Dr Pepper Snapple Bucking Trend, Ups Advertising

Dr Pepper Snapple Group Inc. is risking a different approach to the recession than other major advertisers: the soft drink maker is boosting its marketing budget, saying that's what worked best in the last big downturn.

Spending this year will rise by up to 5 percent, the company's head of marketing, Jim Trebilcock, said in an interview. The company says its total marketing budget is about $300 million to $400 million.

The decision to spend more makes Dr Pepper Snapple an exception in a year when forecasters see overall U.S. advertising spending dropping by 8 to 10 percent.

Company executives said they decided on the strategy after research firm Nielsen produced a study for them that detailed ad spending patterns during the early 1980s, the last prolonged advertising downturn.

The upshot is "dollars this year from a marketing standpoint are actually increasing," he said. "We believe that if we invest now, then when we come out of this thing in a year or two we'll be in a much stronger position."

This year, Dr Pepper Snapple will divide its creative advertising duties chiefly among three agencies. Interpublic Group's Deutsch L.A. will handle Dr Pepper, Diet Dr Pepper and Snapple; WPP Group's Y&R San Francisco is responsible for 7UP, Sunkist and A&W; and Laird & Partners will work on the Mott's brand.

As part of the marketing push, Dr Pepper Snapple is running new advertising for A&W, Canada Dry and Mott's -- brands that were long excluded from fresh ad campaigns.

In addition, Dr Pepper Snapple, the third-largest soft-drink maker in the United States behind Coca-Cola Co and PepsiCo Inc., is investing more in the ongoing make-over of its Snapple brand.

Following its spinoff from Cadbury Plc nearly a year ago, Dr Pepper Snapple has set its sights on reversing slumping sales of Snapple.

As for the marketing mix, Trebilcock said it varies by brand but generally about 70 percent of ad spending occurs on TV, Radio, and billboards, with another 20 percent spent online and the remaining 10 percent used for a variety of other promotions.

(Source: Reuters, 04/16/09)

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