In “Marketing in a Recession,” an audit of existing thinking on the topic that we published last fall, we repeated a well-known story about advertising in tough times: Kellogg’s and Post were close rivals until Post cut its spending during the Depression and Kellogg’s kept going—gaining the edge it still enjoys today.
Kellogg’s has persisted in spending on advertising to keep lower-priced players at bay. “We believe it’s critical, when the economy gets tougher, that people should be seeing the value of our brands constantly,” CMO Mark Baynes told BusinessWeek last year.
Fast-forward to an Oct. 29 Ad Age story: “Kellogg Co. bested industry expectations with third-quarter earnings released this morning, thanks in part to higher ad spending.” Earnings per share grew 5 percent in the quarter, as the company increased its ad spend by as much as 17 percent. Kellogg’s said it’s likely to boost spending by a similarly sizable percentage next quarter. 
“Our commitment to investing in advertising continues to be a key to our business model and to achieving our goals,” CFO John Bryant told analysts, according to Ad Age. As we noted a year ago, while spending alone doesn’t guarantee success, a multitude of studies have confirmed the potential upside of spending through bad times and the potential downside of cutting back. And for premium brands, price may not be a barrier when the consumer believes in or feels a connection to the brand.
0 Response to “Kellogg’s successfully sticks to Depression-era strategy”