How the world’s biggest advertisers are spending (or not) as industries adapt to the coronavirus pandemic

There are good signs of the first quarter earnings season.

So far, expectations of a quick and sharp rebound have been justified. Companies have broken forecasts despite rising costs. And the future looks just as bright. From further easing of lockdowns on both sides of the Atlantic to the prolonged recovery of the struggling travel sector, it is clear that the global economy is recovering – although the recovery will come at a substantial cost.

Digiday analyzed the most recent revenue updates for the 10 largest ad consumers in the world, according to data from COMvergence, which is based on estimated net offline pay media monitoring data for 2020 combined with estimates of paid digital media based on its own proprietary methodology.

Procter & Gamble: balance between marketing effectiveness and growth (total net media spend in 2020 – $ 7.9 billion)

The world’s largest advertiser is resolutely focused on making its marketing dollars count as the pandemic emerges. It increased marketing spend, which is mostly padded (padded?) Media, by $ 270 million in the first quarter. The investment was somewhat offset by overhead costs and marketing savings, which totaled $ 160 million. This is consistent with how P&G has managed its advertising spend throughout the pandemic; make cuts in some areas to fuel ad spending elsewhere. In other words: P&G tries to balance growth, especially as profitability increases, and sustainable marketing spending in a post-pandemic world.

Take online sales: P & G’s e-commerce business is one to watch. The company’s online sales increased 50% in the first quarter compared to the same period last year.

Unilever: Exiting Custody Mode (Total Net Media Spending in 2020 – $ 4.3 billion)

The company warned investors that its margins would decline in the first half of the year as it doubled down on marketing to capitalize on pockets of growth. That said, inflation will also reduce those margins and make the prospect of sustainable growth easier said than done. Still, Unilever believes aggressive marketing will manifest itself for the company in the coming months, especially for online media. Indeed, Unilever has the second largest dataset in the Amazon cloud, CEO Alan Jope said during the company’s latest earnings call, who added that the company is stepping up efforts to make sense of the all of this.

“We are now really learning to derive value from it and we will continue to invest in Unilever’s digital transformation,” said Jope. “But it won’t be net extra because we’re saving money elsewhere.”

L’Oréal: Convenience drives e-commerce growth (total net media spend in 2020 – $ 2.8 billion)

The cosmetics giant got off to an encouraging start in 2021 thanks in part to gains in China, where consumers have apparently put the pandemic behind them, and online sales have taken off. Indeed, e-commerce sales, which cover both sales on the advertiser’s own sites and those of other retailers, increased by 47% in the first quarter.

These sales now represent 26.8% of the group’s sales. It’s a validation from the company’s digital us, which saw online sales offset 50% of its revenue from physical stores last year. So it’s no surprise that the advertiser plans to spend more of its media dollars on platforms where people buy products, from retail media networks set up by some of the biggest retailers to social commerce on platforms like Instagram and TikTok.

Amazon: another explosive quarter (total net media spend in 2020 – $ 2.7 billion)

Amazon’s influence in e-commerce appears to be growing with each quarter. The company’s sales for the first three months of the year jumped 44% from the same period last year to $ 108.5 billion. Interestingly, the growth rate of the company in the first quarter was the same as before which benefits from festive shopping.

Nevertheless, Amazon has never been the kind of company to rest on its laurels. It lost $ 6.2 billion on marketing in the quarter, up from the $ 4.8 billion spent in the same period last year. The company seems all too aware that the growth of e-commerce is a double-edged sword. Yes, that opens up a lot more sales for the company, but it also opens it up to a lot more competition, whether it’s companies like Walmart starting their own media businesses or supermarkets and other platforms that set up their own e-commerce businesses.

Nestlé: a good start but wary of a fragile finish (total net media spending in 2020 – $ 2.6 billion)

Nestlé sales benefited from a dose of caffeine in the first quarter, when sales rose 7.7% from 4.3% in the same period last year. Much of the growth is due to a sharp increase in home coffee consumption. Sales of Nespresso products, along with an increase in demand for instant coffee and its Starbucks branded coffee line, increased 17.1%.

Despite these gains, Nestlé is not getting ahead of itself. After all, there remains the question of the inflation he needs to navigate, which will impact his marketing.

As its CEO Mark Schneider warned: “We are now seeing widespread inflation across our various products, packaging materials and shipping costs. All of these cannot be hedged and our hedging coverage for a number of commodities will run out over time. We increase the prices where necessary, but generally there is a time lag associated with the prices. We are on top of the game and the fact that I am raising this issue should not alarm you. ”

Volkswagen: preparing e-commerce to drive sales up (total net media spend in 2020 – $ 2.5 billion)

Volkswagen is on the road to recovery. Sales in the first three months of the year were up 13% from a year earlier to nearly $ 79 billion. Like many other businesses, the company believes these sales will come more from online stores, now that more people are used to buying a variety of products online.

“We intend to dramatically increase our share of digital sales, even if we think of them, say, as omnichannel sales,” says Christian Dahlheim, Group Sales Manager at Volkswagen.

Even so, many purchases are unlikely to be made entirely online. As Dahlheim explains, “We won’t see a lot of digital or offline exclusive customers. Most customers will use both channels. It absolutely offers the possibility of reducing the cost of sales. “

Renault-Nissan-Mitsubishi Alliance: stuck on the slow lane (total net media spending in 2020 – $ 2.3 billion)

It was an uneven quarterback for the automotive trio.

Renault sales fell 1.1% to 10 billion euros over the period.

Nissan has admitted that production will likely drop by 500,000 vehicles between April and September due to a semiconductor supply crisis that has hit rivals such as Volkswagen, Ford and Stellantis.

Meanwhile, Mitsubishi reported a loss of revenue of $ 12.6 billion for its fiscal year through March. The slowdown continued into the first quarter of 2021, with revenue sliding to $ 25.5 billion, a 32% drop from the same period last year. Nonetheless, the advertiser seems determined to spend to get out of the crisis.

“We will be aggressively investing in growth from this fiscal year, such as advertising costs for new car launches and the development of new products to launch from 2023,” said Takao Kato, CEO of Mitsubushi Motors.

General Motors: Pandemic Tests Moral Philosophy (Total Net Media Spending In 2020 – $ 2.1 Billion)

The auto advertiser expects a strong first half despite some wobble in the first three months. Revenue fell slightly from $ 32.7 billion in the first three months of last year to $ 32.5 billion for the same period this year.

Not surprisingly, the company will rely on marketing to pick up the pace. Plans are already underway to bring its marketing spending back to pre-pandemic levels. The advertiser slashed its annual marketing budget by $ 1 billion last year as it sought to manage its cash flow during a time of turbulence. But getting out of this period will not be easy. Not when General Motors came under fire from critics who believe its promise to spend more dollars with owners of black-owned media is nothing more than a signal of virtue. The pandemic is testing deep moral questions for the company.

Reckitt Benckiser: Covid disinfection boom continues (total net media spending in 2020 – $ 2 billion)

The company’s sales of consumer goods rose 4.1% in the first quarter, down from the 13.3% increase in the same period last year. The company is expected to profit from how the pandemic has changed people’s attitudes towards hygiene, having spread Dettol and Lysol into new markets like Austria and Belgium, as well as additional business customers like WeWork.

Sales of hygiene products, such as the Lysol disinfectant brand, rose 28.5% over the period. As always, more and more of these sales are happening online. So much so that there was a 25% jump in e-commerce sales to push it to 13% of its net turnover. Naturally, Reckitt Benckiser spent a considerable amount of time during the period seeking out specialists in the field to identify opportunities.

GlaxoSmithKline: Waiting for the Blow in the Arm (Total Net Media Spending in 2020 – $ 2 billion)

As cases of Covid-19 increase in some markets, people are increasingly worried about the emergence of new variants. And yet these times are uncertain for companies tasked with developing treatments for the infection.

GlaxoSmithKline (GsK) revenue fell 18% across the group, resulting in total revenue of £ 7.4 billion ($ 10.4 billion). Surprisingly, the company’s pharmaceutical arm saw a 12% drop in revenue to 3.9 billion pounds (5.5 billion).

These fallouts will put even more pressure on GsK’s marketing in the coming months. Like other advertisers, GsK has made various changes to branding and media buying in the height of the pandemic, from reorganizing its brand portfolio to changing its e-commerce plans. Needless to say, the company’s problems are far from over.

Source link

About Quinton Walls

Check Also

Wrongful conviction overturned: man exonerated after spending 26 years in prison for armed robbery

QUEENS, New York (WABC) – A man who spent two decades behind bars for an …

Leave a Reply

Your email address will not be published. Required fields are marked *