After economising on adspends in the first three quarters of 2011-12, over the year before, fast-moving consumer goods (FMCG) companies stepped up advertising in the final quarter.
Peaking out in late 2010, adspends as a proportion to sales fell at the start of last year, as rising input costs forced companies to cut back to maintain margins.
Promotional spending now appears to have stabilised, even headed for a slight rise.
March pick-up
In the March 2012 quarter, the ad budget for nine leading listed FMCG companies stood at 12.1 per cent as a proportion to sales. They spent 11.9 per cent in the same period last year.
New product launches, softening in some raw material prices and a focus on global businesses drove adspends in the March 12 quarter. For the nine months to December 2011, overall advertising outgo stood at 12 per cent as a proportion to sales. That's a good two percentage points below the figure in the nine months to December 2010.
Behemoth Hindustan Unilever actually reduced the amount spent on advertising, in absolute terms, to Rs 1,975 crore from Rs 2,141 crore.
Further, for four of the companies, the proportion of advertisement spending in the March ‘12 quarter was also higher than in the nine months to December 2011.
However, GSK Consumer Healthcare, which doesn't fall in this group, had a lower adpsend only because it withdrew some products.
In its concall with analysts, it said it expects to sustain higher levels of adspend, at 15 per cent of sales.
With Marico, for example, advertising costs accounted for 13 per cent of sales in the March ‘12 quarter, a full four percentage points higher than the year-ago quarter.
Driving adspends
The company benefited from declining prices of a key ingredient, copra, from January. At the same time, it launched its first move into body lotions, necessitating a promotional thrust.
Britannia too had variants of premium and health biscuits that kept adspend higher.
Similarly, Dabur India introduced new variants in its hair oils and shampoos in the second half of fiscal 2012, with the March ‘12 adspend-to-sales figure higher by two percentage points.
According to its concall with analysts, the company will sustain advertising at these levels for the coming quarters, unless inflation runs out of hand.
Heightened competition, especially in categories such as shampoos and soaps, could have also served to boost adspend.
P&G Hygiene's spending, which it slashed heavily in the June ‘11 quarter, picked up in the March ‘12 quarter.
Soaps and detergents, the biggest segment for FMCGs, saw an increase in overall media spending in the March ‘12 quarter, having been on a downward move till then.
A spike in raw material costs had prompted most players in this segment to cut back on adspend. But the trend seems to be reversing now.
HUL increased promotional spending on the soaps and detergents segment in the March ‘12 quarter.