P&G uses advertising to strengthen brands as consumers accept product price increases. | Story

As consumers accept price hikes as a side effect of inflation and distribution chain disruptions initially caused by the pandemic, savvy marketers now view advertising as an investment rather than a cost.

This may not necessarily lead to increased advertising spending during the current economic downturn, but some companies, including one of the largest radio advertisers Procter & Gamble, are taking advantage of this unprecedented time to strengthen product brands. why US consumers are willing to absorb price increases.

“It’s not an entirely good or bad situation for the advertising industry – it’s complicated,” Digidaywrites Seb Joseph. “After all, inflation can be a good marketing opportunity to get consumers to pay more for a product they like when they’re prepared for price increases. They are now making advertising investments that they hope will pay off in driving growth. »

Advertising is more strategically important than ever, say the biggest companies, because they have to impose price increases on proven brands. Businesses now need to think differently about ad spend.

For example, Procter & Gamble chief financial officer Andre Schulten said the company has shifted spending from linear, untargeted television to programmatic and digital advertising, which he says is “much more targeted and much more precise in terms of scope”.

Schulten says that by focusing on a brand’s reach rather than developing category budget plans, the brand should be able to achieve its projected reach at a lower advertising cost than P&G spent. in the past.

Additionally, building strong brands during tough economic times will benefit the business in the long run, as costs will eventually come down, but price increases on products rarely will.

“Consumers are clearly taking on more price increases than many companies anticipated, so now is a good time to advertise to push through price increases,” said Ian Whittaker, analyst at market and founder of Liberty Sky Advisors. Ebiquity event.

“This raises an interesting question as to whether companies that can pass price increases through to the consumer are likely to see a permanent increase that ripples through to their margin. In this way, advertising, or rather brand advertising, becomes more like intangible capex.

About Cedric Lloyd

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