43RD ANNUAL: GM KNOCKS P&G FROM TOP SPOT; ENDS PACKAGE-GOODS GIANT'S CONSECUTIVE STREAK AT 7: LEADERS SWELL SPENDING BY 8.6%, TO $58 BILLION

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General motors corp. didn't leave a media card unplayed last year in unseating perennial leader Procter & Gamble Co. as the nation's top advertiser, according to Advertising Age's 43rd annual report on the 100 Leading National Advertisers.

GM's U.S. advertising hit $3.09 billion, up 29.9%, to P&G's $2.74 billion, up 6.3%, as the automaker became the first advertiser to crack $3 billion in annual ad spending.

GM's strength was media spending, accounting for nearly 73% of its total. It was the nation's top spender in magazines and network TV, and placed in the top 10 in seven other media. GM had nine new-vehicle introductions that drew first-time media dollars of nearly $400 million.

P&G's media expenditure was 62% of its ad outlays.

Apart from media, advertisers funneled huge sums into marketing specialties such as promotion, direct mail, co-op, couponing, catalogs, special events, etc., termed unmeasured in this report.

GM LAST TOPPED 100 IN '62

Not since 1962 has General Motors occupied the driver's seat on the Ad Age ranking. P&G virtually owned the spot in succeeding years, only giving way to Philip Morris Cos. in 1986-89.

When P&G bettered GM in '63, it did so by spending $200 million to GM's $160 million. Now, there are 11 companies with total advertising exceeding $1 billion. Entry to this year's list was $199.7 million.

A healthy economy, government fiat and new technologies stimulated ad growth an aggregate 8.6%, to $58 billion, for the top 100 in 1997. Some $33.4 billion of that was in media, up 9.9%. Unmeasured hit $24.6 billion, up 6.8%.

Also charted in this report are the second 100, a group that amassed $13.2 billion in advertising, $7.94 billion (up 10%) of that in media (see Page S-8).

MEDIA SURGE IN '98

Media continue to press forward: By midyear '98, media outlays for all advertisers hit $38.1 billion, up 9.7% over first-half '97. Dollars in '98 are shifting into network and spot TV, up 10.5% and 9.3%, respectively, as most other media are showing smaller increases than a year ago. These 200 are the reason for TV's ascendancy; annually, they claim nearly 70% of all spending in network and spot, which together account for a quarter of media expenditures by all advertisers.

MOVEMENT VIA M&A

Mergers and acquisitions -- a product of economic stability -- gave ad volumes an extra boost by swelling the acquirers' ad budgets with spending attached to merged companies and/or product lines.

In the 100, No. 8 PepsiCo purchased Tropicana Products from No. 61 Seagram Co., which bought Polygram from No. 74 Philips Electronics. Tropicana carried a media budget of $42.1 million. Polygram media hit $18.3 million.

No. 9 Diageo, formerly Grand Metropolitan, bought Guinness, and No. 31 Bell Atlantic Corp. bought Nynex. No. 35 MCI WorldCom represents the union this month of MCI Communications Corp. and WorldCom.

Never static, the list is changing with the merging this month of No. 140 Daimler-Benz and No. 4 Chrysler Corp. to form DaimlerChrysler; No. 19 AT&T Corp.'s acquisition of Tele-Communications Inc.; Bell Atlantic's buyout of No. 109 GTE Corp.; and No. 80 SBC Communications' expected purchase of No. 134 Ameritech Corp.

GOVERNMENT FIAT

The 11 pharmaceutical companies in the top 100 pushed huge ad sums into TV when the Food & Drug Administration last August eased restrictions on advertising their Rx brands on TV.

This so-called direct-to-consumer Rx spending has risen 33% to about $480 million in the first five months of this year, according to CMR, with TV's share quadrupling the amount spent on the medium in the corresponding period (see story, Page S-25).

The wireless units of Sprint Corp. and several Baby Bells are benefiting from the government's setting aside a frequency band for Personal Communications Service. This, along with growth in the more traditional cellular market, has encouraged a host of new phone makers and service providers. Media couldn't be more delighted, receiving $578 million in advertising, up 58%, from the top cellular phone services and cell phone makers (see

story, Page S-19) in '97.

TECHNO-EFFICACY

Cellular expansion has produced a noisy marketplace that has complicated the consumer's selection process; far less complicated is the toothpaste market.

No. 63 Colgate-Palmolive's new Colgate Total proved so adept at fighting gingivitis among other clinical claims that it drew an endorsement from the American Dental Association, wrested market lead by midyear '98 from P&G's Crest and gave currency to efficacy benefits in a category that had come to be dominated by claims of whiteness and taste (see story, Page S-18).

P&G is defending its Crest franchise by raising first-quarter '98 ad spending to match Colgate's heightened media totals, up 101.7% in that period.

Strength of luxury vehicle sales is directly related to the economy, and in the case of luxe sport-utility vehicles the economy has put more money into the hands of image-conscious baby boomers -- the primary buyers of these luxury light trucks. Form (image) rather than function is what's behind the market boom in SUVs, which passed luxe autos in unit sales, 53.4% to 48.8% of market, this past year (see story, Page S-12).

As investors have recently discovered, the economy isn't win-win for all. Exposure in Asia has contributed to earnings declines for No. 43 Nike, compensating this year by paring $100 million from its ad budget, mostly in the U.S.

Asia still hovers over the world markets like an overly cautious bridge player protecting a high trump.

Copyright 1998 by Crain Communications Inc. Quotation or reproduction in whole or in part without written permission is expressly forbidden.

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