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