Top 100 Outlays Plunge 10% but Defying Spend Trend Can Pay Off

26 Bold Marketers Raised Their Ad Ante in Recession -- and 70% Saw Sales Lift

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Where the Money Went chart
Source: WPP's Kantar Media.
Pie chart reflects 2009 U.S. measured-media spending for all advertisers including 100 LNA.
Figures aggregated by Ad Age DataCenter. Numbers rounded.
See table and notes, P. 22.

NEW YORK ( -- Here's the good news for CMOs, media and agencies: 26 top marketers bucked the trend and boosted 2009 advertising even as spending for the 100 Leading National Advertisers plunged 10.2%. Among those with the guts to spend more, 70% saw a U.S. sales increase -- double the success rate of those whose spending declined.

As for the bad news: Last year's LNA spending decline marked the sharpest drop since Ad Age began the ranking in 1956.

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Among the Top 100 advertisers, one in four spent more, betting on opportunity in the Great Recession. While there is no easy way to prove cause and effect, the sales gains at spending boosters should help reinforce the idea that advertising delivers. The stats surely will give ammunition to those struggling to prove advertising's return on investment to CEOs, CFOs and procurement departments.

Exhibit A for ramping up when many others hunker down: Walmart Stores. Walmart, gunning for market share during the recession with its value message, increased 2009 U.S. spending 14.2%, according to Ad Age estimates. In its 10-K regulatory filing, the world's largest retailer said it spent $2.4 billion on global advertising in 2009, a whopping $300 million increase over the previous year.

Walmart wins
For the first time, Walmart Stores in 2009 was the nation's No. 1 spending retailer based on measured-media advertising, displacing Macy's. Walmart in 2009 was the country's third-most-advertised brand; in 2007, on the eve of recession, it ranked No. 16.

The company's Walmart U.S. division last year managed a 1.1% sales increase in a brutal retail market, gaining share even as the nation's retail sales fell 2.1%. Walmart still spends less than retail rivals by one key measure: advertising as percent of sales. But the trend is upward: Walmart spent 0.59% of worldwide sales on advertising in 2009, up from 0.52% in 2008, 0.48% in 2007 and just 0.30% in 2000, according to Ad Age's analysis of 10-K disclosures.

Nine of the 26 spending gainers -- including Hershey Co., General Mills, Nestlé and Unilever -- came from the recession-resistant sectors of food and package goods.

The list of spending boosters also includes restaurants offering relatively cheap fast food (McDonald's Corp., Subway franchisor Doctor's Associates); four pharma firms (including Pfizer), a sector that kept growing through the recession; dueling satellite services battling for market share (DirecTV, Dish Network); and four retailers (Walmart, Safeway, Gap Inc., regional chain Fry's Electronics).

Rounding out the list was an insurance company (Progressive Corp., which gained share last year in the hotly competitive auto-insurance market), a bank (Wells Fargo, which bought Wachovia Corp.), two tech firms (IBM Corp., Microsoft Corp.) and a big player in the surging field of for-profit education (Apollo Group, owner of University of Phoenix, making its 100 LNA debut).

More for less
Many marketers managed to do more for less, taking advantage of what once seemed unimaginable: media deflation.

Marketers from Anheuser-Busch InBev to Procter & Gamble Co. cited media discounting as a significant cost savings in their annual-report filings.

A-B InBev, the world's largest beer marketer, noted "media and advertising cost deflation in key markets." Spirits marketer Diageo took advantage of "media rate deflation" in North America. Food maker Kellogg Co. said operating profits benefited from "media deflation" in Europe.

P&G, the nation's and world's largest advertiser, said "media rate reductions" helped reduce marketing expenses as a percent of sales.

Revlon, though too small to make the 100 LNA ranking, offers a clear example of how marketers gained from media price cuts. In its 10-K filing, the personal-care products marketer said it cut 2009 worldwide ad expenses by $24.8 million -- or by about 10% vs. 2008 -- "as a result of achieving lower advertising rates, while increasing the level of media support."

It's apt that marketers used the word "deflation" to discuss media prices, for 2009 in economic terms was a deflationary year: The U.S. Consumer Price Index (annual average) fell 0.4% in 2009, the first decline since 1955. The easy savings for marketers probably are over. Consensus is the 2007-2009 Great Recession ended in third-quarter 2009, giving way to a weak economic recovery -- and some increased demand for media.

U.S. measured-media spending in first-quarter 2010 rose 5.1% for all advertisers (and 11.0% for the top 100 advertisers), the first quarterly gain since first-quarter 2008, according to WPP's Kantar Media. More demand from buyers means media sellers -- at least strong media properties -- should feel less need to give away the store. (See story on TV's resurgence, P. 6.)

Crash Landed chart
Source: Ad Age DataCenter (LNA); Bureau of Economic Analysis (GDP)
Stabilizing signs
There are signs the media market is stabilizing. Media staffing offers some clues about the health of that market. Overall U.S. media employment is still falling. But when you factor out newspapers (where job losses continue), media staffing has been essentially flat since last September -- good news following massive job cuts that occurred in 2008 and early 2009. (See employment data at

This LNA report chronicles a remarkable year for the advertising economy -- and only the fifth drop in spending in the report's 55-year history. Spending fell 2.7% in 2008, 1.3% in 2001, 3.9% in 1991 and 0.4% in 1970, all recession years.

The 100 top U.S. spenders -- blue-chip marketers from Abbott Laboratories to Yum Brands -- cut U.S. ad expenditures by 10.2% in 2009, according to Ad Age DataCenter's analysis. The figures include Kantar's estimates of measured media and Ad Age's estimates of unmeasured spending (including promotion and direct marketing).

The 100 leaders cut measured-media spending in all media but the internet (up a whopping 34.2%), cable TV networks (up 3.9%) and free-standing inserts (up 1.1%), according to Ad Age's analysis.

Measured-media spending for the entire U.S. ad market dropped in all but four major categories in 2009: telecommunications/internet services (up 1.5%), a battle ground for market share; food, beverages and candy (up 0.5%), recession-resistant areas; pet food and pet care (up 21.5%), a growing market; cigarettes and tobacco (up 25.7%), a comparatively small category where a limited number of campaigns can move the percentages.

Measured spending in automotive -- the second-largest ad category, after retail -- crashed 22.8%, according to Ad Age's analysis of Kantar data. U.S. auto sales last year plunged 21.2% to the lowest level since 1982, according to Ad Age sibling Automotive News.

Auto sales and auto ad spending have seen gains in 2010, though the market is hardly surging.

There are signs of hope. One year ago, General Motors Corp. was steering through a government-sanctioned bankruptcy. GM slashed ad spending last year, but it remained the auto industry's largest U.S. advertiser in 2009 and in first-quarter 2010. Today, successor General Motors Co. is moving toward a highly anticipated initial public offering of stock. If the IPO sizzles, Uncle Sam -- GM's 61% owner -- will be in a strong position to start selling its stake.

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Contributing: Matthew Carmichael

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