Mumbai, Feb 13: Obscenity in advertising is far from passe. Hindustan Lever hiked its ad-spend by a massive 64 per cent in 1997 when the advertising industry grew at its flattest rate ever.But the consumer products powerhouse is not stopping at the whopping Rs 450 crore it spent last year washing clothes and splashing ketchup on television screens in 1997.
Together with Ponds India's slew of brands following a merger, and India's largest cosmetics brands thrown in for good measure following a takeover of Lakme (both announced on Thursday), the fairy tale of a single corporate shelling out Rs 500 crore and a probably much higher ad expenditure will be real in 1998.
Twin images are flashing through the collective psyche of the ad industry as a consequence.
One has Levers the selfish giant striding air-time buying ground with unquestioned authority, imposing rates, decisions, time-apportionment at its own whim through buying agency, Fulcrum. The other more subscribed view has the consumer productsconglomerate operating through a large number of decentralised profit centres which take independent advertising decisions, never bringing to bear combined group might on the ad market, and bringing vital, market-making business to a funds-starved, billings-starved ad industry.
There are those who request anonymity in hushed whispers and complain that a frown out of place at the first unreasonable air-time deal will throw agencies out of business. The powerhouse can not only dictate its own terms, say the cynics, but also at times twist arms to dictate rivals' terms with this kind of size. Even if they can they will not, say others, like UTV boss and major air-time dealer with Levers Ronnie Screwvalla. Screwvalla says there are two points to be noted here.
"The Hindustan Lever brands are segregated into individual profit centres, with brand managers taking their own advertising decisions in accordance with his own budget," he said, "you hardly feel the combined bargaining power of the group that way." "Infact, Levers brings to the market some badly required stability, with regular buying and payment schedules, as well as ability to give good long-term commitments and budgets," he adds.
HLL's total ad spend (along with wholly-owned subsidiary Indexport) at the end of December 1997, is Rs 450 crore. Add to this the ad-spends of Pond's India and Lakme Lever at close to Rs 40 crore and Rs 16 crore (1996), and this takes the combined figure of advertising spend of the merged entity to a whopping Rs 500 crore.
HLL has almost always maintained its status as the highest spender in advertising, barring the year 1995-96 when ITC took the lead due to the massive expenditure on the World Cup tournament. After the merger of erstwhile Brook Bond Lipton India Ltd with HLL, the conglomerate's expenditure on advertising reached close to Rs 300 crore levels. With the investment requirements in advertising and marketing in a consumer-driven industry like FMCG being high, the Unilever group of company (HLL, BBLIL & Pond's)in 1995 centralised its media buying activities into a single agency, Fulcrum of Hindustan Thompson Associated (HTA). The group otherwise has three advertising agencies -- Ammirati Puris Lintas, Ogilvy & Mather and HTA. Informed sources said that Lakme's advertising agency handling its advertising account may come up for review in the new scheme of things. Lakme's account is being handled by Ogilvy & Mather.
In 1996, HLL's total ad spend was Rs 273 crore. During this period, the ad expenditure made by BBLIL (pre-merger) was over Rs 30 crore. Lakme's ad spend in 1996 was Rs 18 crore. With Levers taking control of the Lakme Lever, the adspend for the Lakme brands is expected to go up.
According to an HLL spokesperson, while the advertising expenditure of the company has been increasing steadily the percentage of adspend vis-a-vis the turnover has been decreasing due to a rapid rise in sales. While the advertising industry has shown a flat growth last year, HLL's ad expenditure during the period rose byover 60 per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
