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U.S. AD SPENDING UP Ad spending in the U.S. rose by more than 10% last year, according to a study by Competitive Media Reporting. The New York-based firm pegged ad spending in 1999 at US$87.5 billion, up from US$79.7 billion the...

U.S. AD SPENDING UP

Ad spending in the U.S. rose by more than 10% last year, according to a study by Competitive Media Reporting. The New York-based firm pegged ad spending in 1999 at US$87.5 billion, up from US$79.7 billion the previous year. The heavy demand of dot-com advertisers pushed up ad rates across the U.S., the report says. Among traditional advertisers, General Motors held its rank as the biggest advertiser, spending US$2.88 billion, up 35.6% from 1998. McDonald’s ranked as the top brand in ad spending, at US$623 million, up 9.5% from the previous year. Behind General Motors, Procter & Gamble was the second leading advertiser, spending US$1.68 billion, down 2.3% from 1998, while DaimlerChrysler AG ranked third with a nine per cent increase to US$1.5 billion. Television networks took about US$18 billion of the total ad dollars spent. However, smaller specialty cable channels saw a 31.2% increase in their share of the ad spending, says CMR. In the Internet advertising category, dot-coms spent US$1.91 billion, up from US$1.03 billion the previous year, and accounted for slightly more than two per cent of total ad spending.

A BUG IN THE WORKS

A series of spots for Orkin, the Atlanta, Ga.-based pest control company, are bugging some television viewers. The series of 15- and 30-second spots, by J. Walter Thompson, feature a cockroach crawling across the television screen. The image is so realistic, it has caused some viewers to literally attack their TV sets trying to kill the pest. As one spot begins, it appears to tout a new brand of fabric softener. Unsuspecting viewers are soothed by unremarkable images: white fluffy towels blowing in the breeze and a thirty-something female caressing a soft, clean towel against her cheek. But as these images lull the audience into complacency, a large cockroach crawls across the screen as if on the viewer’s own television. Only when ‘The Orkin Man’ interrupts the commercial to kill the pest is the ‘fake out’ revealed. According to the company, one woman threw a motorcycle helmet at the screen, while others have thrown shoes to try to kill the roach. The company has added a ‘You Got Me’ promotional contest to the campaign, urging viewers who were faked out to share their experiences.

Kraft Heinz beats the street, but reports slight sales slide

The company's Q2 net sales, while down slightly, reveal continued demand for snacks and pre-packaged meals.
Kraft Heinz

Kraft Heinz is reporting earnings of 78 cents a share, beating Wall Street’s estimate of 72 cents a share, thanks to continued demand for snacks and pre-packaged meals. However, the company also reported a net sales decline of 0.5% compared with the same period last year, to $6.6 billion, according to its latest Q2 earnings report, released Tuesday.

The company experienced a favourable 2.3 percentage point impact from currency and a negative 0.7 percentage point impact from its February divestiture of Hormel Foods – including the Planters peanut brand – which closed in the second quarter of 2021.

Its cheese divestiture – which included the sale of its natural cheese division to Lactalis – is expected to close in the second half of 2021, says Kraft Heinz Global CEO Miguel Patricio in this morning’s conference call.

Adjusted EBITDA slumped 5.2% versus the year-ago period to $1.7 billion and increased 6.6% versus the comparable 2019 period. Higher transportation and inflation-related goods costs continue to affect the company’s bottom line.

Kraft Heinz’ organic net sales declined 3.6% in Canada over the last three months compared with a comparable period last year, this as total net sales rose 8.8% year over year. 

However, its overall organic net sales slipped 2.1% compared with 2020 figures. This includes the negative impact stemming from exiting its McCafé licensing agreement. However, this decline was partly offset, Kraft Heinz reports, by “partial recovery in foodservice channels and retail consumption trends.”

“Food service is recovering, and recovering fast,” Patricio stressed in today’s earnings call. He said “the bet to support QSR” early in the pandemic, with individual packets of ketchups and sauces, is paying off.

Channel trends are still normalizing, he warns, and it’s too early to see how at home or away from home, will net out. “We have big ambitions for away from home business,” he said. Consumers continue to evolve how they eat, with Patricio saying that Kraft Heinz is collaborating with a popular DTC brand for its Philadelphia cream cheese.

Accrued marketing costs, the company reports, rose to $968 million from $946 million in December 2020.

“We are investing more in our brands, and better as well, building a much more creative company,” Patricio reported.

Kraft Heinz is also strengthening and diversifying its media presence, he said, driving repeat rates for those discovering and rediscovering the brand. Patricio added that the company is continuing to drive its transformation program forward, modernizing its brands and better connecting with its consumers.