Frugality ads

Companies are taking their cues from consumers' recession-induced 'back to basics' sensibility and moving their ad dollars from gourmet or frivolous items to pantry staples and traditionally ho-hum household goods. Sales for Hormel Corp.'s Spam and Dinty

NEW YORK — The frill is gone.

Companies are moving their advertising dollars from gourmet or frivolous items to pantry staples and traditionally ho-hum household goods. Hamburger Helper, Kool-Aid drink mix and golden oldie butter are ad stars these days.

The new advertising is aimed not only at cashing in on the new frugality of recession-wary consumers but also fending off a flight to cheaper store brands. It also can maintain their share of a shrinking consumer-spending pie.

In some cases, the ads are paying off with higher sales.

"In this 'Great Recession,' economy, companies are not simply changing the messages they place in their ads, they are doing something much more substantial," said Marc Fleishhacker, senior partner and managing director of Ogilvy Consulting's North America practice. "They are fundamentally changing the products they promote."

Land O'Lakes Inc., the maker of deli cheese, eggs and butter, launched its first TV campaign for its basic butter product in 10 years. Hormel Foods Corp., which increased its spending on ads for Spam last year, began its first national ad campaign for Dinty Moore stew last fall. Sales for Spam and Dinty Moore stew rose by double-digit percentage increases in the quarter that ended Jan. 25.

Home Depot, the nation's largest home improvement retailer, is pushing items like potting soil and hand tools under a new tag line: "More saving. More doing." Last spring, in contrast, Home Depot focused on how to create dream kitchens.

Many ads now also have a soothing feel to allay consumer anxiety. Allstate Insurance Co.'s "Back to Basics" commercial looks back to the Great Depression and other tough periods when people learned to enjoy small things like a home-cooked meal. A General Motors Corp. ad, which has a patriotic theme, promises to make payments if customers lose their jobs.

Shoppers who have noticed the new ads applaud marketers for understanding their changed psyche.

"I like the messages out there. It's less focused on consumerism and buying the best," said Andrea Beck, a 39-year-old stay-at-home mother of two from South Orange, N.J., who has slashed her spending on food and lawn care.

The shift to highlight more everyday products follows more than a decade of companies pushing $30,000 kitchen renovations, $15 per pound cheeses and flashy jewelry as rising home values and growing stock portfolios made consumers feel flush.

No more. The recession has brought on an abrupt change in shoppers' mindsets. Home prices have fallen 29 percent from their summer 2006 peak, according to Standard & Poor's. Major stock indexes are off more than 40 percent from their October 2007 levels. Unemployment hit 8.5 percent last month, the highest rate in a quarter-century, and is expected to reach 10 percent by the end of the year.

That's translated to a spending malaise, even trickling into food purchases. Consumer spending not adjusted for inflation grew at the slowest rate since 1961 last year and is expected to remain sluggish for the rest of the year. In the fourth quarter of 2008, spending on food and nonalcoholic beverages fell 3.2 percent, according to Scott Hoyt, senior director of consumer economics at Moody's

In the last big recession, in the early 1980s, consumer product companies simply shrunk their ad budgets, said John Greening, a 28-year advertising industry veteran and now an associate professor at Northwestern University's Medill School of Journalism.

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But they can't afford to do that this time, as shoppers are shifting to lower-priced store brands, spending more at discounters, scraping the last dollop of face cream and buying more cheap canned goods and pasta.

Sales of store-label consumer products rose 9.1 percent to $84.8 billion in the 52 weeks that ended March 21, while the sale of brand-name goods gained just 1.7 percent to $421 billion, according to data from Nielsen Co.

"People are willing to settle for value-oriented products," Greening said. "It doesn't have to be the best; it just has to be the best for the value of the money."

Sharlene Guerrier, for instance, is buying more store-brand cereal and household products like toilet paper. She's drinking water instead of soda as she worries about mounting bills and her job as a babysitter.

"If they get laid off, I get laid off," said the 39-year-old mother of a 10-year-old boy from Newark, N.J.

Marketers are focusing on "needs as opposed to wants," said Fleishhacker, who heads up the company's new recession marketing practice. He noted that companies are making strategic choices about where to spend their ad dollars in an effort to "increase market share even as the size of the overall market contracts."

Several companies declined to specify the products they've shifted ad money away from as they focus on the basics, but the changing buying habits of consumers are clearly affecting their decisions.

For instance, Unilever U.S. is investing more money marketing its less-expensive Suave shampoo, but is also increasing ad spending on higher-end Bertolli frozen meals as it pursues shoppers who want to eat at home, said Lisa Klauser, vice president of consumer and customer solutions.