NEW YORK (Reuters) - Dr Pepper Snapple Group Inc DPS.N is risking a different approach to the recession than other major advertisers: the soft drink maker is boosting its marketing budget, saying that's what worked best in the last big downturn.
Spending this year on everything from TV spots to print advertisements and more experimental Web campaigns will rise by up to 5 percent, the company’s head of marketing, Jim Trebilcock, said in an interview. The company says its total marketing budget is about $300 million to $400 million.
The decision to spend more makes Dr Pepper Snapple an exception in a year when forecasters see overall U.S. advertising spending dropping by 8 to 10 percent, the steepest decline in more than two decades.
Company executives said they decided on the strategy after research firm Nielsen produced a study for them that detailed ad spending patterns during the early 1980s, the last prolonged advertising downturn.
“We wanted to find out what were the brands that were successful in ‘83 and ‘84, coming out of the recession?” said Trebilcock. “What did they do differently than others during the middle of the recession? Uniformly, the thing that came back is they didn’t retrench. They reinvested.”
The upshot is “dollars this year from a marketing standpoint are actually increasing,” he said. “We believe that if we invest now, then when we come out of this thing in a year or two we’ll be in a much stronger position.”
This year, Dr Pepper Snapple will divide its creative advertising duties chiefly among three agencies. Interpublic Group's IPG.N Deutsch L.A. will handle Dr Pepper, Diet Dr Pepper and Snapple; WPP Group's WPP.L Y&R San Francisco is responsible for 7UP, Sunkist and A&W; and Laird & Partners will work on the Mott's brand.
As part of the marketing push, Dr Pepper Snapple is running new advertising for A&W, Canada Dry and Mott’s -- brands that were long excluded from fresh ad campaigns.
In addition, Dr Pepper Snapple, the third-largest soft-drink maker in the United States behind Coca-Cola Co KO.N and PepsiCo Inc PEP.N, is investing more in the ongoing make-over of its Snapple brand.
Following its spinoff from Cadbury Plc CBRY.L nearly a year ago, Dr Pepper Snapple has set its sights on reversing slumping sales of Snapple.
Now, in trumpeting the drink’s health benefits, the Snapple tea label stresses that it’s “all natural” and is brewed from green and black tea leaves. It has begun producing the tea with sugar rather than high fructose corn syrup.
The company also tweaked the formula of A&W, and is marketing the soft drink with a campaign that emphasizes it is made with “real aged vanilla,” said Trebilcock. “We wanted to communicate it almost like a craft beer,” he said.
For all its brands, Trebilcock said, the company wants to remind consumers that the drinks are relatively inexpensive even when household budgets are tight, but plans to avoid “overtly hitting people over the head” with money-saving messages.
“What we believe is that consumers will recognize the relative value,” he said. “It’s about reminding consumers why they love the fun flavors and great taste of our products. In an environment where coffee is five bucks a shot, here’s Dr. Pepper at 33 cents a can or Snapple at $1.50.”
As for the marketing mix, Trebilcock said it varies by brand but generally about 70 percent of ad spending occurs on TV, radio, and billboards, with another 20 percent spent online and the remaining 10 percent used for a variety of other promotions.
Within TV, Dr Pepper Snapple Group has experimented with more product placement, pushing back against consumers zipping through traditional TV commercials with digital video recorders. Recently, products have turned up on “Top Chef” and the “The Colbert Report.”
“You have to be very selective in getting the right brand with the right integration,” Trebilcock cautioned. “It can be very gratuitous. We’ve even asked the folks in some cases to dial back in what they were doing for us.”
Reporting by Paul Thomasch; Editing by Gary Hill
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