Propelled by the mounting financial crisis, the Strauss Group has decided to shift its advertising drives away from television, to the Internet and printed press. It's the first time in years that the food company has changed its "media mix."
"People change their priorities during hard economic times," explains chief executive Erez Vigodman, who joined Strauss when the company bought Elite Industries in 1997. As the year 2008 rolls to a close, he says, the company's management revisited all the marketing programs in Israel and abroad, with the idea of getting the most bang for each shekel.
The outcome was that management decided to invest less in television advertising and more in online and printed campaigns, Vigodman says. Their return for the investment seems to be better.
It's a hard blow to the television broadcast companies. The dairy company has been one of their most prolific cash cows. In 1997 Strauss placed 96% of its advertising budget - $24.5 million out of $25.5 million - in television ads, and in 2008 it still routed 95% of its advertising investment to television.
Vigodman said he was surprised by what he learned from the ongoing court case involving the liquidation of the United media purchasing company, which bought airtime for Strauss. The secret numbers of how much money went where were revealed in court: "I think it would be irresponsible for us not to study deeply the significance of what came out of the case. The numbers surprised us," he added.
He also said that under the present circumstances, it was his "responsibility and job to examine every agreement and expense," when asked whether Strauss would ask to renegotiate its existing media contracts.
The television stations on their part were shocked by Vigodman's statements, which they learned of only from newspapers. However, one senior television executive said he did not believe Strauss would really cut its TV budget, but these were just part of the company's negotiating strategy with the stations. Another senior executive from a different television franchise added that a large food company such as Strauss could not afford to do without massive television advertising.
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