Lots of ad industry data and jargon here, but one big takeaway - the top 200
advertisers spent 68.5% of their ad money on linear TV advertising (broadcast
network, cable TV network, spot, syndicated). Internet display had 7.2%.
Not sure how they count ads in services like Hulu.
Regards
Craig
http://adage.com/article/advertising/big-spenders-facts-stats-top-200-u-s-advertisers/299270/
Big Spenders on a Budget: What the Top 200 U.S. Advertisers Are Doing to Spend
Smarter
U.S. ad spending for the 200 Leading National Advertisers rose a slim 2.0% in
2014, but the story is not that marketers are pulling back. They are spending
smarter.
Ad Age's annual LNA report provides more evidence of how blue-chip marketers
are getting more bang for their billions of bucks by doubling down on digital
and taking unnecessary costs out of marketing.
While total U.S. ad spending for the top 200 advertisers reached a record
$137.8 billion in 2014, the growth rate was the lowest since the ad-market
recovery took hold in 2010, according to the report.
The full LNA report, including rankings and a database of the top 200
advertisers, is now available online to Ad Age Datacenter subscribers. A
summary of the report will appear in Ad Age's July 13 print edition.
Procter & Gamble Co., the nation's and world's largest advertiser, is among
those making the pitch to Wall Street that digital is more efficient.
"We're shifting more advertising to digital media, search, social, video and
mobile as consumers spend more time there," P&G Chief Financial Officer Jon
Moeller said at a June investor conference. "In general, digital media delivers
a higher return on investment than TV or print."
The nation's 200 biggest advertisers last year reduced measured-media spending
by 1.8%, with cuts in every major medium except broadcast network TV and cable
TV networks.
Among the 200 LNA, the measured medium showing the sharpest decline may be a
surprise: The top 200's spending on internet display advertising last year
tumbled 13.3%.
The 200 LNA boosted spending on other forms of marketing by 6.5% in 2014. Ad
Age refers to spending on other forms of marketing as unmeasured spending, a
bucket meant to capture the difference between measured-media spending figures
and a company's total U.S. advertising and promotion outlays.
The measured-media drop and unmeasured-spending gain add up to a 2.0% increase
in 2014 total spending for the 200 LNA.
Unmeasured spending continues to take a bigger slice of marketing budgets,
capturing 47.8% of the 200 LNA's ad and promotion spending last year. That's up
from 45.8% in 2013.
The 200 LNA accounted for more than half (50.9%) of U.S. measured-media ad
spending in 2014.
If you're in the TV business, the 200 LNA is your hot list: This blue-chip
roster in 2014 accounted for 79.9% of broadcast network TV advertising and
64.6% of cable TV network advertising.
The top 200 are under-represented in other (non-TV) measured media, making up
well below 50% of spending. For example, the 200 LNA accounted for 41.9% of
measured spending in magazines, 40.6% of internet display spending and 25.3% of
newspaper spending.
Here's another way to consider this. Look at the accompanying pie and click on
the "200 Leading National Advertisers" slice. TV (broadcast network, cable TV
network, spot, syndicated) grabbed 68.5% of the pie; internet display had a
7.2% slice; print media, radio and outdoor divvied up the remaining quarter
(24.3%).
Then go back to the main pie chart and look at the pie's "All other
advertisers" slice, the universe of advertisers outside the 200 LNA. TV
consumed 41.7% of the pie; internet display had an 11.0% slice; print media,
radio and outdoor accounted for nearly half (47.3%) of the pie.
When it comes to measured media, the 200 LNA are going in a different direction
than smaller advertisers. U.S. measured-media spending for the universe of all
advertisers edged up 0.7% to $141.2 billion in 2014, according to Kantar Media.
Advertisers outside the 200 LNA boosted measured spending by 3.5% even as the
top 200 trimmed measured spending by 1.8%.
Ad Age's 60th annual LNA report ranks and analyzes spending of the top 200 U.S.
advertisers, up from previous reports that focused on the 100 LNA.
Among the 200 LNA, 119 marketers boosted U.S. ad spending in 2014 while 79
decreased spending. Ad spending was flat at two marketers.
There were 38 marketers with 2014 U.S. ad spending above $1 billion.
Average (mean) U.S. ad spending last year for the 200 companies: $689 million.
In terms of scale, the average was $1.1 billion for the top 100 and $279
million for Nos. 101-200.
There is a huge delta between No. 1 P&G (estimated total 2014 U.S. spending:
$4.6 billion) and No. 200 Liberty TripAdvisor Holdings ($180 million). The top
100 accounted for 40.9% of U.S. measured-media spending in 2014; Nos. 101-200
made up 10.1% of spending.
Top 10 Spenders
Biggest U.S. advertisers in 2014.
Source: Ad Age Datacenter estimates of total U.S. ad spending consisting of
measured media (traditional media and internet display ads, from WPP's Kantar
Media) plus unmeasured spending (Ad Age's estimate of spending in disciplines
including other forms of digital media (paid search, online video, mobile,
unmeasured forms of social media); promotion; experiential marketing; and
direct marketing).
The top 100 increased their total U.S. ad spending by 2.2% vs. a 1.4% gain for
Nos. 101-200, according to Ad Age's estimates. Total U.S. spending for the 200
LNA increased 2.0%.
The report offers evidence of how major marketers are tightening budgets, with
a pullback in measured media. By contrast, the 100 LNA in 2013 increased
spending 4.4%, including a 3.2% boost in measured media.
Total spending last year for the 200 LNA rose in 12 of the 15 largest marketer
categories. The biggest gains were in travel (up 14.5%), apparel (9.8%),
entertainment/media (5.2%) and pharmaceuticals (5.0%). Spending fell in food
(down 4.1%), technology (-3.5%) and personal care (-2.2%).
Total spending last year for the top 100 rose in 11 of the 15 biggest
categories. Spending fell for food, technology and personal-care marketers and
restaurants.
That mixed picture in 2014 contrasted to 2013, when total spending for the 100
LNA rose in every major industry.
Major marketers are intent on spending smarter, putting budgets under intense
scrutiny.
First, companies are reallocating marketing budgets toward digital, with a
strong consensus among top marketers that digital is more efficient.
Brian Goldner, president-CEO of toymaker Hasbro, told analysts on an April
earnings call: "We're employing every one of the digital strategies that are
available to us. That does add a level of efficiency and effectiveness to our
messaging."
Digital is "exponential in terms of advertising," Franck Moison, chief
operating officer, emerging markets and business development at
Colgate-Palmolive Co., said at a June investor conference. "We went from 2.5%
of our advertising budget in 2006 (to) 13% in 2014, and we are growing very
quickly towards 25%. … It depends largely country-by-country, but the trend is
there."
Second, companies are looking for ways to cut non-media marketing costs --
agency fees (consolidating rosters and pushing for lower fees), production
costs (seeking efficiencies by producing ads that can be shared across
geographic regions) and marketing overhead.
Mr. Moeller, P&G's financial chief, this spring revealed a plan to cut agency
spending by up to $500 million.
"One non-media cost area that offers significant opportunity is agency
spending, which includes fees and production costs for agencies we use for
advertising, media, public relations, package design and development of
in-store materials," he said on the company's April earnings call. "We plan to
significantly simplify and reduce the number of agency relationships and the
costs associated with the current complexity and inefficiency while upgrading
agency capability to improve creative quality and communication effectiveness.
We see an opportunity for up to half a billion dollars in cost savings in this
area."
Personal-care and pharmaceutical marketer Johnson & Johnson discussed its
marketing makeover at a June investor conference. "We've reinvented the whole
way we think about marketing and how marketing happens at J&J…," said Sandra
Peterson, group worldwide chairman. "We now have 12 brands that we manage
globally, and we have eight brands that we manage regionally. … And that means
that we get a massive amount of better consumer insight and efficiencies and
better reach and frequency in how we market our products to all of our
consumers around the globe.
"We also have shifted already to about 30% digital, which drives improved
efficiencies. ... [With] every marketing dollar, you actually know the ROI in a
better way," Ms. Peterson said.
"And then last but not least, we also completely changed the way in which we
work with advertising agencies," she said. "So we created a new model to work
with agencies that also drives efficiencies, not only in our media buying but
also in our creative. So all of those things are driving improved
profitability."
In what should be an unnerving point for old-line media, some marketers are
finding that their fastest-growing brands need less -- or no -- traditional
media advertising. That's the case at beauty-products marketers L'Oréal and
Estée Lauder Cos.
Fastest-Growing Ad Spenders
Highest ad-spending growth rates in 2014 among 200 Leading National Advertisers.
Source: Ad Age Datacenter estimates of total U.S. ad spending consisting of
measured media plus unmeasured spending.
*The Japanese pharma marketer's U.S. advertising rocketed on ad spending for
Latuda, a prescription-drug treatment for bipolar depression and schizophrenia.
L'Oréal Chairman-CEO Jean-Paul Agon said on his February earnings call: "The
brands that grew the most in 2014 were also very low
[advertising-and-promotion] intensive like Urban Decay, like Kiehl's, etc. ...
NYX" -- a cosmetics brand acquired in 2014 -- "has no media. Kiehl's has no
media. Urban Decay has no media. Many of these brands have no media."
At Estée Lauder, "the fastest-growing brands such as M.A.C .or Jo Malone or La
Mer or Bobbi Brown are not advertised the traditional way," President-CEO
Fabrizio Freda said on the company's May earnings call. "They are advertised
more in digital. And most importantly, a lot of what we consider their
marketing is in their freestanding stores and is in areas where the cost is
somewhere else...not on the advertising line."
Tracey Travis, Estée Lauder's exec VP-chief financial officer, noted at a June
investor conference: "This year, our marketing investment will be flat spending
in dollars as many of our fastest-growing brands do not require as much
traditional advertising, and digital is becoming a larger share of our media
mix."
Ms. Travis added: "As we get smarter about resource allocation with some of the
advanced analytics that we now have and [shift] some of our television, and in
some cases promotional expense, to more digital expense, that's generating a
pretty nice return."
