P&G To Boost Market Spend, Product Innovation In 2010

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Procter & Gamble indicated Thursday that it will boost marketing spending over the next year as it introduces a run of new and refashioned brands. The world's largest advertiser said it plans to increase product "innovations" by 30% this year -- with the bulk coming in the back half.

"The marketing spend tends to follow the innovations as we work to generate trial," said new CEO Bob McDonald on an investor call. He declined to provide specifics about the new pipeline. P&G spent $911.5 million in measured media last year in the October-December quarter, down 8% versus the year before, according to TNS Media Intelligence.

  Both McDonald and CFO Jon Moeller indicated P&G continues to invest more in marketing, but is also capitalizing on a more-for-the-same dynamic.

"Because the rates of advertising spend have been reduced due to the economic weakness, we now see that we're able to deliver more impressions for the same amount of money," McDonald said.



Moeller said "media delivery" was up in the July-September quarter and P&G is "benefit(ing) from attractive media rates."

McDonald did hint that P&G's marketing investments might skew away from traditional advertising, citing sampling or cause marketing.

P&G posted a 2% increase in organic revenues in July-September, driven by increased pricing on products. About 10% of the company's products saw pricing altered in reaction to the troubled economy, but the company said it does not plan to continue doing this at a significant level.

Revenues in the third quarter were down 6% to $19.8 billion.

On the call, McDonald was asked about the current "mood and psychology" within the company. He responded that a recent upswing has helped, adding: "The attitude -- the morale -- is up."

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