Major brands still investing in advertising

28 October 2009

NEW YORK: Major brands from Google and Yahoo to Verizon and McDonald's are continuing to invest in advertising despite the pressures of the economic downturn, thus tapping in to changing consumer behaviour and the opportunities afforded by the crisis.

Nielsen has forecast that US media spending, excluding the internet, will fall by 12%, to $66.1 billion (€44.6bn; £40.5bn), this year, while eMarketer has estimated that online revenues will decline by 2.9% during the same timeframe.

However, many marketers are bucking this trend at present, a strategy that has been argued to offer significant advantages both during and after periods of financial instability.

Google, the online giant, has recently launched one of its biggest ever advertising efforts in support of its Gmail and Google Docs platforms, including TV spots and a range of outdoor executions.

The Mountain View-based firm's adspend was just $26.7 million in America last year, not including search, according to TNS, and it has largely relied on word-of-mouth during its evolution so far.

Microsoft also spent $100m promoting Bing, its "decision engine" that was launched in June, and around three times that amount on behalf of Windows 7, its latest operating system.

Yahoo, which forged a search alliance with Microsoft in July, has similarly directed around $100m to a range of TV, out-of-home, online and radio ads for its first ever global brand campaign.

Elisa Steele, its chief marketing officer, said the main message featured in communications – "It's You!" – was adopted after research revealed consumers wanted to "make the internet their own."

In a similar category, Cisco and Juniper Networks, the IT hardware specialists, are also heightening their advertising activity.

IDC, the research firm, has predicted that marketing expenditure through the technology sector will decrease by 8.3% this year, before returning to growth of 3.5% in 2010.

Dean Crutchfield, of Method, the branding agency, said "everyone is trying to be the first mover. This is a market now where you stand out or die."

Similarly, despite the challenges facing the financial services industry, the Bank of America has invested heavily over the course of 2009 so far.

According to Nielsen, its adspend reached $21m for the year to August, compared with $88,000 in the same period in 2008, largely as a result of the redevelopment of its mortgage portfolio.

Ray Chinn, the BoA's head of home loans and insurance marketing, said "it was important for us ... to make sure that we were generating the awareness and building the equity around responsible lending and successful home ownership."

The fast-food segment is typically regarded as being one of the few beneficiaries of the recession, as consumers look for low-cost dining options.

McDonald's US advertising expenditure has expanded by 6%, to $575m, in the first eight months of this year, with Burger King up by 3%, to $173m, and Domino's by 31%, to $111 million, per Nielsen.

Tim McIntyre, vp of communications at Domino's, said the current environment "has allowed us to get more bang for our media buck."

In the media category, Verizon, the cable provider, has also increased the support

Data sourced from Wall Street Journal/Brandweek; additional content by Warc staff