Close-Up: Live Issue - Should Unilever boost its adspend?

Industry insiders say the UK's biggest advertiser must invest wisely to keep up.

It seems slightly implausible that Unilever should be under fire for neglecting its marketing spend. For years, it has backed its products with the kind of money that would make most companies blush.

With UK spend in excess of pounds 200 million, when you combine the spends of its component companies listed in Nielsen Media Research, Unilever is the UK's biggest advertiser. It remains one of the largest in the world.

And its huge portfolio of brands has been supported by advertising from some of the world's best agencies.

But a company's advertising history counts for very little if it fails to keep pace with its competitors. The past 12 months have seen fierce competition in the FMCG sector.

Michael Steib, a research analyst at Morgan Stanley, explains: 'Unilever has a strong level of profitability, having cut costs, but its competition, especially Procter & Gamble and, on the food side, Nestle and Kraft, have increased their marketing spend. As a result, Unilever has lost market share in its food and household divisions.'

The extent of Unilever's woes was revealed last week when the company revealed a 3 per cent fall in turnover and a 2 per cent slump in pre-tax profits for the third quarter of the year. Its underlying sales slipped 1.3 per cent, while the company's share price fell to its lowest level in four years.