NEW YORK (AdAge.com) -- If you want to follow the money in advertising, get a passport.
The Top 100 global advertisers spent 62% of their measured-media budgets outside the U.S. last year, according to Ad Age's Global Marketers study, which covers more than 90 countries, territories and regions from Algeria to Zambia. Eleven of the 44 U.S.-based companies among the Global 100 rely so heavily on international sales that they do more than half their ad spending abroad.
Coca-Cola Co. allocates just 16.5% of its $2.67 billion measured-media spending to the U.S. market but spends nearly three times as much in Europe. Three-quarters of Coca-Cola's sales come from outside the U.S.
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Procter & Gamble Co., the world's biggest advertiser since overtaking Unilever in 2002, devotes 65% of its $9.73 billion measured-media spending to international markets, slightly ahead of the 61% of P&G revenue that comes from outside the U.S. P&G is the biggest advertiser in all regions except Latin America and Africa, where Unilever reigns.
The biggest marketers are investing ad dollars wherever they can find revenue or potential for growth in a tough global economy—and increasingly, that's China. And some 39 of the Global 100 had measured-media spending in China last year. Five of them already invest more than 10% of their budgets there—Yum Brands, Pernod Ricard, Avon Products, Colgate-Palmolive Co. and P&G. For fast-food seller Yum Brands, China represents 20% of the company's worldwide measured spending of $1.41 billion. The parent of KFC and Pizza Hut generated 31% of 2008 revenue from its China division, where sales surged 36%.
P&G, China's biggest advertiser at about $1.1 billion, accounts for more than one in four dollars—27%—of the Global 100's China measured-media spending. Overall, China represents 3.4% of total ad spending for the Global 100, slightly below ZenithOptimedia's estimate that China accounted for 4.1% of 2008 worldwide ad spending.
Ad Age's 23rd annual Global Marketers study is accessible as a new database at AdAge.com/globalmarketers09. The database includes top spenders in each country as well as a link to Ad Age's annual Agency Dots compilation, a detailed analysis of agency network assignments of global marketers.
The Global 100 last year spent slightly more in Europe—$46.3 billion or 39% of their total measured-media budgets—than in the U.S., at $44.4 billion, or 38%. The Global 100's U.S. portion was somewhat above the estimated U.S. share of overall worldwide ad spending. ZenithOptimedia, part of Publicis Groupe, estimates the U.S. in 2008 accounted for 35% of worldwide media spending.
The U.S. is by far the most alluring market for some European and Japanese marketers. Six of the 56 non-U.S. companies in the Global 100 ranking spent more than half their measured-media budgets in the U.S. Four of the six are European pharmaceutical makers, which invest heavily in direct-to-consumer prescription drug advertising that is allowed in the U.S. but largely banned in Europe. Sanofi-Aventis, marketer of sleep aid Ambien, devotes 65% of worldwide measured-media spending to the U.S.
For the same reason, U.S. pharmaceutical companies concentrate the bulk of their own ad spending in the U.S. Eli Lilly & Co., Merck & Co. and Abbott Laboratories all spend more than 85% of their media budgets in the U.S.
For the Global 100 group, total measured ad spending rose 3.1% to $117.9 billion in 2008, despite a 3.7% drop in the Global 100's U.S. spending.
That worldwide growth may be somewhat overstated because of exchange rate fluctuations that increased measured spending outside the U.S. due to the falling dollar, as well as improved data collection this year that included additional countries and more comprehensive lists of top spenders in some markets.
But the real issue is 2009, the first full year after the global economy fell off a cliff. For 2009, ZenithOptimedia forecasts a staggering 9.9% drop in worldwide ad spending, said Jonathan Barnard, ZenithOptimedia's head of publications.
ZenithOptimedia expects 2009 United States spending to plummet 12.9%; Western Europe by 11.2%; and Central and Eastern Europe by 20.9%. Asia will be down a relatively modest 3.1%. Only Latin America is forecast to eke out growth of 0.6%. ZenithOptimedia said spending in Africa/the Middle East/rest of world will fall 11.4%.
For 2010, ZenithOptimedia in October cut its forecast for world ad spending growth to an anemic 0.5% from a more optimistic July prediction of 1.6%. The media agency sees a clear division: Developed markets (North America, Western Europe, Japan) will see 2010 spending fall by an estimated 2.9% while developing markets will grow by 7.8%.
The crucial question is when global ad spending will return to the 5% or 6% growth rate that Mr. Barnard said is considered normal. Maybe, he said, in 2012.