Chevrolet cars & trucks needed a fourth-quarter spurt in ad spending to take the checkered flag as the No. 1 megabrand media spender in 1998.
Without that ad spurt, the Chevy megabrand would have sunk in the rankings due to last summer's six-week United Auto Worker's strike that stymied production and influenced a 1.6% dip in media outlays for the year.
As it was, Chevy, at $645.5 million in media, nearly was upended by MCI telephone services at $636.2 million, up a phenomenal 44.6% from 1997, according to Advertising Age's Top 100 Megabrands report. MCI's fourth-quarter expenditure of $222.9 million topped all megabrand performers for that reporting period.
UP 8.4% TO MORE THAN $21 BILLION
Indeed, megabrands in the telephone category, joined that of computers & electronics to send Top 100 media totals spiraling 8.4% upward to $21.46 billion. Each of these two categories grew by more than 20%. Growth of drugs and personal care weren't far behind, each at 17%.
Sears stores carved 14% from its chart-leading media spending in 1997 to end up sixth in '98 spending. The megabrand attempted to prop up sales by diverting media dollars to retail promotion, but still came away with a ho-hum 1% growth in revenues and declining gross margins.
The auto megabrand category, at $6.44 billion, asserted itself with a 5.3% advance in media. Autos, the largest category in spending and participants (23) in the Top 100, accounted for 30% of Top 100 media outlays.
SLIGHTLY BIGGER PART OF MEDIA PIE
As a measure of total U.S. media, the Top 100 claimed 27%, slightly higher than in 1997. Total U.S. spending hit $79.3 billion, up 8.3%, according to Competitive Media Reporting, whose 11-media totals provide the foundation for this semiannual report. Ad Age sorts CMR's brand data into megabrands.
Semiannual megabrand coverage of the Top 100 began last year, succeeding AA's quarterly reporting of the Top 200 brands initiated in 1990. For comparison, megabrands ranked 101-200 added $7.34 billion for a Top 200 pot of $28.8 billion. (For the ranking of megabrands No. 101-200, visit our Web site, adage.com.)
The set of Top 100 closed out at $94.4 million for Dell computers megabrand; Omnipoint wireless services was No. 200 at $57.4 million.
Spending by the Top 100 determines growth in most media each year. In 1998, the Top 100 accumulated 44.3% of all network TV spending, 29% of cable TV networks, 26% of spot TV, 22% of magazines and 17.4% of newspapers.
CHEVY'S BIG QUARTER
Chevrolet ad-spending patterns reflected the impact of the strike. As inventories thinned toward the end of the strike, GM reined in spending. Its third-quarter outlay for Chevrolet plunged to $77.5 million, 36% below third-quarter levels in the previous year. Chevy more than made up the difference in the fourth quarter with an outlay of $220 million, second to MCI in media volume in the quarter.
In the fourth quarter, Chevy launched the Silverado pickup with a marketing package of $100 million -- GM's biggest ever for an introduction. The Silverado and its predecessor C/K pickup sold 555,990 units in 1998 -- second largest U.S. vehicle unit volume, yet a distant 280,639 units behind Ford's leading F-series truck, according to Automotive News.
Light-truck sales were up 3.1% for the Chevy megabrand as its car sales, influenced by low inventories in July and August, fell 10.6%, according to AN. U.S. vehicle production at Chevy was down 6.8% for the year.
GM DOLLARS SLIP
GM spending among all brands slipped 4.7% to $2.12 billion as only Oldsmobile cars & trucks among its megabrands grew in media expenditures. GM U.S. vehicle production fell 8.3% in 1998 -- 12.7% for cars and 3.6% for trucks. GM also lost market share; unit sales of its megabrands slipped 1.9 percentage points to 29.2% of the domestic market for cars and trucks, according to AN.
Ford spent $72.5 million on the Ford F-Series, some 38% of that in the fourth quarter. The F-Series brand ranked second in ad volume at Ford behind the Ford Taurus at $78.5 million, up 16.6%.
At DaimlerChrysler, the Dodge megabrand grew 9.2% to $602.8 million, largely behind spending for Intrepid of $148.3 million in 1998 vs. $88.2 million in 1997. Throwing money at a brand doesn't ensure success, though. Unit sales for the redesigned Intrepid slipped 6.8% for the year.
Advertising was criticized as showing too much high-tech flair and too little car, but other forces conspired to chase away sales.
INTREPID PRICING PROBLEM
The Intrepid hit the mid-size market in January, but its first offering was a version that cost 15% to 25% more than other popularly priced cars in the segment, and national dealers associations were slow to support the remake in the first few months.
Spending was sliced 27% to $63.1 million for Plymouth cars and trucks as the parent moved ad dollars earmarked for Plymouth into media supporting the Chrysler megabrand. This fueled speculation Plymouth may get mothballed, as did the Eagle line this year.
In the race to crown the No. 1 auto-volume leader, Toyota devoted a fifth of its budget to the Toyota Camry. That $111.4 million, up 38% from the previous year, pushed unit sales 8.2% to 429,575, allowing the Camry to remain on top for the second consecutive year.
TELCO SPENDING TSUNAMI
Marketing dollars backing dial-around and cellular services were of stunning magnitude. Category media spending by telco megabrands was propelled 26.3% to $2.13 billion, with heavier than usual activity in the last quarter traced to advertising by MCI WorldCom (its first quarter as a merged company) and AT&T Corp.'s launch of Lucky Dog Phone Co. Lucky Dog is AT&T's bid to penetrate MCI's dial-around market lead.
The MCI megabrand spending outburst, paced by a $100 million marketing program to tout MCI services with presenters NBA superstar Michael Jordan and Warner Bros.' Looney Tunes characters, brought MCI's full-year growth in network TV expenditures to 45%, syndicated TV to 235.6%, and network cable to 190.6%.
MCI led the advance in dial-around ad spending. It plowed $178.7 million into 10/10/321 long distance service, up from $79 million in 1997; it supplied $65.3 million to inaugurate the 10/10/220 long distance service; and placed $30 million be hind the new 10/10/9000 directory service that hooks callers to a live operator for a fee. It also matched its 1997 expenditure for 1-800-COLLECT with $147.4 million.
The dial-arounds entered the big three long-distance carrier market in 1996 when MCI purchased Telecom USA, and with it, the 10/10/321 service.
AT&T, reported in late 1998 to be losing $1 million a day from dial-around competitors, finally launched at yearend its 10/10/345 dial-around service under the auspices of Lucky Dog.
The AT&T megabrand spending hit $550.8 million, up 15.8%, led by the new marketing dollars for Lucky Dog, a 14.6% increase to $110.3 million for AT&T long distance residential, and 28% growth for 1-800-CallATT to $52.1 million.
Sprint telephone services megabrand grew a dramatic 34.5%, with the biggest growth coming in $127.3 million for Sprint cellular service marketed by Alltel Corp.
The Sprint megabrand is "owned" by two parents: the long-distance and PCS portion of the megabrand bearing the Sprint name are part of Sprint Corp.; the cellular portion of the megabrand is owned by Alltel Corp. through its purchase of 360 Communications Co. in mid-'98, a company Sprint spun off in 1996. Sprint Corp.'s own dial-around service, 10/10/777, remains in test.
COMPUTERS PILE UP ADS
Agency changes, sometimes a damper on ad spending, proved otherwise in the computer & electronics category, up 32.5% to $1.32 billion in media; among the top five U.S. PC manufacturers, only category leader IBM kept its agency during the year.
Direct sellers, Gateway and Dell, led the category in media growth at 83.9% and 58%, respectively. Dell, Intel and Sony PlayStation are new to the list.
Network TV and cable TV displayed collective growth of 31% to $514 million. Dollars tossed at these two media as well as consumer magazines turned the ad environment soft at high-tech business publications. Ad revenues at the 28 computer magazines of the Ad Age 300 (AA, June 14) rose only 0.4% to $2.22 billion. Business trades are not included in the 11 media monitored for megabrands.
SEARS SQUEEZES MEDIA
The 14% decline in spending at Sears stores largely came out of its broadcast pocket, particularly network TV, off 25.5% to $171.6 million.
Sears, Roebuck & Co. modified its "Softer side" campaign late last year with a "Take another look" modifier; and that look this year includes the Benetton clothing line to share high-end label status with Liz Claiborne's First Issue and Vanity Fair.
Sears' spending was one exception in a retail category that put $3.64 billion in media, up 8.7%. Gap apparel registered a seismic 142.9% increase in spending, mostly dedicated to general promotion in broadcast for apparel stores for men, women and kids.
Gap entered the Top 100 for the first time, and its Old Navy megabrand breached the Top 200. In fact, among the Top 200, there were 29 new entries, with