The supermarket wars have pushed two of Australia’s big advertisers in different directions, with No. 1 supermarket Woolworths revving up its spending while Coles winds its down.
Woolworths is estimated to have spent $18.8 million on traditional advertising from January to March this year. This was an 8 per cent increase on its $17.4 million supermarket spending in the first three months of last year.
By contrast, Coles is estimated to have slashed its ad spend to $13.7 million from January to March. This is down 17 per cent from $16.5 million in the same period last year.
The Nielsen advertising expenditure estimates cover the bulk of the supermarkets’ ad spend, across television, radio, print, outdoor, cinema and some online. It doesn’t cover advertising booked through exchanges, specialist press and social media.
Credit Suisse analyst Grant Saligari said Woolworths had “increased advertising frequency [on TV] and has been running more promotions in the third quarter [from January 5] than in prior periods.”
Woolworths and Coles declined to comment.
Coles’s long-running “Down, Down” campaign, featuring rockers Status Quo, has been widely described as successful but annoying. Woolworths responded last year with a less lauded campaign featuring a “Cheap, Cheap” slogan, animated birds and singer Samantha Jade. Its ‘BrandZAC’ campaign for Anzac Day last month was widely panned.
Sources have suggested Coles’s lower ad figures this year could be because it was working out its response to Woolworths’ campaign, or because its existing campaign was successful.
Ben Willee of Spinach Advertising said: “Just because you spend more doesn’t necessarily mean your campaign is more effective. The hardest part is getting your creative right.”
Woolworths – owner of major retailers including alcohol business Dan Murphy’s and discount department store Big W – and Wesfarmers – owner of Coles and hardware chain Bunnings – are two of Australia’s biggest advertisers.
Responding to disappointing grocery sales and an improving Coles, Woolworths in February said it would spend at least $500 million on cutting its prices and improving its stores.
Coles this week reported a marginal increase in market share in the third quarter and tipped independent and specialty retailers would continue to lose market share at the hands of foreign supermarkets Aldi and Costco. Coles has about 25 per cent of the Australian food market, Wesfarmers said.
Excluding new store openings, Coles food and liquor sales grew by 3.8 per cent in the three months to March 31. Including new stores, Coles food and liquor grew by 5.4 per cent, to $7.1 billion.
Woolworths is set to hold a strategy briefing day and store visits next week, and is tipped to post third-quarter sales growth of about 0.9 per cent.
