FedEx to reduce marketing budgets by 25%

FedEx will to cut its marketing budget by more than 25% in 2009 as it struggles with the weakened US economy.

FedEx will to cut its marketing budget by more than 25% in 2009 as it struggles with the weakened US economy.

Mike Glenn, FedEx Executive Vice-President for market development revealed the cuts on the official company blog on December 29.

FedEx, a major sponsor for US sport such as the National Football League and Nascar, said the 25% cuts will come from its “non-contractual” marketing efforts, such as displays during live sporting events.

The company also disclosed that its television adspend has hit its lowest levels in over three years, announcing for the first time in several years it will not advertise in the upcoming Super Bowl.

Last year’s “carrier pigeons” spot, created by BBDO NY was one of most popular Super Bowl commercials.

Glenn said: “It’s important to note that a large part of all marketing expenses are tied to long-term contractual agreements that we have with our various sports properties.

“This means that we are committed to pay both the sponsorship fees and for advertising during broadcasts. However, we have significantly cut back on the non-contractual aspects of these properties like hosting events during games.”
Glenn said that FedEx gets a return on investment of USD 4 to every USD 1 spent on sports marketing, with some promotions generating up to USD 14 for every USD 1.

Last month, FedEx CEO Fred Smith took a voluntary 20% salary reduction, while other senior executives had their salaries reduced 7.5 to 10%.

Other employees were hit with 5% salary reductions as the company aims to reduce USD 1.6bn (£1.1bn) in spending over the next two years.

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