Ad Spending Continues Robust Increase In 2020

eTradeWire News/10525940
Schonfeld & Associates, Inc.
LIBERTYVILLE, Ill. - eTradeWire -- Schonfeld & Associates, Inc. has just released the 43rd edition of its annual study, Advertising Ratios & Budgets. The new research report covers more than 4,200 individual companies within 310 industries. Over 800 non-U.S. headquartered firms whose stock is traded on U.S. stock exchanges are included in this year's study.

The study reports 2018 advertising budgets as well as forecasts for 2019 and 2020, advertising-to-sales ratios for 2019 and annual growth rates for ad spending and sales by company as well as industry so users of the study can monitor competition and plan their own ad spending. Overall, 2020 promises to be a year in which industries devoted to digital content will continue to significantly increase advertising spending while industries in more traditional arenas will see more modest increases. Although spending on traditional advertising media is seeing a decline, the ever-growing variety of new advertising channels has resulted in increasing total marketing activity. For the first time, spending on digital advertising is expected to exceed that on traditional media. Money spent in nurturing a social media presence provides near to real time two way communication with customers, helping to build and maintain brand loyalty.

The top 10 spenders in 2020 reflect the continuing shift in commerce from bricks and mortar to digital. Within the top 10 spenders, double digit increases in ad spending are predicted for Amazon, Alphabet, Booking Holdings (formerly Priceline) and Liberty Expedia Holdings; all are projected to see growth in sales of 10% or more. The world's largest luxury goods conglomerate, LVMH Moet Hennessy, is also seeing double digit growth in advertising spending and sales, as it is increasingly improving its e-commerce capabilities.

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Advertising by catalog and mail-order houses continues to increase robustly to over $20 billion. Online powerhouse Amazon continues to grow its advertising budget by just over 16 percent. A presence within the social media universe, along with spending on more traditional advertising, has become an integral part of every retailer's marketing and advertising efforts. Alibaba, China's biggest online commerce company, will increase ad spending over 16% to $5.1 billion.

Apple, well-known provider of consumer electronics, software and services, will increase its ad spending by over 8%. Advertising for semiconductors and related devices will be up 6.8 percent in 2020 and spending by computer manufacturers, led by Dell, will increase 8.2%.

The automotive industry is expected to be the second to top spending industry with an outlay of over $45 billion, a 4.5% increase. Daimler, Fiat, Ford, General Motors, Honda, Nissan, Toyota and Volkswagen will each spend over $3 billion.

The pharmaceutical industry will increase spending in 2020, exceeding $26 billion. Within the U.S. there is continuing support both for and against direct-to-consumer pharmaceutical advertising. It is now the most common form of health information encountered by the public. The biotech industry with its involvement in personalized medicine will grow its advertising spending by 8% to $3.3 billion. As in other industries, use of social media has become integral to the marketing strategies of pharmaceutical companies.

Ad spending for cellular communications services will increase just 1.8% to just over $26 billion with sales projected to grow 3%. Growth in advertising by non-cellular telecommunication service companies will be down by 4% in 2020 with estimated spending of $8.4 billion worldwide. In the U.S. landline use continues to decline.

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Diversified multi-media companies, such as Disney and NBCUniversal, are expected to grow their ad budgets over 2% to over $9 billion while cable and pay TV services are increasing their ad spending 5.2% to $16 billion. In the entertainment industry, cord cutting has become the popular option.

Large, diversified food companies are expected to spend a total of over $5.3 billion in 2020, up slightly from 2019. The soft drink industry will also spend $5.3 billion, a slight decrease, and see essentially flat sales. Beer companies will spend $9.9 billion, an 11% increase. The 58 separate restaurant chains in the Schonfeld study will spend a total of $4.7 billion in 2020, an increase of 4.7% from 2019.

Variety stores, led by Wal-Mart, will increase their ad budgets 5.9% for a total of over $7.2 billion. Retail department stores, such as Macy's and Kohl's, will spend over $2.7 billion in 2020, down a bit more than 1% from 2019. Many of the former big names in retail are closing their doors.

Advertising Ratios & Budgets is widely used for strategic planning by ad agencies, monitoring competitors, planning ad budgets, and identifying new business prospects. It is also used for selling advertising space and time, and for planning by publishers and broadcasters in developing new media vehicles. Budgets are grouped to show all competitors within an industry. Data from the study are also available in Excel format. Additional information is provided within the datafiles to allow for analysis by corporate location or NAICS code.

Copies of the 172-page study are available only in PDF format for $395. Forecasts and data from Advertising Ratios & Budgets are also available for all companies and industries in Excel format. Additional information is provided within the datafiles to allow for analysis by corporate location or NAICS code. The 2019 edition of the PDF study along with Excel datafiles is $495. Contact Schonfeld & Associates, Inc., 1931 Lynn Circle, Libertyville, Illinois 60048. Call for more information: 800-205-0030 or visit the company's web site at www.saiBooks.com under the Area of Expertise: Advertising Spending.

Contact
Carol J Greenhut
***@saibooks.com


Source: SCHONFELD & ASSOCIATES, INC.
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