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P&G Won't Rely On Spending Cuts

  • Ad Age, Friday, December 15, 2006 10:30 AM
Procter & Gamble Co. is not going to rely on cuts in marketing spending to hit aggressive profit targets, despite having cut its ad budget as a share of sales the past two fiscal years, company executives tell Wall Street analysts.

At the same time, the company says that trims in ad spending don't necessarily hurt brands. According to CFO Clayton Daley, P&G's North American fabric-care business cut ad spending as a share of sales by 2% over the last five fiscal years, but saw sales jump $900 million while boosting market share and building scores for brand equity on flagship Tide to record levels.

"Our sustained-growth model doesn't actually count on P&G reducing marketing as a percent of sales," Daley says. "As such, we will look to reinvest [marketing-efficiency savings] back in the business."

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