CLOSE-UP: LIVE ISSUE/BUDGET CUTS - When advertising becomes an expensive luxury. Is Citroen’s decision to cut its adspend misguided or inspired, Emma Hall asks

A big cut in above-the-line adspend sends out a barrage of signals.

A big cut in above-the-line adspend sends out a barrage of

signals.



Perhaps the brand is going downhill fast; its management is

short-sighted and thinking only of the next quarter; the advertising

isn’t working; or maybe internal wranglings have prevented the

development of a coherent strategy.



Or perhaps budget cuts suggest the advertiser has decided that low

prices are the only marketing tool that counts.



Citroen is certainly trying to persuade people that the dramatic cut in

its marketing spend - which last year amounted to pounds 31 million on

advertising alone - is a positive move to allow the car giant to devote

more money to discounting prices (Campaign, last week).



At the same time, Safeway - usually a pounds 14 million above-the-line

client - announced that it has pulled out of national advertising in

order to focus on local promotions. Although the retailer claims it is

not deliberately making a virtue of this with consumers, its motivation

is to free funds for price cuts.



Adam Leigh, the deputy managing director at Safeway’s agency, Bates UK,

says: ’This is about an aggressive drive to increase sales. Safeway has

stopped national advertising in the short term in order to allow local

managers greater autonomy.’



Managers at individual Safeway stores across the country have been

granted the flexibility to respond to rivals’ local promotions. Prices

can be adjusted to keep them competitive at all times - but at a cost.

The ’talking toddlers’ campaign, which has been running for nearly six

years, will no longer be on air to maintain Safeway’s brand profile.



Car manufacturers, like supermarkets, are facing difficult choices and

declining margins. Both are bearing the brunt of the ’rip-off Britain’

campaign, led by the Consumers’ Association, which is persistently

highlighting the premium prices that the British public seems to be

paying for everyday goods.



Advertising can be viewed as a burdensome cost by companies that have

their eyes fixed firmly on the bottom line. The most famous UK case of a

major advertiser cutting above-the-line spend was Heinz, which, in 1994,

announced a new marketing strategy based around a customer magazine and

a discount voucher scheme.



One year later, the food giant was back on television with a campaign

which it declared was the only way to fend off the threat from cheaper

rivals.



To be fair, neither Safeway nor Citroen is claiming that its ad budgets

will be reduced permanently. The telling similarity between the two

companies is that neither is performing very well. Safeway’s profits

were down 20 per cent to pounds 150 million last year and Citroen sales

were down 8.2 per cent year on year to the end of October.



Sainsbury’s, however, which is also suffering from declining market

share and falling profits, does not look like cutting its pounds 52

million adspend.



Moray MacLennan, the joint chief executive of Sainsbury’s main agency,

M&C Saatchi, says: ’History has proved that withdrawing above-the-line

advertising is the short-term reaction of a company in difficulty.’

Sainsbury’s, MacLennan argues, is maintaining a long-term view.



Marks & Spencer, the troubled high street brand of the moment, has also

set store by advertising. Budgets are rising, television is playing a

more important role in its strategy and BBH Unlimited has recently

kicked off a campaign for M&S food which the agency’s managing director,

Steve Kershaw, describes as ’brave’ - not a word previously associated

with the brand’s ads.



Procter & Gamble is reputed to have a strict set of guidelines about the

proportion of a brand’s marketing budget that can be spent

below-the-line if a brand’s equity is to be maintained. The consumer

giant and marketing superpower defines a brand that relies on sales

promotion as a weak brand.



At the other end of the spectrum, strong brands and strong advertising

go hand in hand. Volkswagen and Tesco - both thriving in the sort of

fiercely competitive markets that see weaker contenders suffering -

could show Citroen and Safeway a thing or two.



VW and Tesco have a lot in common. They combine value for money with a

commitment to excellent advertising. Tesco’s high-profile ’every little

helps’ campaign by Lowe Howard-Spink regularly tops Campaign’s People’s

Jury and was recently voted the UK’s most popular television advertising

at the National Television Awards. BMP DDB’s VW ads have also achieved

public popularity, stacks of industry awards and massive sales

boosts.



Leigh says: ’All big brands enjoy their most successful periods when

their advertising is good.’



Despite the examples of Sainsbury’s and Marks & Spencer, it seems that

survival sometimes has to take precedence over advertising

campaigns.



A hiatus from big television budgets gives everyone a bit of breathing

space while the brand sorts out its priorities.



Absence from mainstream advertising doesn’t have to mean that a brand is

in trouble. Four years ago, Tesco cut its advertising budget by more

than half in order - temporarily - to focus funds on the launch of its

Clubcard. The launch was initially a huge success and Tesco’s brand was

enhanced in the long term.



’We live in the age of the price war,’ Leigh observes, ’but look at the

new e-commerce brands - they are all establishing themselves by using

conventional mass media. The role of advertising has not changed.’



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