Amazon's marketing spend soars to $8.2bn to rival P&G and Unilever
The ecommerce player is now a contender as the world's biggest advertiser.
Feb 07, 2019 04:36:00 AM | Article | Gideon Spanier
Amazon hiked its marketing spend by 30% to $8.2bn last year, making it a serious challenger to Procter & Gamble and Unilever as the world’s biggest advertiser.
The tech giant said in its annual report that its marketing costs "primarily consist of targeted online advertising, payroll and related expenses for personnel engaged in marketing and selling activities, and television advertising".
Amazon added that its marketing spend also includes promotional costs such as "commissions to third parties when their customer referrals result in sales" and "co-operative advertising arrangements with certain of our vendors and other third parties".
However, the marketing expense does not include costs related to Amazon Prime membership and shipping offers, which are treated separately.
Amazon has been investing heavily in its growing stable of brands, which includes Prime, Prime Video, Fresh, Fire and Kindle, and it aired a TV ad in the US Super Bowl last weekend for the fourth year in a row.
The company, which reappointed Initiative as its global media agency in 2017, has more than doubled adspend over the past five years as it has risen from $3.3bn in 2014 to $3.8bn in 2015, $5bn in 2016, $6.3bn in 2017 and $8.2bn in 2018.
Analysts say it is hard to make an exact, like-for-like comparison with other big advertisers such as P&G and Unilever because each company discloses its marketing spend in a different way and there is no globally accepted, independent ranking of top advertisers.
P&G, which has been widely regarded as the world’s biggest advertiser in recent years, spent $7.1bn on advertising expense in the year to June 2018, according to its most recent annual report.
The FMCG giant described the outlay, which has dropped from $8.2bn in 2013, as being primarily "worldwide television, print, radio, internet and in-store advertising expenses".
P&G incurred other "non-advertising" expenses as part of its marketing spend but did not disclose an amount, although it was included along with many other costs in $18.9bn of selling and general administrative expense.
Unilever, which is generally considered the world’s second-biggest advertiser, spent €7.6bn (£6.7bn) on what it calls "brand and marketing investment" in 2017, according to its most recent annual report.
The company describes BMI as "costs incurred for the purpose of building and maintaining brand equity and awareness", including "media, advertising production, promotional materials and engagement with consumers".
Unilever’s spend on BMI has dropped from €8bn in 2015.
Jonathan Barnard, head of forecasting and director of global intelligence at Zenith, said Amazon's figures suggest the company is now "on a par" with the top global advertisers and is "certainly" in the top five.
Adam Smith, futures director at Group M, said it was "a remarkable thought" that Amazon "could now match or even exceed the world's largest, established advertisers".
P&G and Unilever have been looking to improve margins amid low single-digit percentage revenue growth and both have cut agency fees and the size of their agency roster in the past two years.
By contrast, Amazon has been increasing its revenues by about 30% a year.
The ecommerce giant has also ramped up its own ad sales operation, which brought in around $10bn last year.
Amazon’s total sales were $233bn last year – about treble those of P&G or Unilever.
(This article first appeared on CampaignLive.co.uk)