Ad Age's Top 200 Brands Report

Telecommunications and Pharmaceuticals Dominate Ad Spending

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CHICAGO ( -- A hefty 27.7% increase in media outlays on telecommunications brands in first-half 2006 propelled the Top 200 Brands to $24.73 billion in U.S. measured media, up 9%,
Verizon and the drug brands Lunesta and Ambien played major roles in driving ad spending during the period.
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in Advertising Age's semiannual report. In fact, telecoms comprised four out of the five top brands.

Verizon continued to hold the top spot -- as it has since 2003 -- with first-half spending of $937.7 million, up 13.2% from the same period in 2005. The 200 extend to AIG at $49.2 million, up 41.9%.

Newly resurgent AT&T is poised to challenge Verizon's lead by the next Top 200 brand report. AT&T powered its way to the No. 4 spot, spending $511.5 million, as the Cingular brand, destined to be rebranded as AT&T, remained runner-up, with $628.6 million. AT&T is acquiring the 40% of Cingular Wireless it doesn't already own through its pending purchase of Cingular co-owner BellSouth Corp.

Sprint skyrocketed 30.6% in spending to $496 million to claim No. 5. The only non-telecom brand to crack the top five was No. 3 Ford, at $540.3 million, up 8.4%.

The strength of these top brands drove total U.S. media spending of $72.98 billion, up 4.1% over first-half 2006. Without the Top 200's contribution, spending behind all other brands advanced only 1.8%. Ad-spending data from 17 consumer media is from TNS Media Intelligence. Ad Age aggregates TNS data into brand spending for this report.

The rivalry between sleep-aid brands Lunesta and Ambien drove the pharmaceuticals category, with spending of $161.9 million and $113.8 million, slotting them as No. 37 and No. 68, respectively. Pharmaceuticals are a volatile category in the Top 200, with new drugs constantly coming onto market, older ones losing patent protection and others being pulled off the market for a variety of reasons. Still, pharma brands in the Top 200 spent $1.54 billion in first-half 2006, up 41.2% over the same period last year.

Telecom and pharmaceutical increases more than offset the 6.6% spending decline in automotive, the largest category in the report. Of the 28 automotive brands in the Top 200, 10 showed a decrease as overall auto spending among the Top 200 fell to $4.72 billion in first-half 2006. After Ford, top spenders among autos were No. 6 Toyota, which increased its spending 11.9%, to $485.8 million, and No. 7 Chevrolet, with a media outlay of $443 million, up 1.4%. Nissan slipped to No. 11 as it decreased spending by 24.5% to $298 million.

Despite Ford's massive media outlays, sales of its cars, trucks and SUVs fell more than 4% in the first half, according to Automotive News. Toyota's media-spending efforts were more fruitful, with first-half sales up 10% for the brand. Auto brand spending can fluctuate for a variety of reasons including new model introductions, or lack thereof, as well as advertising for special offers or promotions to reduce high inventories.

Retail, the third-largest category in the Top 200, logged a 6.3% increase, even though category leader No. 10 Home Depot reduced spending by 3.4% to $306.9 million. The slack was more than taken up by the second-largest retail brand, No. 15 Target, and third-largest, No. 17 Lowe's, both of which zoomed ahead with spending increases of 22.5% and 18.8%, respectively.

In financial services, the fourth-largest category among the Top 200 in media volume at $1.98 billion, No. 19 American Express spent $229.6 million, up 6.1%, followed closely by No. 23 Visa at $223.8 million, up 31.1%. Overall, financial-services spending rose 13.9%, bolstered by key players Capital One, Chase, TD Ameritrade and Fidelity -- brands whose spending grew a collective 52%.

The insurance category had even stronger growth than financial services -- up 25.6% to $899.5 million from eight companies. No. 22 Geico, top brand in the category, spent $223.9 million, up 28.2%. No. 30 Allstate increased spending at an even higher rate, up 47.4% to $184.4 million. New to the Top 200 is online auto-insurance marketer Esurance, a subsidiary of White Mountains Insurance Group. Esurance is only available in 24 states, yet spent $62.3 million.

Network TV, the top medium by ad spending, was almost totally dependent on the Top 200. The group's $7.59 billion in spending grew 13.9% compared with the same period last year. This spurt kept all network spending in the growth column for the year even though network spending by all brands outside the Top 200 actually fell 5.3%. Ford, the largest brand on network TV, flooded the medium with $255 million.

Spending on Spanish-language TV networks, the eighth-largest medium in the report, soared 30.4%, to $882.5 million. Spanish-language media benefitted from the World Cup held mostly in June in Germany. Spanish-language TV networks tracked by TNS include Univision, TeleFutura and Telemundo.

On the downside, local newspapers garnered only $2.48 billion from the Top 200, down 12.3%, or $348.1 million, compared with first-half 2005. Auto brands in the Top 200 delivered the coup de grace, their spending plunging 55.4% to $217.3 million in the medium. General Motors Corp. was the major culprit, making good on its "permanent" repricing strategy, announced in January 2006, that avoids big, national multi-vehicle brand incentive campaigns. GM's outlay in local newspapers fell by $212 million to $89.2 million, a 70.4% hit for its eight brands in the report.

The decline in local newspapers allowed consumer magazines, up 6.1% at $2.86 billion among the elite 200, to eclipse newspapers. In general, newspapers are attracting less advertising as marketers shift more spending online and test other new-media methods.

Indeed, internet spending continued its upward trajectory, logging $1.65 billion among the Top 200, an increase of 25.6%. The 20 retailers in the report boosted their online spending by a collective 152.3% in the first half, with No. 18 Wal-Mart, the top retail internet spender, increasing its outlay to $32.5 million from $7.2 million in first-half 2005. Target, intent on keeping pace, placed $28.4 million in internet, up from $8.2 million.

Other categories showing significant increases in online spending were insurance, up 119.3%; automotive, up 49.7%, and food, up 43.9%. Financial services was the internet- spending category leader; its 18 brands in this report funneling $349.1 million into the medium, a 49.4% hike. The largest internet spender was online telco Vonage, No. 13, which put $126.5 million, up 3.3%, behind its brand.

The movie category, which has significant spending, is omitted from the Top 200 Brands due to the lack of continuity in spending on movie titles from year to year. Spending for Disney's "Cars" alone was $47.6 million, the top film by measured media in the first half. In fact, the top five films were lavished with more than $40 million in spending each.

The leading spender on movies, DVDs and videos was Time Warner, which injected $419.7 million into the category, while the top nine movie companies combined spent over $2 billion in first-half 2006. New releases make up the majority of this media tally, with DVD and video spending taking 18% of the total.
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