P&G Still Spending

My daily email from All Things Digital had an interesting tidbit on the advertising market. Procter and Gamble is the largest US advertiser and CEO A.G. Lafley was quoted as follows from last week’s earnings call:
“We have held our marketing spending, advertising spending and in fact what is really going on is the advertising markets are softening and for the same dollar we are buying more delivery… we have been shifting support in general to the store and the point of purchase… It is couponing in markets where couponing is a well established consumer habit and coupon redemptions go up in recessionary times. In markets like the U.S. we have clearly shifted dollars to coupons…Then depending on the market we are doing more digital and there are a number of categories that are doing quite well with the digital.”
On the one hand, this is positive for ad supported media as it reminds investors that there is a reason to keep spending to support brands, products, and services even as volumes soften. However, it seems quite clear that PG is able to get the same amount of exposure in traditional media like TV and radio by spending less because the price per spot they are paying has fallen. $100 million might have bought X minutes early in 2008. In 2009, the price of those spots might be down 10-20% so PG can spend $10-20 million less on the same campaign and still get X minutes and the same reach.
Those dollars appear to be getting redirected to coupons and digital campaigns. The shift to coupons is cyclical but the shift to digital is cyclical and secular. Overall, the picture for advertising remains bleak and still has not bottomed on a cyclical basis. The only thing an investor can do is look for pockets of relative strength. Digital (Google’s decent report) and possibly cable networks (we hear from Disney, Time Warner, News Corporation, and Scripps Interactive this week) represent relative strength.