Will GE Increase Ad Spend with This New Agency?
Ad spending is up among some competitors of General Electric (NYSE:GE). According to Kantar Media, Whirlpool (NYSE:WHR) increased its ad spending some $22 million (over 2,000 percent) through May 2013, compared to the same period last year. The appliance business is recovering enough that Electrolux (ELUXY.PK) also increased its spending to $6 million from $1 million in early 2102, according to Advertising Age. After the announcement that GE is changing advertising agencies, a similar increase could lie ahead.
Advertising Age reported that GE is going with MEC to handle media buying and search strategy on the international front. MEC will take over this segment of GE’s global media campaign, as Omnicom Group’s (NYSE:OMC) OMD will continue to handle the GE account in the United States, according to the report.
More consumer spending in kitchen appliances has led rivals like Whirlpool to spend so much more on advertising in 2013 that GE is likely planning to follow suit. While Whirlpool has nearly double the market share of GE in appliances, the company’s ad spending is more than triple that of General Electric for its appliance line. GE has spent huge sums on its revamp of GE appliances.
According to Advertising Age, GE’s $1 billion overhaul in the appliance division will be accompanied by a new ad campaign starting Monday, August 5. “Reimagining Home” is the theme of the new campaign targeted for U.S. audiences, and is the work of BBDO, the company related to OMD.
Kantar Media figures showed GE’s marketing budget in the U.S. jumped to $193 million in 2012, nearly a 50 percent increase following $130 million the company spent in 2011. Switching the handling of media buying to MEC is seen as a blow to Omnicom, which recently merged with Starcom.
GE is still riding the positive news from its earnings report, and has risen over 8 percent in the past 30 days (nearly 18 percent for 2013). Milissa Hudepohl of Schaeffer’s noted recent bullish activity on GE options in a roundup of trading, while remarking that 7 out of 11 analysts had a buy rating for GE. Of the remaining hour, all had a hold rating in place.
The last significant movement of GE stock was buoyed by the attractive margins the company showed it was earning in its global business. GE’s revenues have been lower following the company’s movements to cut down on the size of GE Capital, and so far the plan has worked when reviewing the profits in different aspects of its business.
Attractive margins also reflect wise spending in different areas of the business. As Advertising Age noted, GE’s sending on media and ads is rather low when taking into account the scope of its business ($147 billion in annual revenue). Whether it’s just a different strategy or an increase in its budget, GE will be taking a different course in its overseas media.