Monday, February 04, 2008

What Can You Buy for a Billion Dollars?

2007 was a landmark year for Kellogg’s global advertising: Their total dollars spent on ad outlays for the first time in history hit the billion-dollar mark. Kraft, not one to skimp, also spent a little more than $1 billion in advertising, up $10 million from the year before.

One billion dollars. What can that buy you? A lot. And, apparently, a lot of advertising.

What it certainly doesn't buy us consumers is cheaper prices.

In that same Brandweek article about the ballooning ad budgets, we learn that both Kraft and Kellogg are increasing their prices. A connection?

Well, not according to the article, which blames those higher prices on the company's "effort to offset rising materials costs."

Maybe I'm missing something here.
Kellogg's advertising outlays are 12 percent of their overall budget; for Kraft it's closer to 7 percent. Don't you think that these companies are spending a good chunk of their resources--and billions of dollars--in advertising might make boxes of our morning cereal a little more expensive?