent on online video last year, per an estimate by Magna.

Reckitt isn't spending big just to repurpose TV ads; it's also creating an interactive pre-roll ad unit to run with each of the ads and insisting on tough auditing standards to ensure they're served, Mr. Sacerdoti said. People don't have to click to get past the pre-roll ad to their content, but there is a two- to three-second pause if they don't. So far, he said, people appear to be responding favorably.

Havas' Euro RSCG handles creative, and sibling shops MPG and Media Contacts handle media and interactive buying and planning. The JD Project, London, is handling media auditing and conversion of TV ads to the interactive format.

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