CHICAGO (Reuters) - U.S. food companies are tailoring their marketing strategies to the recession, trying to stretch budgets without cutting back on experiments with pushes into new areas such as online "viral" campaigns.
Executives at this week's Reuters Food and Agriculture Summit said they were using more efficient ways to marketproducts, and most said cutting back was not a good thing.
Constellation Brands (STZ.N: Quote, Profile, Research, Stock Buzz) CEO Robert Sands said his overall advertising budget generally rises with inflation. Yet he said he plans to spend more to market Constellation's Svedka vodka, whose growth has been largely fueled by the online popularity of its futuristic female "spokesbot."
"That's the most contemporary example of how you reach (younger) consumers who are not receiving their advertisements through watching TV or reading magazines or newspapers anymore," Sands said.
Besides offering demographic advantages, online or viral campaigns are often less expensive than splashy TV or radio advertisements, adding to their attractiveness, said Mark Schiller, president of Quaker Oats' North American business.
Earlier this month, Quaker launched a campaign including billboards, print ads, giveaways and a temporary appearance on Yahoo.com of its Quaker man flying across the screen.
The campaign's scope was a departure from Quaker's earlier reliance on television and print.
"For really the first time in -- I think in forever, but certainly in my tenure with the company, this is much more of a 'surround-sound' campaign," Schiller said.
"One of the positives in tough economic times is your dollars go a lot farther. So we're finding that we get a much bigger bang for our buck in terms of purchasing power."
FOOD MAKERS GAIN PROMINENCE
U.S. advertising spending is expected to fall between 5 percent and 10 percent this year due to cutbacks by retailers, automakers and financial service firms.
This is also pressuring advertising rates.
Spending by food companies, which are in far less turmoil, is expected to hold up better. By simply maintaining their budgets this year, food companies could see their share of U.S. advertising rise in 2009, after increasing slightly in 2008 to 5.6 percent, according to TNS Media Intelligence.
Bakery-cafe chain Panera Bread Co (PNRA.O: Quote, Profile, Research, Stock Buzz) is currently testing its first big foray into television.
As advertising costs come down, Panera can "dramatically" increase the value of its advertising at "modestly" higher prices, said William Moreton, co-chief operating officer. Continued...
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