Procter & Gamble, the world’s largest advertiser, highlighted the slump in global media markets on Thursday, forecasting the “buyer’s market” in advertising would continue as car companies and banks scale back their marketing spending.
P&G; said its selling, general and administrative expenses fell $800m, or 13 per cent, in the first quarter, compared with the same period last year, “reflecting the benefit of lower marketing expenses while increasing media delivery”. P&G;’s global marketing budget is about $8bn.
“It’s been a buyer’s market,” said AG Lafley, chief executive. “A simple way to look at it is this: auto industry – big media buyers – dramatic drawdown; financial services industry – big media buyers – substantial drawdown.” Mr Lafley said P&G; was getting more for less from its media suppliers, which had helped it offset some of the costs resulting from increases in issuing money-saving coupons and in-store efforts to lure budget-conscious consumers.
“What we’ve tried to do . . . is to figure out how to spend a little less money and get a lot more delivery,” he said, arguing “in the near term it could be even a bit more of a buyer’s market”.
Separately, Ian Cook, CEO of Colgate-Palmolive, said the oral and personal care company had seen falls in advertising costs “anything from mid-single digits to north of 25 per cent” in differing media and markets.
“Starting in the fourth quarter and continuing this year we saw some meaningful downward moves in the costs of advertising media. We took advantage of that and expect to take advantage of it further in 2009.”
Quarterly results from WPP and Omnicom, the global advertising and marketing companies, this week showed a steep fall in new commissions and one-off project work from large clients, as well as signs of pressure on agency fees.
Both saw like-for-like revenue fall by about 6 per cent.
Sir Martin Sorrell, chief executive of WPP, said “clients are being very demanding”. “I’m not talking about new business situations, I’m talking about existing relationships. Anybody who suggests otherwise is being economical with the actualité.”
John Wren, Omnicom’s chief executive, told analysts that the company had been “working with clients to adjust fee structures to their spending needs and their requirements”.
FT
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