Marketing Budgets

Written by New York Times | Updated: Feb 28 2012, 10:31am hrs

For the last couple of months, forecasters have been predicting that 2012 would be a better year for Madison Avenue and media companies as more marketers increased advertising budgets. That outlook is starting to brighten further as some of the biggest spenders reveal plans to open their wallets even wider than had been expected.

Of course, those plans could change suddenly if the economic recovery reversed course or a crisis abroad rattled consumer confidence. And not every giant marketer is buoyantly optimistic.

For instance, Paul Bulcke, chief executive at Nestl, said last week that he did not expect 2012 to be any easier than 2011, which he called a challenging year. Also, purveyors of pantry staples like General Mills and J. M. Smucker have reduced their earnings forecasts for 2012.

Still, the skies seem to be sunnier as marketers including Coca-Cola, Kraft Foods, PepsiCo, Procter & Gamble, Reckitt Benckiser and Unilever step up spending or product introductions or both.

Weve got a real exciting year ahead of us, Keith Weed, chief marketing and communications officer at Unilever in London, said in an interview last week during a visit to New York.

Despite the challenging economy, he added, were interested in stimulating consumer demand.

Unilever will be investing more in media spending, Mr. Weed said, declining to be specific; the company spends more than $6.6 billion a year on advertising. The mix will include more ads in digital and social media as those media continue to gain favor with consumers, he added, because we fish where the fish are. Unilever is buying ad space from companies like Apple and Facebook.

Unilever was heartened, Mr. Weed said, by the response last year of American consumers to the introduction of a brand of ice cream bars, Magnum, that the company sells in markets like Asia, Europe and the Middle East. The launch was a tremendous success, he said, adding that I think youll see more new products from Unilever that could be categorized as indulgent and fun or simple pleasures, in categories like food, personal care and teas.One new product that Unilever has begun to introduce in the United States is a brand named Simple, a skin-care line that is already sold in countries like Australia and Britain. A campaign now under way promotes Simple products as sensitive skin experts.

Procter & Gamble, a principal competitor of Unilevers, started last week what it described as the intrigue phase, or teasers, for its introduction of Tide Pods, a one-step laundry tablet that will be promoted with a marketing budget estimated at $150 million for the first year. The reveal phase is to begin on Sunday, with a commercial for Tide Pods during the ABC broadcast of the 84th Academy Awards.

Reckitt Benckiser, which competes with Procter and Unilever, said it would increase worldwide ad spending this year by 100 million, or almost $160 million. Reckitt Benckiser sells household product brands like Air Wick, Calgon, Finish, Frenchs, Veet and Woolite.

The bump in the Reckitt Benckiser ad budget, hefty as it may be, pales in comparison to those announced by the Coca-Cola Company and PepsiCo.

PepsiCo said it would raise ad spending in 2012 for brands like Gatorade, Pepsi-Cola and Tropicana by $500 million to $600 million, with up to an additional $100 million to be spent in retail realms like store display racks. The goal is to turn around market share declines, Dara Mohsenian, an analyst for Morgan Stanley, wrote in a research note.

And Coca-Cola said it would reduce business costs $550 million to $650 million by the end of 2015 and reinvest the money in areas like marketing and building brands.

Those intentions by major marketers are, needless to say, putting happy faces on executives at leading media companies.

As we sit here today nearly seven weeks into the new year, I am truly excited about what we are seeing, Leslie Moonves, chief executive at the CBS Corporation, said in a conference call on Wednesday as he discussed the companys financial results. The first quarter alone is looking to be extremely strong, he added, and I am confident this will be an even better year than the last.

Jon Steinlauf, executive vice president for ad sales and marketing at Scripps Networks Interactive, which owns cable channels like Food Network, HGTV and Travel Channel, said he believed the television business is incredibly healthy.

Companies are now making a greater investment to add market share in their categories, Mr. Steinlauf said last week in an interview at a programming presentation by Travel Channel, and most advertisers are saying to themselves that television is still the primary medium to move product.

The growth in ad spending is a trend we started seeing about a year ago, when the economy started coming out of its deep recession, Mr. Steinlauf said, and I dont think theres any turning back.