Ad Age World’s Largest Advertisers, a ranking of the 100 biggest spenders, serves as the 2019 baseline for marketers and marketing activity before COVID-19 and a global recession.
The 2020 tally for marketers won’t become clear until after companies disclose financial results in the early months of 2021.
But 2020 ad spending figures for top marketers are going to be depressed—with exceptions for some advertisers that increased spending to take advantage of market opportunities amid the coronavirus pandemic.
Insurance marketer Progressive Corp., for example, boosted ad spending by 20% in the first nine months of 2020. Progressive’s most recent quarterly regulatory filing said: “We will continue to invest in advertising as long as we generate sales at a cost below the maximum amount we are willing to spend to acquire a new customer.”
Packaged-goods marketers, benefiting from consumer pantry-loading and increased consumption during the pandemic, continue to pour money into advertising. Colgate-Palmolive Co. increased global ad spending by 10% in the first nine months.
But rising revenue doesn’t necessarily translate into higher spending. Revenue at Netflix jumped 25% in the first nine months, yet the streaming service cut marketing spending by 17%, “primarily due to a $327 million decrease in advertising expenses,” according to a Netflix filing.
Alphabet, parent of Google, saw revenue rise 8.5% in the first three quarters, but it cut ad and promotion expenses by $718 million “as we reduced spending and paused or rescheduled campaigns and changed some events to digital-only formats as a result of COVID-19,” the company said in a filing.
Amazon has prospered in the pandemic, with worldwide net sales rocketing 35% in the first nine months as it delivered the goods to consumers. But that doesn’t necessarily lead to surging ad and promotion spending even for a marketer as flush with cash as Amazon.
The retailer’s marketing spending in the first nine months rose 15%, primarily due to increased costs for staff involved in marketing and selling activities, “partially offset by lower spending on marketing channels as a result of COVID-19,” Amazon said in a filing. The company said it expects “marketing costs as a percentage of net sales to continue to be favorably impacted” by COVID-19 through at least fourth-quarter 2020.
Amazon is one of 13 internet-centric companies in the Ad Age World’s Largest Advertisers top 100 ranking. Internet firms as a group accounted for an outsized portion of ad spending growth in recent years, but that wasn’t the case in 2019. The internet firms collectively increased 2019 global ad spending by 1.2%—not far from the 0.9% growth for the remaining 87 companies in the ranking.
Shrinking ad growth for internet firms mostly relates to China, where the economy last year grew at the slowest pace since 1990. Among the 13 internet firms in the ranking, three marketers cut spending: China ventures Ant Group, Baidu and Tencent. Ant, which operates digital payment platform Alipay, slashed ad and promotion spending 66% in 2019.
To be sure, spending jumped 35% at another Chinese firm, internet retail giant Alibaba. But as a group, the four Chinese internet ventures in the top 100 last year cut spending by 27%. The ranking’s remaining nine non-China internet firms increased spending 15%.
Among the Ad Age World’s Largest Advertisers, internet firms topped the list of companies with the sharpest 2019 spending increases: Facebook (up 43%), Alibaba (up 35%) and Amazon (up 34%).