Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

16. Advertising and Sales
    Promotion

Text © The McGraw−Hill

Companies, 2002

Advertising and Sales Promotion 453

Of course, percentages don’t tell the whole story. Nissan, which spends less than

1 percent of sales on advertising, is among the top 50 advertisers worldwide. The

really big spenders are very important to the advertising industry because they

account for a large share of total advertising spending. For example, in the United

States, the top 100 advertisers (many of which are based in other countries) typi-

cally account for about 30 percent of all advertising spending. Worldwide, the top

50 global advertisers spend about $50 billion a year. The three top global spenders

are all consumer packaged goods producers: Unilever, Procter & Gamble, and

Nestlé.^4

Advertising spending is very important in certain markets—especially final con-

sumer markets. Nevertheless, in total, advertising costs much less than personal

selling and sales promotion.

While total advertising expenditures are large, the advertising industry itself

employs relatively few people. The major expense is for media time and space. In

the United States, the largest share of this—24 percent—goes for television

(including cable). Newspapers take about 20 percent of the total and direct mail

about 18 percent. The shares for radio (8 percent), the Yellow Pages (5 percent),

magazines (5 percent), and the Internet (2 percent) are much smaller. However,

spending for advertising on the Internet is growing very fast.^5

Many students hope for a glamorous job in advertising, but there are fewer jobs

in advertising than you might think. Even in the United States, with the highest

advertising spending of any nation, only about 500,000 people work directly in

the advertising industry. Advertising agencies employ only about half of all these

people. The rest are people who help create or sell advertising or advertising media

Advertising as percent of sales

Petroleum refining

13 57911131517

12.5

9.4

9.1

7.5

5.6

3.8

4.5

1.2

1.2

12.8

Computers and office equipment

Plastic products

Motor vehicles and car bodies

Greeting cards

Cable and other pay TV services

Sporting and athletic goods

Business services

Footwear (except rubber)

Soft drinks, water

Investment advice

Transportation services

Malt beverages

Games and toys

Soap and detergent

Grocery stores

Hotels and motels

Eating places

Video tape rental

Women's clothing stores

Amusement parks

Catalog, mail-order houses

Furniture stores

Dairy products

PRODUCERS:

RETAILERS:

10.3

8.6

6.2

5.7

5.0

5.3

4.8

4.4

4.2

3.0

2.7

1.8

2.5

1.5

1.4

0.8

Bakery products

Perfumes and cosmetics

Exhibit 16-2 Advertising Spending as Percent of Sales for Illustrative Product Categories

Advertising doesn’t

employ that many

people