Ad Track: McDonald's adds espresso as ads taunt Starbucks

ByABC News
December 14, 2008, 11:48 PM

— -- McDonald's is now serving espresso in Starbucks' home Seattle market and has billboards there with pointed messages, such as: "Four bucks is dumb." The point, of course, is that what folks pay for some espresso or latte drinks at Starbucks. A small McDonald's latte is about $1.99.

It's a "lighthearted" local promotion that reflects McDonald's "fun approach to our brand," McDonald's spokeswoman Danya Proud says.

But Starbucks isn't biting and it won't respond to the ads, spokeswoman Deb Trevino says. Yet, she does point out that some of the java giant's drinks are similarly priced to McDonald's.

For instance, a cup of brewed coffee costs about the same at Starbucks and McDonald's in the Seattle market.

"For us, the bottom line is not price," Trevino says. "Customers come to us for the experience."

P&G ad spending shrinks

Procter & Gamble, the biggest U.S. advertiser, has serious plans to cut global marketing costs in 2009. The sour economy and unstable media environment offer opportunities for companies to re-evaluate ad spending, P&G CEO A.G. Lafley said at an analyst conference last week. "Because we're the biggest advertiser in a lot of these countries," he says, "we just go in and tear up the contract."

P&G already did major slicing in 2008, according to new TNS Media Intelligence data. It spent $2.3 billion on media in the first nine months of the year, a 5.9% drop vs. a year ago.

Overall ad spending for January through September fell 1.7%, with auto, telecom and retail marketers all slashing outlays. For a look at advertising spending trends in the top 10 categories, see the above chart.

Pepsi glass is half-full

Pepsi-Cola's new marketing will play up optimism. Research found that target buyers so-called Millennials born 1980 to 1990 are "confident" about 2009, and 95% agree it's important "to maintain a positive outlook on life."

A redesigned logo on cans showing up in stores now looks like a smile. Ads from TBWA/Chiat/Day Los Angeles, which unseated BBDO New York as Pepsi's agency, may begin in January. Pepsi also will be a big player in February's Super Bowl, where it paid a premium to keep rival Coca-Cola ads out of the first half.