AD BUDGETS RECEIVE Q3 BOOST Keith McArthur – Globe And Mail It was a busy summer for Procter & Gamble Inc., with several major new product launches including the Tide To Go instant stain remover.
“Our total marketing budgets are increasing and that's because we're launching so many new products,” said Tim Penner, president of Procter & Gamble Canada, one of the country's top marketers. “It was a very busy quarter for us.”
Product launches helped boost Canadian marketing budgets in the third quarter, according to a study being released today by the Institute of Communications and Advertising, which represents Canadian advertising agencies.
The ICA survey found that 22.4 per cent of companies increased their marketing budgets in the third quarter, while 12.1 per cent decreased them.
The gap — 10.3 percentage points — was the largest net increase recorded since the second quarter of 2004. The remaining two-thirds said their budgets remained unchanged in the quarter.
The survey also confirms that businesses are continuing to shift dollars away from advertising into non-traditional forms of marketing, such as the Internet.
“TV advertising or broadcast media is still a sizable portion of our total spending. But the other forms of communication with the customer are accelerating even more quickly,” Mr. Penner said.
The ICA Survey of Marketing Budgets polls 270 Canadian marketing directors in the final three weeks of each quarter.
The survey found that traditional advertising budgets have increased over the past two quarters, after nine months without growth.
That's likely because television has a proven track record of being an effective way to launch new products, according to British-based NTC research, which conducted the study.
Procter & Gamble deployed a major television campaign for the launch of Tide To Go.
But the consumer products company is also turning heavily to other forms of marketing including public relations activities, Mr. Penner said.
When asked specifically about traditional media advertising, 19.4 per cent of respondents said they had increased their budgets, compared with 14.6 per cent who said they had decreased them.
That's a difference of just 4.8 percentage points, much lower than the 10.3 percentage point gap in overall marketing budgets, confirming that other forms of marketing are growing more quickly than advertising, said NTC economist Chris Williamson.
Internet spending was the clear winner when companies were asked where they planned to increase their budgets, compared with direct marketing and sales promotions.
“You can clearly see where they're reallocating their spending to — from media into Internet-related activities,” Mr. Williamson said.
The study also found that the number of marketing managers who said they don't spend any part of their budget on Internet marketing fell to 18.5 per cent — the lowest in the history of the survey and about half of what it was at two years ago.
Gannon Jones, director of global customer relationship management and strategy for Kraft Foods Inc., said most marketers sense intuitively that they should spend more in areas like sponsorship and public relations. But he said it can be difficult to measure the effectiveness of such programs, so marketers may shift their budgets into areas that are easier to quantify.
Mr. Jones predicts that non-traditional marketing will continue to eat into advertising budgets. “What we're seeing across the industry is more and more people are trying more non-traditional ways to reach consumers,” he said. “And in general, I think people in the industry are saying ... it's becoming harder and harder to reach people through the 30-second commercial.”
NTC Research, which undertakes a similar quarterly study in Britain, says it is not possible to determine the survey's margin of error. |