Markets Outside U.S. Capture 61% of Spending. New No. 3 Ad Market: China
Advertising Age – 12.06.10
Posted by Bradley Johnson
CHICAGO (AdAge.com) — The United States accounts for 5% of the world’s population, 20% of global GDP and 34% of total worldwide advertising, making the U.S. by far the largest ad market. But if you want to reach the remaining 95% of consumers, what do you do? Go global.
The Top 100 global advertisers invested 61% of their measured-media budgets outside the U.S. last year, according to Ad Age’s Global Marketers, a study covering 96 countries, territories and regions.
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Regardless of their home base, these multinational marketers advertise where they see opportunity for growth.
They are betting big on one country: China. It accounts for 20% of the world’s population, 13% of global GDP and — for now — just 5% of total worldwide advertising. But ad spending is growing fast. Publicis Groupe’s ZenithOptimedia forecasts that China in 2011 will displace Germany as the world’s third-largest ad market, coming in behind the U.S. and Japan.
On the Global 100 roster, 10 firms — including Procter & Gamble Co., L’Oréal, Colgate-Palmolive Co., Coca-Cola Co. and PepsiCo — allocated more than 10% of 2009 measured-media spending to China.
One global advertiser stands out in China: Fast-food seller Yum Brands (parent of KFC) last year allocated 27% of measured spending to that market and generated 31% of its worldwide revenue from mainland China.
Among the 46 U.S.-based marketers on the Global 100 roster, 12 firms do more than half their ad spending abroad, largely tracking with where they generate revenue and expect to find growth.
Cincinnati-based P&G, the world’s largest advertiser, in 2009 invested two-thirds of measured spending abroad; it generated 62% of revenue outside the U.S. in the year ended June 2010. P&G ranked as the No. 1 advertiser in 18 of the 96 measured markets in Ad Age’s study.
Unilever, P&G’s European rival and the second-largest global advertiser, last year pumped 86% of measured spending into non-U.S. markets, which accounted for 84% of revenue. Unilever scored as top advertiser in 20 of the 96 markets in this study.
Among the 54 non-U.S. companies on the Global 100 list, six marketers — including four pharma firms — do more than half of their advertising in the U.S. market. No surprise there; prescription drug advertising is prevalent in the U.S. but not allowed in many other countries. (The other two firms in that group of six were Anheuser-Busch InBev and SABMiller.)
For the Global 100, total measured ad spending tumbled 8.7% to $107.2 billion in 2009, only the second decline on record (after 2001′s 2.6% drop) since Ad Age launched the annual study in 1987. U.S. spending for these firms fell 7.2%; the non-U.S. portion dropped 9.6%. Spending was flat or down for 80 of the 100 companies.
Last year’s sharp spending decline came amid the global recession; global GDP fell in 2009 for the first time in the post-World War II era.
There were relative bright spots last year. Personal-care ad spending slipped just 1.6%, displacing automotive as the world’s largest ad category for the Global 100. Food advertising also fared well, dropping just 1.5%; you’ve got to eat.