Kellogg Sees Benefits of 17% Ad Increase5 Nov, 2009 By: Jacqueline Renfrow Response This Week
CHICAGO – Kellogg Co.’s earnings per share grew 5 percent in the third quarter, partly due to its 17-percent increase in advertising, reports AdAge.com. The company predicts it will continue to increase ad spending by double-digits in the fourth quarter.
“Our commitment to investing in advertising continues to be a key to our business model and to achieving our goals,” says John Bryant, CFO for Kellogg. “Rather than take advantage of lower rates to reduce the cost of our advertising investment, we see this as a great opportunity to increase our investment and build even stronger brands in the future. Higher spend combined with media deflation and a push on efficiency is driving a significant increase in advertising pressure.”
While increasing its spending, the company has also shifted its funds, by reducing the number of television commercial shoots and driving more projects to the more-measurable Web, where ROI has far surpassed TV.
In the category of cereal, Kellogg is up 2 percent in the market, a 7-percent gain over one year ago. Special K, Rice Krispies and Kashi brands topped the list with double-digit growth, driven by their increased advertising.
However, sales slipped slightly on currency conversion to $3.3 billion, and the company has had to discontinue its on-the-go single-serving cereal packages due to lack of demand from value-conscious consumers.