TV washout

Although it is the UK’s top TV advertiser, P&G is exploring other media and increasing its sponsorship, outdoor and radio spend. Unilever has also questioned TV ads’ effectiveness. Are packaged goods companies falling out of love with TV? Can

They have been threatening it for years, and at last at least one packaged goods giant – Procter & Gamble – appears to be putting its money where its mouth is by ripping up the marketing manual and moving out of television advertising.

In what many view as a radical departure for the company, P&G has decided to pull all TV support for Wash & Go, and plough its entire marketing budget – about &£6m – into a sponsorship deal with the English Premier League (MW November 25).

The company has ditched Leo Burnett and hired Premier Sponsorship’s Manchester agency Powell Communications to handle the new strategy, which involves major sampling and promotional campaigns at Premier League club grounds and in surrounding areas. Sampling will be backed by local radio and press campaigns.

Wash & Go marketing manager Chris Jansen says: “The majority of our consumers are young, active men who spend a lot of time playing and watching sports, particularly football. We need to reach them at these venues – they don’t watch a lot of TV.”

But P&G is not the first company to try to ditch TV in favour of other media. Critics cite the well-documented Heinz decision to pull out of TV and plough the majority of its ad spend below the line through direct marketing agency WWAV Rapp Collins, as exclusively revealed in Marketing Week (April 8 1994). The strategy failed and Heinz was forced into an embarrassing U-turn. But that was then.

Three years ago Niall Fitzgerald, chairman of P&G’s rival, Unilever, called into question the effectiveness of TV ads in a speech to the European Association of Advertising Agencies. “There are vast and irreversible changes taking place in the world of communications – and not one will favour network TV,” he said.

Wash & Go plans to use its Premiership sponsorship to relaunch the product as a sports brand and will run the strapline: “A simply great supporter of football”.

The deal has surprised many in the sponsorship industry. They say sponsorship on its own is not enough – companies must spend the same amount on advertising to support the programme. One insider comments: “It will be hard for Wash & Go to suddenly come in and say ‘we’re a football brand’. It’s a cluttered market and P&G will struggle to make it work without any TV advertising support.”

The Premiership has a total of nine official sponsors – McDonald’s, Visa, Sky Sports, The Daily Telegraph, Lucozade, Yorkie, and Sony PlayStation – and individual clubs also have their own deals.

The insider adds: “When Nationwide signed up as a football sponsor it ditched TV and ploughed nearly all its spend into the deal. But it soon realised that the strategy would not work without telling consumers why it was sponsoring the sport.

“Even the mighty Coca-Cola couldn’t prove its football credentials without running high-profile ad campaigns with a soccer theme.”

P&G has signed up for this season with an option to renew. Jansen says negotiations will be under way in the coming weeks for next season’s deal. But the sponsorship insider predicts: “This time next year Wash & Go will be back on TV.”

Last year, P&G was the leading TV advertiser in the UK, with heavyweight campaigns for brands such as Pampers, Pringles and Sunny Delight. It spent nearly &£115m on TV, according to AC Nielsen-MEAL, while P&G health and beauty spent &£50m. The largest spending Unilever division, Elida Fabergé, was fourth with a &£53m spend.

But last week, the Billett consultancy, an independent media auditor, revealed that P&G’s cosmetics brands alone have switched at least &£10m of their budgets out of TV and into outdoor (MW November 25). The company has also soared from 24th to fourth place in the UK outdoor advertising spend league and boosted its budget by nearly 50 per cent (MW November 18). Radio is also up over 220 per cent to just over &£1m.

Billett managing director Andy Pearch says: “There are signs that packaged goods companies are falling out of love with TV.”

One media observer says: “For second-tier brands, when your margins are under pressure, you have to look for alternative ways of getting your message across.

“The outdoor sector has struggled to fill its sites – the market has actually deflated – so posters are a cheap alternative to TV. Internet ad campaigns are also more cost-effective.”

Many view P&G’s move as a natural progression. After all, the fragmentation of the TV market, through digital and cable, and the rise of media inflation, means that the medium is only viable for top brands. The second-tier brands simply cannot afford big budget campaigns.

P&G changes its approach

One advertising executive, who works on P&G business, claims: “Agencies have tried to push new ideas to P&G chiefs for years, but they have not been interested. Suddenly things are starting to change and they are becoming more receptive to alternative media.”

P&G’s new ad strategy forms part of the Organisation 2005 programme – a &£1bn restructure which is designed to “drive bigger ideas to the market faster”.

The company accepts that it must be more nimble because rivals – including retailers’ own-label brands – react rapidly by bringing their own versions to market. The company is often viewed as a marketing leviathan, too sluggish to act quickly.

As part of this crusade, brand managers are being given greater control of their products and are being encouraged to think more carefully about how they can reach their target consumers.

One observer says: “P&G used to be obsessed with TV advertising but it is starting to experiment with other media. It is not uncommon for an ad strategy to embrace Internet, cinema, outdoor and direct mail executions.”

He cites the recent launch of a Web campaign for Head & Shoulders, which is the company’s first dedicated online push. P&G has also moved into sponsorship in a big way, with Pringles signing up for the Euro 2000 football championships and its detergent lines backing Granada TV’s Emmerdale. “Brand managers are now taking a more holistic approach,” he adds.

The point is reinforced by a director of one of the UK’s major publishing houses, who says: “P&G has advertised in magazines for quite a while. But the biggest and most recent change has been media owners’ access to brand teams. We no longer deal with just the top executives – we deal with the whole team.”

Different media for different brands

But one advertising industry source, who has worked closely with P&G, does not believe the Wash & Go deal will necessarily spread to other brands: “To an extent, this move is due to the vagaries of the brand. P&G is experimenting with different media to varying degrees with individual brands. Sponsorship works best when you have to improve the brand idea. But if the Premiership deal backfires, it will pull out.”

Yet what of Unilever’s strategy? There are few signs that Fitzgerald’s widely reported criticism of TV has been acted upon. Statistics from research company MMR show that, if anything, Unilever’s TV spend is slightly up, with subsidiaries Van den Berg and Lever boosting their budgets.

A Unilever spokesman comments: “Fitzgerald’s original speech {in 1997} was saying that ad agencies have to get away from the fixation with television – there are other channels available, such as the Flora London marathon.

“Eighty per cent of Unilever’s ad spend is through TV but that will fluctuate up and down a few points. TV is still the principal form of advertising and first-tier brands are likely to continue to use the medium.

“But our view is that we need a mix – it is all about getting away from taking the manual off the shelf.”

So has Unilever backtracked on its plans to downplay TV, or is the P&G “experimentation” likely to be rolled out to other brands and adopted by its rival?

Some observers say that big brands simply cannot afford to pull out of TV advertising. Top-tier brands need the medium to remain visible and the packaged goods giants’ plans for global brands make TV even more important. They say Fitzgerald and P&G chief executive Durk Jager, who has recently announced plans to introduce performance-related pay to ad agencies, are simply posturing, putting the wind up the advertising community.

Implications for second-tier brands

It is still too early to tell which P&G brands could follow Wash & Go’s move away from TV. If it proves successful – and not everyone is as sceptical as sponsorship observers – then many second-tier brands are likely to desert the small screen.

Consolidation in the television industry – evident in Carlton’s proposed merger with United News & Media – can only weaken the hand of advertisers in the new-look media mix.

It seems that only the biggest power brands will be able to afford the luxuries of big spending television campaigns. Brands will polarise into giants and minnows, and their size will determine which media they use.

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