Colgate shifts 60 per cent of ad spend to digital as TV viewing falls

MUMBAI: Colgate is brushing up its media mix as the television habit fades. Colgate-Palmolive India is shifting the centre of its advertising strategy towards digital, with roughly 60 per cent of its media spend now going to digital as television viewership declines among consumers at both ends of the income pyramid.

The company said its overall advertising and promotion (A&P) spending has also climbed sharply, from around 12-13 per cent of sales historically to almost 16 per cent, as it steps up investment behind its brands, particularly its premium portfolio.

Speaking at the company’s Investor Day, managing director and CEO Prabha Narasimhan said Colgate was seeing a “steep drop off in TV viewership”. The change, she explained, is being driven by different media habits among consumers at the top and bottom of the income pyramid.

At the lower end, easier access to smartphones is pushing consumers towards digital platforms, while consumers at the top are increasingly moving away from advertising-supported media and towards non-advertised sources. As a result, both groups are increasingly being reached through digital.

The middle of the pyramid remains more television-friendly, however, keeping TV relevant for Colgate’s core brands.

“If I was going to give you some numbers, I think we’re about roughly 60% of our money now goes behind digital and the remaining behind television,” Narasimhan said.

The digital tilt is happening alongside a broader increase in brand investment. Colgate reported A&P expenditure of Rs 252 crore in the first quarter, up 34 per cent year on year, with reported A&P at 15.8 per cent.

A sizeable portion of that spending is being directed towards premium products. Narasimhan said the company’s premium portfolio carries an advertising-to-sales ratio of around 50-60 per cent, significantly higher than the size of the business itself. The company clarified that this figure refers to the A&P-to-sales ratio of the premium business and not to 50-60 per cent of Colgate’s total advertising budget.

The investment is being driven by the premium portfolio’s growth, which Colgate said is running at around six times the growth rate of its core brands. Premium products now contribute 2.5 times their earlier percentage contribution to overall toothpaste sales.

Management also pointed to what it described as a strong level of elasticity in the premium business, with higher advertising investment translating into incremental sales. That has encouraged Colgate to reinvest some of the savings generated through stronger margins and profitability into premiumisation.

The shift is also changing how the company builds campaigns. Instead of creating a single television commercial and running it for months, Colgate is taking one advertising idea and breaking it into multiple executions across influencers, key opinion leaders, social media and brand-led communication.

For Colgate Total, the communication is being built around sport, while Visible White is being connected with beauty arbiters and beauty occasions. The broader objective is to give brands a “hook in culture” rather than simply place advertising in front of audiences.

That does not mean television is being shown the door. Colgate continues to see TV as useful for reaching the middle of the consumer pyramid and for supporting its core brands.

The result is a more segmented media strategy: digital where consumers are spending more time or avoiding traditional advertising, and television where it continues to deliver meaningful reach.

For Colgate, the equation now goes beyond simply moving money from one medium to another. The company is using stronger profitability to fund premiumisation, digital-led communication and new consumer touchpoints, betting that increased brand investment can translate into faster growth.

As management put it, the current choice is to invest more, grow faster and accelerate the business, rather than simply hold on to the savings as margin.