FMCGs saved on advertising cost in the March quarter

11 Jun,2012

By A Correspondent


FMCG companies managed to rationalize their costs this March quarter. And one of the areas where they have managed to cut corners is the area of advertisement and promotion expenses.


For 24 FMCG companies, the selling expenses as a proportion of net sales stood at 12.1 per cent – the lowest in at least the last ten quarters. This proportion stood at 12.9 per cent in the December quarter, 12.6 per cent in the September quarter and 12.7 per cent in the June quarter. Lower spend on advertising has helped companies to fairly protect and in some cases boost their operating margins. Most companies focussed more on below-the-line marketing activities rather than above the line ones.


HUL has managed to bring down its ad spends by 100 bps from the previous year to 12 per cent of its total domestic sales for the quarter ended March 2012. ITC’s other expenses (comprising its expenditure on advertisement and promotion) stood at 22.6 per cent of net sales – lower than 22.9 per cent in the preceding December quarter.


Another MNC, Colgate spent 8.5 per cent of its revenues on advertising – the lowest in the last four quarters. It spent 16 per cent and above in the first three quarters of this fiscal on advertising and promotion. Marico was one of the few companies whose advertisement and promotion spend was exceptionally higher at 14.3 per cent of its net revenues.


Source: The Economic Times
Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved


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