Earnings Reports Offer Clues as to How Marketing Held Up in the Third Quarter

Adland Shows Mixed Results as Spending Pays for Coke, Pepsi But Intel, Microsoft Face Challenges

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COCA-COLA: Thanks in part to its massive Olympics campaign, marketing spending was up double digits for Coke's international operations. And although it's still 20 months away, marketing running up to the 2014 World Cup in Brazil also contributed to a spending uptick. The company highlighted a German campaign that used its global partnership with Spotify to offer teens access to songs and exclusive Coca-Cola content. The marketer claims it reached more than 90% of teens in Germany.

GOOGLE: The search giant shocked financial markets by sending out an unfinished earnings release six hours ahead of schedule, and its stock fell 9% before Nasdaq halted trading. When it resumed, the world absorbed the fact that Google's search business is slowing as users move from PCs to mobile devices. But that 's temporary. Users are ahead of the advertisers, and as advertising gets more sophisticated they'll start bidding up keywords in mobile just as they have on the PC. "It's very clear that advertisers are going to follow the eyeballs," said Bryan Weiner, CEO of 360i.

INTEL: The quarter grew at only half the rate of the seasonal norm, and Intel's fourth-quarter forecast isn't much better: quarter-to-quarter growth of 1%, but a year-over-year decrease of 2%. CEO Paul Otellini expressed hope for the coming Windows 8, noting Intel will be inside 40 "touch" PCs in fourth quarter. Asked whether tablets will stunt PC growth, he said, "I don't think the tablet, as we have seen it evolve over the last several years, is the end state of computing. ... What I can't predict is what form factor is going to win."

JOHNSON & JOHNSON: Third-quarter earnings per share came in ahead of forecasts, and the company raised its full-year prognosis, though largely due to strength in medical devices and newer pharmaceuticals. The consumer business, which accounts for the vast majority of ad spending but only 21% of sales, grew revenue, excluding acquisitions, divestitures and currency just 1% vs. a 10.8% jump for the company as a whole. J&J still doesn't expect manufacturing-remediation efforts in the wake of recalls of consumer products such as Tylenol and Benadryl to be complete until late next year.

MCDONALD'S: Though a strong performer through the recession, McDonald's isn't immune to a slow economy. U.S. same-store sales were up 1.2% in the quarter -- its slowest growth in 11 quarters. CEO Don Thompson said that was driven by breakfast and beverages, noting the company will put strong ad support behind "value offers" while also pushing news around "premium menu" items.

MICROSOFT: Total revenue was down 8%, thanks to the sluggish economy and buyers holding off purchasing in anticipation of Windows 8, launching Oct. 26. A bright spot was its online-services division, with growth of 9%. Online-advertising revenue was up 15% and search gains offset declines in display advertising.

OMNICOM: Third-quarter net income increased slightly to $203.9 million. Domestic revenue rose 3.2%, but global revenue fell slightly. CEO John Wren talked up the need to pool resources from different agencies to serve a single client, though he stopped short of suggesting dedicated agencies, which is the strategy being employed by rival Martin Sorrell at WPP.

PEPSICO: PepsiCo shared early signs that increased ad spending is paying off, reporting it gained global value share in carbonated beverages and improved brand equity in third quarter. The noncarbonated portion of its portfolio took a hit, however, as the company made the "very painful decision" to not chase price in categories like bottled water. Also worth noting: The marketer hinted at plans in the energy-drink category, which has grown rapidly in recent years. It said it has some "interesting" launches planned for 2013.

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