General Mills Thrives In Bad Economy

Back in November 2008, I wrote an article for RBR on the importance of marketing during tough economic times (It’s The Great Depression Charlie Brown). The piece examined lessons on how advertisers responded to the Great Depression, and the success stories of Kellogg and Chevy – two brands that kept advertising while other leading brands cut ad budgets.

As if on cue, in an economic that many in our media and government are touting as the worst since the Great Depression, General Mills announced profits driven by increased consumer marketing.

This from an article by Emily Bryson York of AdAge (2.17.09):

The company has staunchly supported consumer-marketing spending increases -- 19% in the first half of fiscal 2009, which began in June -- while competitors, including Kellogg and Kraft, have begun to scale back on the heady marketing outlays of 2008, instead preaching bundling and greater return on investment. General Mills estimates that its consumer-marketing spending will be up by "double digits" for the full fiscal year.

General Mills' sales have responded well to increased marketing support as consumers are eating more at home. Sales grew 11% in the first half of fiscal 2009, to $7.5 billion. For the balance of 2009, the company said it is planning a broadcast blitz for its cereal brands. Ian Friendly, chief operating officer of U.S. retail operations, said he expects the ad program to generate the biggest bump in sales.

We’ve heard many broadcasters saying “You shouldn’t cut marketing dollars during tough times” – well now, here is a living, breathing, RECENT example that can be used with that argument.

It’s also worth noting that in the same article, General Mills’ COO outlines the role that “new media” is playing in the success story:

"We are seeing higher returns from digital than broadcast," Mr. Friendly said, declining to give the percentage of spending that's moved online. "It's not that our TV ads don't work, but when you're watching TV you're doing it for a different reason. When you go to a website you have a very specific purpose."

Now here’s the tough question – if it’s true that increased marketing during tough economic times helps to boost business; and it’s also true that new media is playing a greater role in that boost… as a broadcaster (business) – does it seem wise to cut expenditures on your station’s new media development? It’s our belief that if you are not expanding your digital offerings, you’re shrinking your opportunities.

We believe that traditional media (most especially radio) and new media are powerful partners for producing measurable results.  To deliver those results, radio must explore new digital solutions to pair with its incredible reach.

For those that insist that “radio is broken” – consider that radio listening continues to display staggering consumer reach – 94% of adults listen at least once per week! So, why then are revenues at a five year low? It’s not the medium that is broken… it’s more about the method and model the industry relies upon to conduct business.

As Caroline Krediet recently pointed out in an article for MediaPost:

The good news in these tough economic times is that radio is relatively cheap to create and produce. Moreover, its short and simple production times allow brands to be opportunistic and flexible in their media buys--a noteworthy advantage over the more-than-four week production lead times of out-of-home, magazine and newsprint, and TV's eight-week minimum.

Since October of 2008, our sister company – (a web design and hosting company) has seen an increase in the volume of calls from small business owners looking to develop or redesign their web sites.  When you think about it - makes perfect sense.

Small businesses that are looking to scale back on marketing expenditures are trying to find affordable ways to keep their marketing efforts alive while they weather the storm. They view their web sites as an affordable means of marketing their business 24/7. 

However, this presents a classic chicken and egg scenario – if you have the best web site in the world, how are you going to drive traffic to it? You could experiment with Google Adwords, or expensive SEO programs… both require a good deal of time and money to produce results. OR, you could partner with an affordable, local mass media outlet like radio and get twice the benefit!

What’s the only thing we consistently see missing from this equation is a radio rep willing to make the argument and the pitch!

If you are an exception to this rule and have a great story to share about a business using radio and the web in this economy, we’d LOVE to hear from you. Drop us a line with your story at success@remergemedia.com

-- Chuck Francis, VP New Media Strategies, Remerge Media

Remerge Media is a multi-media consulting firm, specializing in new media integration and simultaneous media solutions. Remerge works with radio (as well as other legacy media) clients to help them understand, integrate and generate revenue from new media through custom sales solutions, and providing traditional media sales personnel with highly specialized training. Remerge solutions provide a high rate of ROI for our traditional media clients, as well as their advertising clients. The company is based in Columbus, Ohio. More information about Remerge can be found online at RemergeMedia.com

Tweet