Jeremy Lee on Media: It's a start, not an end

Jeremy Lee
Jeremy Lee

Media owners should avoid getting too excited at P&G's plan to increase its adspend this year.

Further evidence for media owners of the fabled broad, sunlit uplands of the future may have been provided by Procter & Gamble's UK vice-president and general manager, Irwin Lee, when he announced last week that the company would be increasing its media spend this year.

In fact, Lee seemed so confident of the power of advertising that he promised that P&G's UK ad budget would rise by more than its sales-growth rate this year. It all made for welcome headlines and gave media owners, particularly the TV broadcasters, which rake in about 65% of the company's total spend, a much-needed shot in the arm.

However before Rory Sutherland and his lieutenants, huddled in the map-room of the IPA's headquarters, crack open the Pol Roger and light a few Romeo y Julieta cigars to congratulate themselves on a job well done, they need to look at what P&G did last year.

In 2009, during what the media consultancy Enders Analysis described, with a certain amount of melodrama, as 'the worst advertising recession since the Second World War', P&G actually reduced its spend by 13%. This was a more swingeing cut than that made by the biggest 100 advertisers collectively: as a group, they decreased spend by just over 11%, according to Nielsen. Little evidence of much confidence there.

Obviously, media deflation meant that P&G, along with other advertisers, did not need to maintain or increase its adspend levels to maintain its share of voice, so it simply took advantage of the softer advertising market by cutting spend, rather than pumping more money in.

The fact that it is increasing its spend this year therefore suggests that Lee believes there is more money coming into the market and that he must react accordingly. This theory is borne out by further Enders Analysis research, which shows that the ad market is hardening up, largely on the back of a strong summer helped by the FIFA World Cup.

This comes with a note of warning, however. Poor visibility caused by the post-election economic outlook means that the second half of 2010 could prove to be very different from the first half.

Incidentally, Lee also promised P&G would invest more in digital media and internet advertising. In truth, it would be hard for it to spend much less - according to Marketing's recent list of the top 100 online advertisers, it put just £2m into internet advertising, not even 1.5% of its total ad budget.

From being the second-biggest advertiser overall, such was its faith in the web as a way to sell that it dropped 20 places in the league behind brands such as Weight Watchers.

Given that Jim Stengel, P&G's former global marketing officer, once predicted it would spend 10% of its budget on digital advertising, Lee has a long way to go to reach this goal. Reports of a 'successful' Herbal Essences-Facebook partnership do not provide evidence that a tipping point has been reached.

The indicators of whether the ad market is back in growth will become clearer next year, when the market is predicted by Enders to be flat; whatever P&G's plans are for that eventuality, it will prove a better bellwether of its confidence.

So any media owner thinking of emerging from its bunker should do so with caution. While P&G's decision to increase its spend is undoubtedly welcome, it does not mark the end of the ad recession. It may not even be the beginning of the end. But could it be the end of the beginning?

Jeremy Lee is associate editor of Marketing. Read his blog at marketingmagazine.co.uk

30 SECONDS ON ... IRWIN LEE

- Lee is a P&G 'lifer'; the 45-year-old has spent the past 25 years with the company. He joined after university in his native Philippines, with the idea of saving up enough money to take his band into a studio, cut a demo and go on to become a rock star.

- He spent two decades in various roles, including finance and marketing, in six Asian countries. He was moved from China, where he oversaw the integration of several joint ventures into a wholly P&G-owned business and helped take its laundry detergents from seventh to first place in the space of four years, to take over from Gianni Ciserani as the head of UK operations in 2008.

- Lee, a Rolling Stones fan, still plays the drums and sings with a rock band, often performing covers at P&G Christmas parties; indeed, he claims this informs his management style. 'You get the drumbeat going and you set the rhythm and pace of an organisation, but every now and again it's great to come up and front the band,' he told Telegraph.co.uk.

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