Insights on Advertising Spend Trends and Market Leaders

IS THE AMOUNT OF MONEY SPENT ON ADVERTISING JUSTIFIED? Gabriel Cabrera

INTRODUCTION If you take a look around, advertising is all around us. Everywhere you look, there is an ad promoting a good or service from a company. There are billions of dollars spent on advertising each year and this number is only increasing. But is this amount of money really necessary? I believe this money could be spent on more appropriate things but every company wants to have their product featured more than the competitor s to increase their revenue. The following slides have information on advertising today and you can decide whether you think this amount of money is justified or not.

WHAT IS ADVERTISING? Advertising is formally defined as the activity or profession of producing advertisements for commercial products or services. A more simple definition would be promoting your good or service through a medium of communication to get people to buy or use it. Advertising can be done by any company, big or small, and is necessary in the beginning so that consumers can know about your product or about your company.

METHODS OF ADVERTISING Traditional mediums of advertising include radio, magazine, outdoor, and newspaper. The revenue from all four methods has decreased in the last few years. In 2010, all four accounted for 40% of money spent on advertising. In 2016, they combined for only 25%. Many companies are decreasing the money they spend on these methods and are investing their money into TV advertising because the revenue from TV advertisements is growing and is expected to be $82 billion by 2020..

ADVERTISING IN AMERICA U.S. is by far the largest advertising market in the world. In 2015, more than $180 billion were spent on advertising and over $220 billion in 2016 in U.S. alone. This is more than double the amount spent by second largest advertising market, China. Advertising has completely take over America because everywhere you look, there is an advertisement for a product or company.

WORLDS LARGEST ADVERTISERS The world s largest advertisers all come from the United States. Top advertisers include Walt Disney, American Express, Ford Motor Company, GM, AT&T, Verizon and Proctor and Gamble. Collectively, the top 200 advertisers make up about $150 billion of the total amount spent on advertising. Ford Motor Company ranked 6thon leading advertisers with $2.68 billion and GM ranked 3rdwith $3.5 billion. Proctor and Gamble spend about $4.6 B a year which makes them the leading advertising spender in the world.

SUPER BOWL ADS 30 second spots for Super Bowl 51 sold for an average of $5 million. This is an average of over $160,000 per second. There was an estimated 111.9 M viewers and bout 72% of homes in the U.S. were watching SB51. If your target audience is viewing the Super Bowl, then this is a great place to advertise if you have the money to buy a spot for a commercial.

IS THE AMOUNT SPENT JUSTIFIED? (CONCLUSION) Personally, I believe that the amount of money spent on advertising should be nowhere near to the amount that is spent today. If you spend millions of dollars to promote your product and no one buys it, you just wasted millions of dollars. Most ads that we see today are repetitions of companies that we already know and I believe that most money spent on advertising is wasted. Most people don t pay attention to commercials and when they have the ability to skip an ad, most times the people will. Only about 17% of commercials are actually fully viewed during major televised events so this shows that people don t really care. If consumers are going to skip your ad and not bother watching it, then I think companies should only spend a certain amount of their income toward advertising and the rest can be spent on enhancing the product, higher wage for employees, or donating to charity to help make the world a better place.

QUESTIONS FOR YOU What are the four traditional mediums of advertising? 1. U.S. spent over $220 billion in advertising in 2016 which was more than double the second largest advertising country in the world. What country is the second largest advertising market in the world? 2. What was the average selling price for a 30 second commercial spot during Super Bowl 51? 3. Do you think the amount of money spent on advertising is justified? 4.

ANSWERS Radio, Magazine, Outdoor, and Newspaper 1. China 2. $5 million 3. You decide 4.

RESOURCES https://www.statista.com/topics/979/advertising-in-the-us/ 1. http://www.businessinsider.com/10-biggest-advertising- spenders-in-the-us-2015-7 2. http://study.com/academy/lesson/what-is-advertising- definition-lesson-examples.html 3. http://bleacherreport.com/articles/2691166-super-bowl- commercials-2017-ad-costs-review-value-before-patriots-vs- falcons 4.