Colgate-Palmolive got a solid boost in sales in a quarter where it boosted advertising spending by 20%.
The maker of Colgate, Ajax, Speed Stick and Irish Spring is reporting that second quarter sales rose about 8% year-over-year to $4.82 billion USD.
“Advertising spending increased significantly in the quarter to drive brand health and in support of our strong innovation and pricing activity,” says Noel Wallace, chairman, president and CEO at Colgate-Palmolive. “Strong investment levels should continue in the back half of the year as we work to deliver balanced organic sales growth.”
In this morning’s earnings call, Wallace said it will continue to fuel its advertising investment and that its business responds well to “strong advertising” and innovation.
The CPG is focusing more on its digital marketing capabilities, which is generating more in terms of ROI.
“We are not best in class yet, but have more room to grow,” Wallace said in reference to the company’s digital transformation. He adds that the increased ad spending is also coming with investments into making that spending more efficient.
“This includes areas like programmatic buying, the collection and use of first party data and a heightened focus on building up the effectiveness of our advertising copy itself,” Wallace said.
North America delivered organic sales growth of 2% in Q2, driven by strength in surface cleaners and skin health. Oral care, however, had organic sales down slightly due to volume declines. The company says volume performance was negatively impacted by its shift of support dollars away from trade promotion and into advertising spending.
Wallace says it’s “very pleased” with market share performances and its elevated advertising spend around the world, adding that the company wants to sustain consistent organic sales growth through brand investment.
Advertising doesn’t see an immediate payoff, Wallace warns. “Over the long term, consistent levels of advertising play out for brands the best,” he says.
Colgate-Palmolive raised annual its forecasts, expecting annual organic sales to grow between 5% and 7%, compared with previous forecast of 4% to 6% growth.
Featured image by Luigi Novi.
