Whose ad spending is up? The big FANG theory

When it comes to ad spending, the FANG gang has developed some serious teeth. For the first time, all four FANG companies—Facebook, Amazon, Netflix and Google parent Alphabet—rank among the top 100 spenders in Ad Age Leading National Advertisers 2019. FANG—Wall Street lingo for these internet stocks—is helping drive ad spending growth as the companies ratchet up advertising to build brands and protect their reputations. Among the nation’s 100 biggest advertisers, 65 companies, including FANG, increased U.S. ad spending in 2018. FANG accounted for nearly 30 percent of the spending increase, according to data from the Ad Age Leading National Advertisers report, released online and as a downloadable Fact Pack. How FANG is driving ad spending Among the nation's 100 biggest advertisers, 65 companies increased U.S. ad spending in 2018. FANG—Facebook, Amazon, Netflix and Google parent Alphabet—represented about 7 percent of the top 100's spending yet accounted for nearly 30 percent of the spending increase. U.S. spending increase for those 65 companies $8.1B U.S. spending increase for FANG $2.4B FANG's portion of spending increase 29.6% U.S. ad spending for 100 biggest advertisers $131.0B FANG’s U.S. ad spending $8.9B FANG's U.S. spending as percent of top 100 advertisers' spending 6.8% Hover over the pie charts for more information. Source: Ad Age Datacenter estimates. See expanded data at AdAge.com/lna2019. Facebook’s 2018 estimated U.S. ad spending soared 236 percent to $475 million, the highest growth rate among the top 100 advertisers. Netflix’s U.S. spending last year rocketed 70 percent to $1 billion, the second-highest growth. Amazon’s estimated U.S. advertising and promotion spending jumped 32 percent to $4.5 billion. That made Amazon the nation’s third-largest ad spender behind Comcast Corp. and AT&T. Alphabet’s estimated U.S. advertising and promotion spending increased 23 percent to $3 billion. More from Ad Age From Amazon to Uber, internet companies are driving U.S. ad spend FANG’s overall U.S. spending surged 37 percent, according to Ad Age Datacenter’s analysis. U.S. spending overall for the top 100 advertisers rose 4.5 percent in 2018. Extract FANG, and spending for the remaining 96 advertisers increased only 2.8 percent. The members of FANG have the means and motivation to step up spending on marketing, pouring money into digital media and TV. FANG’s U.S. TV spending last year jumped 70 percent to $1.6 billion, according to Ad Age Datacenter’s analysis of data from WPP’s Kantar. Facebook’s TV spending vaulted to $277 million from $13 million. What FANG spent on U.S. advertising in 2018. The FANG gang's overall 2018 U.S. ad spending surged 37 percent to an estimated $8.9 billion. The companies poured money into TV, where FANG spending jumped 70 percent to $1.6 billion. U.S. ad spending Percent change TV ad spending Percent change Facebook $475M +236% $277M +1,972% Amazon $4.5B +32% $686M +53% Netflix $1.0B +70% $96M +86% Alphabet (Google) $3.0B +23% $518M +26% Source: U.S. ad spending: Ad Age Datacenter estimates. Netflix figure shown is company's stated domestic streaming marketing expense; advertising accounts for about three-fourths of Netflix's marketing costs. Facebook is estimated advertising expense. Amazon and Alphabet are estimated advertising and promotion expenses. Numbers rounded. TV ad spending: Ad Age Datacenter analysis of data from WPP's Kantar. More info: kantar.com/media. Three of the four FANG members—Alphabet, Facebook and Amazon—are both big ad sellers and buyers. Alphabet last year generated 85 percent of its $137 billion worldwide revenue from advertising. Facebook generated 99 percent of its $56 billion revenue from advertising. Amazon’s “Other” revenue bucket had $10 billion in net sales, primarily from the sale of advertising services. (That’s a drop in the bucket, given that Amazon had overall net sales of $233 billion.) It’s not a new story for major media companies to be big ad buyers. Radio Corp. of America (RCA), the then-parent of NBC, and magazine publisher Time Inc. ranked among the top spenders in Ad Age’s first Leading National Advertisers report in 1956. Comcast, owner of NBC Universal, and AT&T, owner of WarnerMedia (formerly Time Warner), top the list now. But big old-line media brands aren’t seeing huge ad spending growth. What FANG spent on worldwide advertising Worldwide spending since 2010 for Facebook, Amazon, Netflix and Google parent Alphabet. Facebook’s ad spending soared to $1.1 billion in 2018 from $8 million in 2010. Over that period, Amazon’s spending climbed to $8.2 billion from $890 million. Source: Ad Age Datacenter analysis of company reports. Facebook and Netflix figures are advertising expenses. Amazon and Alphabet are advertising and promotion expenses. See expanded data at AdAge.com/marketertrees2019. Facebook disclosed it more than tripled worldwide ad spending to $1.1 billion in 2018. Ad spending as a percent of revenue rose to 2 percent from 0.8 percent. Facebook has pumped up spending as it plays both defense (addressing issues over privacy and fake news content) and offense (promoting its brands and services). Ad Age ranks Facebook as the No. 100 U.S. advertiser. Amazon spent $8.2 billion on worldwide advertising and promotion in 2018, with spending growth (up 30 percent) essentially in line with growth in net sales. Amazon’s spending as a percent of sales held at 3.5 percent; it’s been in the range of 3.5 percent to 3.7 percent since 2014. Amazon spends heavily on social media, other online advertising and TV to attract customers. Ad Age ranks Amazon as the No. 3 U.S. ad spender, up from No. 70 in 2010. Netflix boosted worldwide ad spending in 2018 by 66 percent to $1.8 billion. Ad spending as a percent of revenue jumped to 11.4 percent from 9.3 percent. In its latest 10-K annual filing, Netflix said higher U.S. marketing spending—$1 billion last year, up from $604 million—reflected “increased investments in marketing of new original titles.” Netflix is working to make a costly bet on content pay off with more subscribers. Advertising accounts for about three-fourths of the company’s marketing spending. Netflix ranks as the No. 44 spender among the Ad Age Leading National Advertisers. Alphabet spent $6.4 billion in 2018 on worldwide advertising and promotion. Alphabet attributed its $1.2 billion spending increase largely to higher marketing and promotion-related expenses for cloud offerings and Google Assistant. Like Amazon, Alphabet last year increased ad and promotion spending essentially in line with revenue growth. Ad and promotion spending as a percent of revenue came in at 4.7 percent; it had been in the range of 4.2 percent to 4.6 percent since 2014. Ad Age ranks Alphabet as the eighth-largest U.S. ad spender. Download the Ad Age Leading National Advertisers 2019 Fact Pack.AdAge.com/lna2019factpack Subscribe to Ad Age Datacenter to get exclusive access to expanded data. AdAge.com/datathatleads

Whose ad spending is up? The big FANG theory

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