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General Mills Inc. is boosting its spending on consumer advertising by 27 percent in the first half of 2010, compared with the same period last year.
The increase far outpaces the Golden Valley, Minnesota-based company’s 1 percent growth in net sales during the same period last year. The marketing push in both traditional media and increasingly on the Internet is a deliberate attempt by the maker of Big G cereals, Yoplait yogurts, and Progresso soups to keep growing top-line sales despite the recession.
In its fiscal 2009, which ended in May, General Mills hiked advertising spending by 30 percent from the previous year, exceeding $730 million. The company’s total 2009 revenue was $14.7 billion.
General Mills executives said they’ve spent more on online efforts than in the past because they have a higher return on investment than traditional TV advertising.
For example, it launched an interactive Internet campaign in September for its new high-energy Wheaties Fuel cereal, which is aimed at male athletes. The company asked its customers to vote online on the final flavor of Wheaties Fuel. The cereal began shipping January 4.
Last week, the company unveiled its first 30-second commercial for the product to 11,400 Facebook “fans” of the new cereal. The ad, created by Saatchi & Saatchi New York, includes an endorsement from NFL MVP and Indianapolis Colts quarterback Peyton Manning. It began airing on TV networks Monday.
General Mills also operates and advertises on many of its websites and blogs, including BettyCrocker.com, which attracted 6.7 million unique visitors in December, up 6.5 percent from December 2008, according to SiteAnalytics.com. It also advertises on other popular websites.
Of course, General Mills is still running multiple mass-media campaigns, such as the “Home is Calling” promotion of Pillsbury refrigerated doughs. The ads, also created by Saatchi & Saatchi, started running in fall 2008, to appeal to cash-strapped consumers who are eating more frequently at home. General Mills said the campaign helped drive a 12 percent increase in Pillsbury sales in fiscal 2009.
General Mills also invested heavily in traditional TV ads in the past year for other products, such as those that promote the health benefits of Cheerios, a Hamburger Helper ad featuring Beyonce, and campaigns for Progresso Soup and Fiber One bars.
Can it keep it going?
General Mills’ fiscal year is half over, and when it comes to ad spending for the rest of 2010, executives are leaving their options open.
Ian Friendly, executive vice president and chief operating officer for U.S. Retail at General Mills, told analysts in early January that the spending increase in the second half won’t be as high as it was in the first half. Without being specific, General Mills said total fiscal 2010 media spending will be up by double digits year over year.
Analyst Robert Moskow, from Credit Suisse Group in New York, said he’d be concerned if General Mills took its foot off the accelerator now.
People invest in General Mills today because “it’s taking market share and it is best of class,” he said.
But Friendly stressed at the conference that the company would continue to support its brands.
“We believe that one of the most important strategies in this environment is to have a very strong level of consumer support driving our businesses,” he said. Advertising spending is “driving a lot of the differentiation” in General Mills product sales, and that is rewarding shareholders through good bottom-line performance.
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Sam Black writes for the Minneapolis/St. Paul Business Journal.
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