The Hindu Business Line : FMCG cos turn aggressive on adspend

THE airwaves are flooded with commercials for soaps, detergents and shampoos with FMCG companies back on a spending spree on advertising. Proof of this can be found in the June quarter results of major FMCG companies.

Advertising and promotional expenses jumped in the June quarter for all players showing hefty increases of between 11 and 54 per cent. This reverses the trend of sharp cutbacks in adspend that began in 2003 and continued until the March quarter this year.

Companies say that the higher spends were used to advertise price-offs or push new offerings.

A 30 per cent hike in ad spend packs a wallop for Hindustan Lever, a big advertiser. Its adspend was Rs 257 crore this quarter, a level not seen since the June quarter of 2001. The money, HLL says, went mainly to fund "media spends" (read TV/print ads) on laundry and personal care products.

Over the past few months, HLL aggressively advertised price cuts on Surf Excel detergent and Clinic Plus shampoo and publicised a new "water-saving" formulation for its detergents. Spending more on advertisements is likely to have deepened the dent on HLL's profits, which already took a blow from the price cuts announced in March.

But the company says that its brand-building efforts helped protect its market shares from competitive "attack". Aggressive brand support, the company claims, helped it hold on to its volume market shares in detergents and shampoos, despite competition.

Nestle India, too says it stepped up marketing support on its brands despite the pressures on its profits. The company recently released TV campaigns featuring celebrities such as Rani Mukherji, Preity Zinta and Simran to endorse its Munch chocolates, Sunrise coffee and Maggi noodles.

Others such as Marico and Gillette India hiked their ad budgets to nurture new products. Marico, for instance, says that new products accounted for 70 per cent of the increase in adspend for the June quarter. And the bulk of the expense was on actual advertisements rather than on promotional materials (read freebies).

The company rolled out three new products this quarter - Saffola Gold, Silk-n-Shine conditioner and Parachute Advanced - which were supported by ad campaigns on TV and radio and `in-shop' ads.

Gillette India too hiked adspend to hard-sell its new products. The company has been promoting rollouts such as Vector Plus and Mach3 Turbo through high-decibel TV campaigns.

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