U.K. Retailers Overake CPGs in Ad Spending

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April 5, 2011

For the first time last year, U.K. retailers outspent national brands in advertising for their banners and store brands, according to a study by Ebiquity commissioned by The Grocer publication.

Retailers spent 17 percent more on television, print, radio, cinema and outdoor advertising totaling $2.8 billion than the prior year, while CPGs (which the U.K. refers to as fast moving consumer goods -- FMCG) spent $2.74 billion, up only 7.9 percent during the same period.

The biggest increase were posted by Marks & Spencer (up 59 percent), spending $100 million on advertising and Waitrose’s, whose ad budget increased 84 percent to $35.7 million. Tesco posted a 9 percent increase, spending $165.5 million.

“These figures represent a hug shift in power from brand owners to grocery retailers,” Richard Buchanan, director at branding agency The Clearing told The Grocer. “Brands are still driving growth in grocery. Even so, they’ve lost power and are one step away from customers as retailers now understand their customers better, he said, referring to grocers’ loyalty card data and insights.

SBD Views: While this story may not be the best read this week, I believe it is one of the most important. Imagine a time when U.S. retailers are such strong marketers that their consumer media spend is greater than that of the major CPGs. That’s what just happened in the U.K. Will this happen in the U.S. in two, 10 or 20 years? The answer will be determined by how quickly retailers ratchet up their consumer marketing and the degree to which CPGs are forced to spend more of their money on marketing initiatives to drive direct sales results. -- John Failla for Store Brands Decisions

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