Blog: Cutting A&P, no excuse for glee?
Olly Wehring | 13 March 2009
Results season is never the most joyous of times for us journalists – ploughing through reams of paper looking not only for the basic figures but also for 'Any Other Business' that may have played a part in making up the numbers.
What has been of particular concern this time around, however, is the large number of companies who boast of, at best, flat or inching up profits, but – as the trawling throws up – have had their bottom line improved by the curtailing of advertising & promotional spend. In delivering its full-year results today, for example, Jones Soda said that it cut its promotional allowances and slotting fees in 2008 by 11% on the year before.
This sort of news reminds me of something John McDonnell, COO of Patron Spirits Company said to me when we met last year. "We're firm believers in keeping supporting brand equity and awareness in tough economic times,” he said. “When you come out of it, things will be all that much better for the brand.”
Several firms have pointed out that the economic downturn has also brought a sharp drop in media rates, particularly for television advertising. TV ad rates have fallen by up to 20% in the UK, for example, inevitably offering companies the chance to maintain "voice" for less hard cash.
Still, some companies have indicated that they intend to cut A&P spend as a percentage of sales in the next few months.
Trust us to keep an eye out for it, but do be aware of companies who claim to have bucked the trend in their sector.
Reducing your A&P can't be the answer to your ills, can it?
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