Spending During Downturn Improves ROI
Posted by Jaci Russo
The Golden Rule in advertising is that companies have to spend money on marketing to stay competitive and when there is a downturn in the market they should spend more to gain market share.
As advertising agencies and marketing firms have shared examples of companies who followed that policy during a recession (examples include Coke’s domination over Pepsi that still exists today) I think that this advice has fallen on deaf ears. It has seemed a little too self-serving and companies think it won’t work for them.
Luckily, General Mills listened to their marketing team and not only are they gaining the benefit where it counts, with the shareholders, but they are also providing a great new example of exactly how profitable it can be to to increase your marketing presence when everyone else is pulling back and laying low.
Per this recent article in AdAge, General Mills Sees Profits Climb 49%, and that’s with 37% increase just in the most recent quarter.
As Ad Age reports, Chris Growe, an analyst with Stifel Nicolaus Equity Research, estimated that the 37% increase translates to an additional $40 million on marketing during the quarter, and a 20% increase on year-to-date spend. During the fiscal second quarter ended Nov. 29, General Mills profits soared 49.5% to $565.5 million, from $378.2 million the year before. Augmenting its well-worn strategy of supporting big-name brands, General Mills has focused ad dollars on “high ROI areas,” such as multicultural consumers and the digital space. Among other initiatives, General Mills has been working hard to establish itself in the digital space, with projects such as blog aggregator Tablespoon.com, in addition to brand-specific work. General Mills spokeswoman Heidi Gellar pointed to Betty Crocker, which now has applications for iPhone and Windows 7, and 50,000 Facebook fans.
What investment strategy will you change in 2010?
Investing in your own company can have the biggest ROI of all. Are you moving budget out of phone books and putting it into search? Are decreasing your print buy and increasing your Pay Per Click?
How will you change the conversation about your brand?
