Telecommunications, automakers have stranglehold on top spots in annual report; while spot TV takes hit, internet spending by leading brands goes through the roof.

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Telecommunications giants pulled a trifecta in Advertising Age's ranking of the Top 200 Megabrands for 2005, not only claiming the top three spots by total media outlays but spending a heady $4 billion in doing so.

Verizon led all megabrands with $1.72 billion, followed by Cingular at $1.31 billion and Sprint at $995 million, according to TNS Media Intelligence data collated by Ad Age into the megabrands for this report. It was the fourth consecutive year Verizon has topped the ranking.

But even with voluminous spending from a handful of telecoms, consolidation among telecoms will likely mean that Top 200 category in 2006 will come up short of its 15.9% growth in 2005. Cingular, a megabrand since its inception in 2000, will vanish later this year as the service becomes part of a revived AT&T megabrand.

Mergers invariably reduce collective media spending by the merged partners as they consolidate and develop economies of scale. Also, telecom spending would have been up only 9% had Vonage not entered the Top 200 elite with a barrage of spending behind its broadband telephone service.

As a group, the Top 200 spent $49.14 billion in 18 media monitored by TNS in 2005, up 6.6%. They accounted for one-third of the $148.29 billion spent in all measured advertising, up a modest 3% from the prior year.

The Top 200 still heavily favor TV, placing 58% of their media budgets into the five monitored forms of the medium.

Network TV, the largest single measured media category among these heavy hitters, grew 4.8% to $13.26 billion, topping overall growth in the medium of only 1.9% in 2005. The Top 200's tally represented nearly three-quarters of all spending on network TV.

Cable TV's solid 19.3% growth pushed its total to $6.75 billion among the megabrands. Spot TV languished at $5.18 billion, down 13.6%. Spot in particular suffered from the biennial lag in spending due to the Olympics and political elections which drove up spending levels in the prior-year.

Other spending adjustments have hit the medium. The 31 automotive megabrands in the Top 200 comprising the auto category pared spot TV by 15% to $2.26 billion. Some of that reduced spending is credited to a shift of ad monies from auto manufacturers to their regional auto associations, which are not part of the Ad Age compilation of megabrands. Spot TV's spending has rebounded 6.4% among all advertisers in the first quarter of 2006, partly due to the Winter Olympics.

The auto category dished out $10.46 billion in 2005, but that was less than its 2004 outlay of $10.55 billion. Most of that decrease came out of spot TV and consumer magazines. Conversely, autos pumped up internet by 16.9% to $253 million and network cable by 14.6% to $1.15 billion.

Autos, retailers and telecom megabrands remained the volume backbone of print in this report. Between them, the three Top 200 categories accounted for 39% of Top 200 spending in consumer magazines, and 70% of Top 200 spending in local and national newspapers.

The auto category put $1.93 billion behind consumer magazines as volume leader, but that tally was down 4.5% in a growing medium. Ford's $216 million in magazine outlay led the auto megabrands, even though the expenditure was off 21.2% from 2004. Megabrand categories propping up magazines were financial services, up 28% to $520.5 million, and pharmaceuticals, up 28.6% to $542.7 million.

In newspapers, the nine telecom megabrands spent $2.05 billion in national and local newspapers, up 5.6%. Verizon was telecom's volume leader in newspapers at $621.7 million, down 3.5%. Retail elevated its newspaper outlays by 7.3% to $2.23 billion. The Macy's megabrand, establishing a national ad footprint following parent Federated Department Stores' shifting of other Federated and May Department Stores' brands into a mega-Macy's, topped the 23-member retail category at $398 million in newspapers, up 17.7%.


Macy's and Target were media darlings in retail. Their expenditures in all media rose 16.8% and 14.3%, respectively, as total spending by the Top 200's retail megabrands edged downward 1.1% for the year. Wal-Mart Stores, Home Depot and Sears sliced their media spending in 2005 by 2.9%, 7.8% and 14.9%, respectively.

The internet's growing prominence as an ad medium is highlighted by the influx of spending from the Top 200. The group's $2.88 billion in internet spending in 2005 grew by 23.8% over 2004. The measured media total for all internet advertisers grew 13.3% to $8.32 billion, overtaking the measured total of $7.43 billion for local radio, down 0.3% from 2004.

Drug marketers continue to pour a stream of megabrands into the 200. Last year 20 drug brands spent $2.68 billion, up 19.5%, with most of it in TV. That compares with $8.44 billion in medicines for all advertisers, up 1.8% for the year, according to TNS. The growth difference between the drug category in the Top 200 and all drugs is the Top 200 captures the big drug spenders at their "peak" ad periods and not on their downward spiral when reduced spending bumps them from the list.

Direct-to-consumer ad support behind a prescription drug is intense from the moment it is approved until the marketer loses right of exclusivity and the brand faces competition from generics. In 2005, the most-advertised drug was AstraZeneca's Nexium at $226.3 million, down 6.5%. Sepracor's Lunesta ranked just behind at $215.1 million in first-year spending.

The Top 200 in 2006 is expected to lead all advertisers out of the ad funk that left 2005 media growth at only 3%. Media expenditures have picked up steam this year, hitting 5.2% growth to $34.92 billion for all advertisers in the first quarter, with network TV up 12.3%, spot TV up 6.4% and internet up 19.4%. With congressional elections in November, spot TV will get yet another chance to pick up steam.
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