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2004 AD AGE GLOBAL MARKETING REPORT

How Top Marketers Spent $83 Billion in 80 Countries

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CHICAGO (AdAge.com) -- Despite the slow economic growth worldwide, higher ad rates per country and a precipitous decline in the U.S. dollar combined to boost media spending by the Top 100 global marketers in 2003 by 11.6% -- a dramatic


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jump over the 7.1% growth in 2002 and a 2.6% decline in 2001 for these mega-marketers.

From P&G to Hasbro
Procter & Gamble Co., top spender at $5.76 billion in measured media, up 29%, and No. 2 Unilever, at $3.54 billion, up 13.3%, led the pack that stretched to No. 100 Hasbro at $199 million. Collectively, the Top 100 backed media with $82.83 billion vs. $74.25 billion in the prior year, according to Advertising Age's 18th annual Global Marketing report.

The Top 100 were determined by the collation of parent totals from media lists in 80 countries obtained from ad monitoring services. Typically, advertising in each country list was by gross ad rates without discounts for frequency or commissions paid to agency/media specialist. In determining parent totals, Ad Age discounted spending to reflect estimated negotiated rates per country.

Returns from the U.S. continued to dominate the list, accounting for $40.36 billion vs. $37.31 billion in 2002, for a global share of 48.7% vs. 50.2% in 2002. The decline in the U.S. share is attributed to the weak dollar, which elevated totals elsewhere. Spending in Europe by the Top 100 grew 12.9% to $26.04 billion -- better growth in dollars than in the U.S. but sluggish nonetheless given that ad growth in Europe didn't top the euro's 20.1% advance against the dollar.

The Asia and Pacific region grew 13.8% to $11.22 billion, or 13.5% of the total vs. 13.3% in 2002. This growth exceeded the 7.8% growth of the region's dominant currency, the Japanese yen, against the dollar, but not by much. Media spending in Japan actually declined for the third consecutive year in 2003. Dentsu, the region's largest advertiser, attributed Japan's 2003 ad decline to the war in Iraq, the outbreak of SARS, concerns over the stability of Japan's financial system and a comparison to 2002 ad dollars packed with FIFA World Cup soccer largess.

China fuels the region
Asia and Pacific's emerging Chinese economy largely drove up that region's total. Gross ad spending for China was up 64% in 2003, giving credence to the recent statement by Omnicom Group's CEO John Wren regarding Omnicom's third-quarter 2004 results: "The only region that's a keen interest to me is Asia -- China," he said. "It's business as usual other than that."

The U.S. is sole base of operations for 47 of the Top 100 marketers, with 11 headquartered in New York. Japan was second with 16 marketers on the list, nine centered in Toyko. France had eight, all based in Paris, and Germany claimed 10.

The personal-care category among the Top 100 abetted the group's double-digit growth. The category grew to $15.29 billion in media, up 22.8%, accounting for almost one-fifth of total media spending. Telecommunications, retail and financial also grew 20%-plus, although volume levels were much smaller than for personal care. Autos drew the most dollars -- $20.93 billion -- but not the growth, only 8.8%.

P&G's 16 global brands
Among its brand powerhouse, P&G markets 16 global brands, each generating $1 billion or more in sales. P&G added Wella, Head & Shoulders and Actonel osteoporosis drug to its billion-dollar list in its fiscal 2004. The 16, led by Pampers, claimed $30 billion of P&G's $51.4 billion in 2004 worldwide sales. Unilever pulled 1 billion euro or more from each of 12 global megabrands led by Dove, which grew 21% in sales as Unilever advanced 6.2% to $48.73 billion in worldwide sales.

Growth in worldwide spending this year is likely to be relatively flat because of the continued decline in the dollar and slow recovery in Europe. "If industry growth rates are 3% to 4% this year, then they are likely to be 2% to 3% next year," Martin Sorrell, group chief executive at WPP Group, noted in WPP financial documents. His projections took into account that 2005 would be void of the heavy ad stimuli accompanying this year's U.S. presidential election, the Olympic Games and European Championship football.

520 ad accounts
In a companion study showing global brand assignments by country for the world's 22 multinational agency networks, these networks report 520 accounts, representing 9,894 assignments. Ad Age's "global" criteria requires that an account be held in at least five countries (each being an assignment) outside the U.S.

These 520 accounts represent 285 parent companies, basically the scope of global marketing given the fact multinational networks in the study dominate the global ad business. In Ad Age's Agency Report, these networks accounted for about 65% of global media/advertising revenue.

Unilever's 26 accounts with 660 assignments -- largest among marketers -- were spread across Ogilvy & Mather Worldwide, Bartle Bogle Hegarty, Lowe & Partners Worldwide, McCann Erickson Worldwide, J. Walter Thompson Co., Grey Worldwide, DDB Worldwide and Red Cell.

The multinational networks basically are servicing the same number of global account as last year, although the mix is slightly different. Only seven networks currently hold fewer accounts than this time a year ago.

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