No. 1: The Procter & Gamble Company (NYSE:PG), $4.90 billion
Procter & Gamble, the company behind Tide detergent, Crest toothpaste, and dozens of other consumer products, easily took the top spot in 2011 as the U.S.’s largest advertiser at $4.9 billion. With increasing competition and brand-name household products that often command a pricing premium to store brand, P&G has needed to step up its advertising campaign to reinforce the quality of its products and encourage consumers to step up to its higher-quality products.
What’s the takeaway?
If anything, we’ve been shown that top-dollar spending doesn’t always translate into big revenue increases. The Procter & Gamble Company (NYSE:PG) has struggled in recent years with a big marketing budget that hasn’t delivered the expected bottom-line results. This doesn’t mean P&G ads are failing so much as they’re trying to target consumers’ buying habits at a time when spending is naturally going to be down because of higher payroll taxes and delayed tax refunds.
This brings me to my second point: Timing is everything. P&G’s timing to spend nearly $5 billion in ads certainly wasn’t perfect, but plenty of banks, including JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC), have been taking advantage of low lending rates to encourage mortgage and refinancing activity and increase the quality of their loan portfolios. With banks usually among America’s most hated companies, the opportunity for them to offer consumers the ability to save money could help restore their very fragile brand image.
Finally, advertising that’s geared toward online audiences and younger generations appears to be giving businesses the best bang for the buck. This is the reason Ford has been running circles around General Motors Company (NYSE:GM) lately with its fuel-efficient cars and also why Google Inc (NASDAQ:GOOG) increased its ad spending by 60% to just a hair more than $1 billion in 2011. Social media is giving brand-name companies a new mode of communicating and personalizing with the public, and many of these companies are taking advantage of it.
The article These 5 Companies Spend the Most on Advertising originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams owns shares of Bank of America Corp (NYSE:BAC), but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool recommends Apple, The Coca-Cola Company (NYSE:KO), Ford, General Motors Company (NYSE:GM), Google Inc (NASDAQ:GOOG), and Procter & Gamble. It owns shares of Apple, Bank of America, Ford, Google, and JPMorgan Chase & Co. (NYSE:JPM).
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