P&G and GM Slash Upfront Spending

Jun 13, 2005  •  Post A Comment

By Claire Atkinson and Abbey Klaassen

Advertising Age

Procter & Gamble and General Motors have delivered a one-two punch to TV, both slashing upfront spending in favor of new-media experiments and branded entertainment.

P&G, the country’s largest advertiser, is thought to have drastically cut TV budgets, especially cable. The packaged-goods company cut broadcast and cable budgets by 20 percent, or $150 million, this year, one knowledgeable executive said. Of the $2.7 billion P&G spent on all media last year, $705 million was spent on cable, according to TNS Media Intelligence, while $858 million was spent on broadcast.

What’s more, sellers find themselves waiting anxiously to see where GM-which last year spent $1.58 billion on TV and is the second-largest advertiser in the United States-will spend its dollars. The auto giant has been preoccupied with other business problems of late and has yet to make any deals, executives said.

GM’s media-buying agency, Interpublic Group of Cos.’ GM Mediaworks, received its budgets only late last week, according to one executive. Those close to the automaker said the budgets were down from last year. The struggling auto giant has already outlined its intention to shift money from straight cable airtime to new media alternatives such as video-on-demand.

An executive familiar with P&G’s negotiations said the company is not saving its investments for scatter.

“It’s the economy and a combination of shifts to different avenues; new media and broadband,” the executive said. This person also said that P&G wasn’t alone in cutting budgets, that General Motors and Masterfoods and many other marketers had held money out of the TV market.

P&G’s media shop, MediaVest, registered budgets with cable sales chiefs June 9, according to cable executives, who were informed that ad commitments would be cut across the board. The biggest losers could be the places where P&G spends most: women-oriented network Lifetime, Discovery and MTV, though they would not be alone. (Lifetime could not be reached; MTV declined to comment. Joe Abruzzese, president of ad sales at Discovery Networks U.S., said P&G “continues to be a very good partner.”)

A separate executive familiar with P&G’s media plans said that the company wants to move the money to event marketing, the Internet and branded-entertainment deals.

A P&G spokesman declined to comment on the report of a 20 percent cut, saying: “We’re still in negotiations, and until we’re all done, we’re not going to comment.”

In 2004 GM spent $765 million on broadcast and $304 million on cable, according to TNS. Cable networks where GM spent heavily last year include ESPN, CNN, Discovery, MSNBC and HGTV.

Jean Halliday and Jack Neff contributed to this report.