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Short-Termism and Investor Pressure Hits Adspend, Says Guru

Periods of recession have a heightened negative impact on advertising expenditure levels in countries where companies are under greater pressure from investors and take a more short-term view, according to a new study of economic downturns from over the last 100 years.

[Estimated timeframe:2009-2015]

Professor Gerard J. Tellis, of the University of Southern California Marshall School of Business, has analysed how shifts in GDP over the last century have impacted brand performance, as discussed in more detail here.

He found that a change of in GDP of 1% in either direction is generally mirrored by a similar positive or negative alteration of 1.4% in adspend.

While this trend has been "evident across major world economies," it is typically more pronounced in countries where the main priorities are "short-term orientation" and "avoidance of uncertainty."

Similarly, it is also often more significant when "corporate managers may suffer pressure from investors."

Tellis also argues that television has proved less sensitive to changes in the economy than either newspapers or magazines.

Some private label gains in a downturn also turn out to be "permanent," while companies increasing adspend in a slump generally "experienced higher sales, market share, or earnings during or after the recession."


All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: WARC News
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3928

Remy's Risky Business

The cognac maker wants to cut costs by getting rid of its distribution network. That might be a bad idea ...

[Estimated timeframe:2009-2015]

... "It’s very risky," said Fortis bank analyst Severine Ble. She argued that large players like Pernod Ricard had the necessary muscle, in terms of experience, brand name and volumes, to pursue a distribution strategy. It would far more challenging for a firm like Remy Cointreau, which is far smaller and has six brands to its name, to do the same.

While Pernod Ricard and Diageo have cheaper brands like Jacobs Creek and Guinness to fall back on in the downturn, Remy is a pure-play premium producer, peddling the likes of Piper-Heidsieck champagne. Remy attributed the 30.0 million euros ($39.5 million) of revenue declines in the fourth quarter to destocking by clients, especially in the United States and Russia.

The company said that full year revenues fell 11.6%. By contrast, Pernod is expecting a double digit rise in profits for the year ending in June, while Diageo is sticking to its expectations of 9.0% annual profit growth.

Remy Cointreau shares were down 1.5%, or 30 euro cents (40 cents), at 19.50 euros ($25.66), in Paris.


All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: Forbes.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3924



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