Additionally, since the first 100 Leaders in 1956 (covering spending in 1955) when GM paced all advertisers at $170.4 million and P&G placed second at $85 million, only Philip Morris Cos. succeeded in breaking their hold on the top spot. Now P&G is poised to reclaim the lead in 2006 with its buyout of No. 41 Gillette Co.
The 100 Leaders recorded total advertising last year of $98.34 billion, growing 9.2% compared with 9.0% in 2003. Of the total, media accounted for $58.48 billion, up 9.6%, with the rest from unmeasured forms of advertising (see methodology on Page S-19). Despite the strong growth, all other advertisers grew more in media, up 9.8%. By comparison, the 2003 Leaders pulled U.S. media out of recession with 9.3% growth vs. 4.1% from all others.
So why aren't the 100 Leaders, who in 2004 accounted for nearly 42% of U.S. media expenditures, "leading" this economy? The likely scenario is the rest of U.S. marketers played catchup in 2004, starting at a lower spending base. Also the Leaders are diverting money into new media: Their Internet spending shot up 41.2% in 2004 vs. 14.3% from all others, for example. New media-from PlayStation Portables to Internet-are of increasing concern to these heavy TV users as spot-skipping technology goes mass market and key TV demographics are proving hard to reach. The Leaders didn't stray far from home, though. Network TV captured the lion's share of their media outlays at $17.06 billion, up 10% in 2004.
The Leaders have displayed their pocketbook power since that first 1955 list when as a group they handled 20.4% of all U.S. advertising, media and unmeasured. That share has edged up incrementally each year to the present 37.3%. Within those 50 years they've shaped America, moving the nation from an industrial to a service-based economy, consolidating industry and leading globalization.
Categories driving growth in all U.S. media spending in 2004 represented four of the nation's five categories by media volume: Financial services, up 18.5% to $7.34 billion, medicine and remedies, up 17.7%, to $8.17 billion, telecom, Internet services and Internet service providers, up 14% to $9.06 billion; and automotive, up 10.8% to $20.52 billion.
Fifty years ago, there were no financial services advertisers among the Leaders and only one telecom marketer, oligarchic American Telephone & Telegraph Co. Seven drug marketers were on that original list, well before the government approved direct-to-consumer advertising in 1997, which ballooned their spending. DTC ad spending alone in 2004 hit $4.43 billion, most of it from the Leaders, according to TNS Media Intelligence.
Automotive is the core of every Leaders ranking. The category's nine U.S.-based members in 1955 spent a collective $389.1 million in advertising. By 2004, the category, now at 11 marketers, hit $15.74 billion in U.S. ad spending, with seven of those Leaders based outside the U.S. not including dual-based DaimlerChrysler. There are now 23 foreign-based Leaders vs. three in 1955.
TELECOM IN MERGER FEVER
Consolidation continues to winnow the Leaders, particularly its telecom category. It will fall from seven to five members with the pending merger of No. 28 Sprint Corp. and No. 64 Nextel Communications, and No. 5 SBC Communications' acquisition of No. 89 AT&T Corp., a year after its purchase of AT&T Wireless, a 2003 Leader. No. 9 Verizon Communications also is buying MCI, last a Leader in 2003 with $517 million in spending.
The telecom segment aggregated $7.98 billion in ad spending in 2004, up 13.1%. While that total is surely to decline because of consolidation, market forces are likely to elevate the category in the long term as telecom takes on cable and Web portals in a drive to bundle phone and entertainment services in U.S. households.
Consolidation keeps the Leaders in flux. Aside from the telecom linkups, No. 49 Federated Department Stores is buying No. 45 May Department Stores Co. and P&G is buying Gillette. No. 26 Viacom is splitting into two companies, both of which should be Leaders in 2006. And Altria Group is weighing spinning off Kraft Foods, thus excising itself from a future list.
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