Top 100 Marketer CEO and CFO 3Q23 Commentary
Including American Express, Capital One, Clorox, Coca-Cola, Colgate, Hershey, Mondelez, Nestle, Progressive, P&G, Unilever, Wayfair and more
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I try to follow comments that companies’ CEOs and CFOs make about their advertising and marketing activities on earnings calls. Below are verbatim statements from earnings calls transcripts from over the past month to help understand how those individuals (and their companies, all among the 100 largest advertisers globally) are thinking about related issues.
In alphabetical order, this note covers commentary or data from AB Inbev, Allstate, American Express, Beiersdorf, Capital One, Clorox, Coca-Cola, Colgate, Estee Lauder, Hershey, Hyundai, Kering, Keurig-Dr. Pepper, Kimberly-Clark, Kraft Heinz, L’Oreal, LVMH, Mondelez, Nestle, P&G, Progressive, Samsung, Unilever and Wayfair
As a top-line summary, most companies providing commentary about advertising were increasing their spending year-over-year – some substantially so – helping to explain the relatively strong results we saw for sellers of advertising in the third quarter. However, as always some were cutting. At a category level this was notable and consistent among insurance companies. Although there are no specific quotes captured from earnings calls to be included below from Alphabet, Amazon, Meta or Microsoft, it’s worth noting those companies’ marketing spending trends as well: interestingly, cuts were only significant at Meta (where sales and marketing expenses fell by 24%). For the others, cuts were only in the low single digits.
AB Inbev (Oct. 30, 2023)
In relation to a question about prior plans to triple spending on media for Bud Light during the summer months, “In short, we are managing very tight, as usual, our overheads. And we've been investing, as we said, behind our brands to the long term, and we didn't change our investment plans for the summer. We continue to invest, and we will continue to make the right investments and choices to the open.
- Michel Doukeris, CEO
Allstate (Nov. 1, 2023)
“Expense reductions are also being pursued by many (competitors), including lowering advertising spending, which has moderated competition for new customers.”
- Thomas Wilson, CEO
(Advertising expense declined 8.4% year over year during 3Q23)
American Express (Oct. 20, 2023)
“I still expect to have marketing spend of around $5.5 billion for the full year, fairly flat to our 2022 expense. We feel really good about the quality of our new card acquisitions…and I continue to see great demand for our products across a wide range of attractive investment opportunities. Given this strong set of opportunities, I would expect to increase our marketing spend in the balance of this year. And we're confident that our sophisticated acquisition engine we'll continue to do so in an efficient way.”
- Christophe Le Caillec, CFO
“We said we're going to raise our marketing expense for next year as well. So no, we're not seeing anything at all that gives us pause. And we will continue to acquire those cards as long as those opportunities are out there. So you will see a higher level of marketing spending in the next quarter.”
- Stephen Squeri, CEO
Beiersdorf (Oct. 24, 2023)
“We achieved growth of plus 28% in the online business. This was fueled, for example, by focusing our digital efforts for Aquaphor on TikTok advertising, leading to strong top line growth and increased market share.”
“Our increased digital capabilities, particularly in precision marketing with a full funnel focus, helped us to almost double our online sales in Mexico in 2023.”
- Vincent Warnery, CEO
Capital One (Oct. 26, 2023)
“Total company marketing expense of $972 million for the quarter was…relatively flat year-over-year.”
“Our choices in domestic card are the biggest driver of total company marketing…our marketing continues to deliver strong new account growth across the domestic card business. As a result, we are leaning into marketing to drive resilient growth and enhance our domestic card franchise. As always, we're keeping a close eye on competitor actions and potential marketplace risks. We expect fourth quarter marketing will be seasonally higher.”
“Let's just pull up and talk about the big drivers of our marketing. First, we continue to really like the opportunities we're seeing in the market. Including…opportunities that we get in expanding channels and growing the number of card products, we have the benefit from our technology transformation that sort of is everywhere in what we do as we leverage more data. We're able to take advantage of powerful machine learning models, create customized better experiences for consumers. So that continues to have a lot of traction, and we are leaning into that…Also a very important part of our marketing spend and a thing we're really leaning into is our focus on heavy spenders.
“So when we think about our quest for heavy spenders, it really goes back to 2010 when we launched our Venture card, and that was the beginning of a strategic push that we have continued and accelerated ever since. And that involved more than just putting an attractive product out there…to win with heavy spenders, we need great servicing, jaw-dropping customer experiences, of course, great value propositions. And this takes a significant investment in upfront promotions and in marketing and in brand building. And this is all about my observation, all the years of doing this business and watching players who succeed here and those who get less traction is very much about a sustained investment and…ultimately, the brand that one builds.
“So we're continuing to invest also in building the properties and experiences to drive heavy spender growth at the top of the market. So these investments include our travel portal, access to exclusive properties and experiences, airport lounges and Capital One shopping. And our sustained investment at the top of the market has helped drive momentum in -- overall in our spender business, but we've grown even faster with the heaviest of spenders…The final factor driving our marketing levels is our investment in continuing to build our national bank. And of course, as we have a smaller branch footprint, our growth is powered by modern technology compelling digital experience, a cafe presence in heavily traveled locations across the nation and, of course, a sustained investment in marketing.”
- Richard Fairbank, CEO
Clorox (Nov. 1, 2023)
“We'll continue to spend about 11% of sales on advertising and sales promotion, which was up versus last year where we spent about 10%. And we continue to believe this is the right level of spending to support the brands as we get through this inventory recovery and growth phase as we head into the back half. And of course, we'll make any adjustments that we see necessary by brand, et cetera. And it's also supported, I would note, by continued very strong performance from an ROI perspective. So we're getting more and more for that spend….not only are we spending at a higher rates but we're also getting more for every dollar that we invest. And we'll continue to monitor that closely. But between that and the increased promotional environment we expect to see, we think we have the right money in the market to ensure that retailers have the right plans and the consumers are seeing our brands from a marketing perspective.”
In response to a question about potentially increasing advertising spending, “We had all of those debates to see and prioritize having the right level of spending. And that's exactly the exercise that we undertook. And we think what we have in combination with innovation…if there's any change to that based off of what we see in the marketplace, we absolutely will make adjustments prioritizing the health of our brands and ensuring that we're in front of our consumer but we feel good about that 11%. It still is slightly higher than it was last year, if you just look at absolute dollars as well. And of course, we're driving our team to try to get as much efficiency impact as they possibly can on that spend as well. But we think it's the right level. And again, as we always do, we will prioritize that. And if there's any adjustment needed based off of the path forward as we rebuild, we will make that, but feel very confident where we are right now.”
- Linda Rendle, CEO
(Advertising expense increased 2.5% year over year during 3Q23)
Coca-Cola (Oct. 24, 2023)
“Our marketing transformation is increasingly making our brands more relevant to consumers. Today, Gen Zs spend 7 to 9 hours per day on screen. However, very little time is spent watching traditional TV. We've been shifting our media spend towards digital. In 2019, digital was less than 30% of our total media spend and year-to-date is over 60%, through digital campaigns, which segment the population that's disproportionately reaching consumers where we earn higher return on investments.”
“Much our strategy of the marketing, the innovation, the (Revenue Growth Management) (and) the execution has been very much around not just gaining value share in these environments but making sure that there's volume growth embedded in it.”
“I'm not sure I would characterize extra marketing as a drag on results, more as a motor to driving the top line and the bottom line that we're seeing. So we feel that the leaning in is working, obviously, typified by the fact we've raised both the top line and the bottom line guidance. I think as a model to the extent that we can continue to push that through the end of this year and into next year, we would certainly be happy to do so. Having said that, to the extent that 2024 brings some unexpected surprises, we will pivot, whether it's a country, a region or globally, we will pivot with speed as we did in the second quarter of 2020 when COVID hit, and we ramped down marketing spend in that environment. So we feel we've developed a much greater degree of flexibility to move, should moving be needed at whatever part of the world. But as a starting point, we're going to lean in for growth. And I think the last thing I would say is if you think about the balance of all these items…if you kind of zoom out a little bit and take a broader perspective of the operating income margin because obviously, marketing is just a component of all the different pieces, if you take a look at operating income margin over the, I don't know, last 5 years or so, you'll see that it's been increasing at about 0.5 point a year operating margin, which is broadly in line with the implied leverage in the long-term growth model.”
- James Quincey, CEO
“With respect to advertising spend, our bias is to continue to reinvest behind our brands while maintaining flexibility.”
- John Murphy, CFO
(Advertising expenses rose 5.2% year-over-year during 3Q23)
Colgate (Oct. 27, 2023)
In response to a question about advertising expenses running higher than 12% of sales, “it's not as much as a percent of sales. It's really about…what return on investment we're getting for that. And clearly, you've seen that play through the P&L on the strong organic in the business, the continued growth on market shares around the world, particularly in those strategic categories that we're pushing more deliberately with the advertising… it's really about an ROI. And as we see that play back through the P&L, which we clearly are, we'll continue to invest. So we're really focused now, I'll say, on making sure we continue to optimize that investment. We put a lot more focus on programmatic buying, a lot more focus on personalization and getting content right. You heard Yves talk about when we were down in Florida with regards to the importance of advertising creative and content development. So putting a lot more focus to get better ROI for what we're delivering. So not necessarily a percent, but overall, we are getting the performance through the P&L and through our businesses on the ground.”
“The strong advertising that we're putting into the North America business continues to inflect positive…The 25% increase (in advertising spending in North America) was not the highest (among all regions)…Hill's continues to receive a disproportionate amount of the advertising increase. But North America again, given the vibrancy of that market and the long-term strategic importance of that market, we will continue to invest for the long term…. Overall, the bulk of our North America business is oral care, and it receives the bulk of that (25%) advertising increase. But pleasingly, we are supporting our home care and our personal care businesses, which is important. And clearly, as we get the promotional cadence back on those businesses, particularly here in the fourth quarter, we anticipate we'll see an improvement in shares.
“We had a lot of unprofitable share historically where we were chasing share and buying share, and we have deliberately as we see great health across our P&L and the geographies across the world, we have the opportunity to right-size that in the U.S. and get the shares much more profitable and get much more sustainable share growth moving forward. And the intention is to continue to support all those businesses in the U.S. as we move forward.”
“If you look at Mexico and Brazil specifically, Mexico was up mid-single digits. Brazil was up high single digits in volume. So again, I think a reflection of the strong advertising innovation and the fact that over time, as pricing settles out in the market, you see the volumes come back, and that's pretty consistent.”
“We continue to support the (pet nutrition) business with a disproportionate amount of our total increase in advertising.”
“Our Skin Health business in the U.S. is getting a good levels of advertising. That continues to perform well. If you take our Skin Health business outside of China, that grew double digits in the quarter for us. So we continue to see a nice growth on that business, and we'll continue to support that in the U.S. market as well.”
- Noel Wallace, CEO
(Advertising expenses rose 23% year-over-year during 3Q23)
Estee Lauder (Nov. 1, 2023)
“We maintain key investment plans in areas such as advertising and promotional activities, innovation and selling to accelerate growth where we had momentum”
- Tracey Travis, CFO
Hershey (Oct. 26, 2023)
“We are looking to optimize our investments in trade and media to ensure we have the right mix of each along with the right price points, in-store execution and brand equity to drive profitable growth…we also are really focused on making sure that the allocation is as strong as it possibly can be between trade and between media as we look holistically.”
- Michele Buck, CEO
“Advertising and related consumer marketing increased 20% in the third quarter with investment up double digits across segments…Looking to the fourth quarter, we expect advertising spend to grow double digits as we continue our strong support for sell-through of seasonal items and begin to reactivate our Salty Snacks brands coming out of our ERP transition.”
- Steven E. Voskuil, CFO
Hyundai (Oct. 26, 2023)
“EV retail sales increased by 183% year on year due to proactive marketing.”
- Michael Yun, Hyundai Motor Company - Head of IR
Kering (Oct. 24, 2023)
“When it comes to…advertising and communication spend, yes, it's not something new that the cost to compete has increased massively in the industry. And…it's not only about advertising and communication. It's more broadly about how we engage with consumers, the need to invest in our stores, events in our stores, events or private events. So it's really about a 360 approach. And it has increased, indeed. Also, the digital communication is absolutely key. Even if…investment should not be skewed only towards digital communication, it does remain a very important way to engage with consumers. And it has a cost also in terms of…the cost of information systems. So all in all, it's clear that there was an inflation.”
“Could we say that we could see some moderation going forward? Of course, I won't comment about our competitors. That's not my job. What we told you already is that probably in that environment, the focus would be to insist and to focus on the return we can expect on our communication investments. When the industry was booming, it was probably less, let's say, the need to look at this KPI even if it's always difficult to measure what's the return of investment on this type of marketing investments. But clearly, we need to be more selective and to be sure that for the same amount of money, we can be more efficient in terms of impact, in terms of, let's say, brand awareness, brand equity building. And that's, I think, at least in our brands, it's what we will impose as a financial discipline, it's just to be sure that we are investing in the right way.”
- Jean-Marc Duplaix, CFO
Keurig Dr Pepper (Oct. 26, 2023)
“Gross profit growth enabled us to continue reinvesting in the business, including increased marketing for the third consecutive quarter, while simultaneously driving bottom line growth which was slightly above the expectations we shared with you back in July.”
- Robert Gamgort, CEO
“SG&A saw another quarter of double-digit increases in marketing spending.”
- Sudhanshu Priyadarshi, CFO
Kimberly-Clark (Oct. 24, 2023)
“Over the last 5 years, we're probably up a couple of hundred basis points in advertising investment. I think from there, we really need to make that investment. At this point, we're approaching 6% overall sales. And so I would say that's competitive in our business. It's perhaps not as much as our primary global competitor, but our plan is not to outspend them. And our plan would be to drive great innovation, great commercial programming and have a competitive spend…I don't think, I'll go and say, "Hey, we need to continue with increased advertising investment in a straight line infinitely". Do I think there's some opportunity for us to continue to invest? Yes. But do I think we also have to leverage the investments we've already made better? Yes.… 5 years ago, we were spending in the 3s…too low for a company of the categories that we operate in. I feel competitive at this point. But we also have great opportunities to spend on and ROIs are great. And so especially as we continue to migrate more and more to digital and so there's going to be plenty of things that we're going to want to invest in.
I think we view trade promotion as a path to drive trial, especially of new items. And so that's kind of where it fits in our marketing mix. And so I'm not a fan of using promotion to rent or borrow share for a period of time.”
- Michael Hsu, CEO
“Continued progress in gross margin recovery puts us in a great position to advance our commercial programs, and we continue to expect advertising spend to increase by approximately 100 basis points for the full year.”
- Nelson Urdaneta, CFO
Kraft Heinz (Nov. 1, 2023)
“In kids single-serve beverage, our share continues to be pressured, primarily driven by the reduction in the SNAP benefits as well as lapping competitive out-of-stocks in the prior year. We have improvement plans in place, which include an increase in advertising support as well as new consumer promotions and displays activations.”
- Carlos Abrams-Rivera, President of the North America Zone
L’Oreal (Oct. 19, 2023)
“We are progressively improving our performance in luxury makeup, with a good comeback of Armani, good results of YSL, the performance of Lancôme on Amazon, which, as you know, we've opened Amazon for Lancôme, and it happens to be a very successful, both in terms of sales, but also in terms of recruitment of new consumers, thanks to the media we are spending on the platform. So it's positive for the future of L'Oréal Luxe in North America.”
- Nicolas Hieronimus, CEO
LVMH (Oct. 10, 2023)
“As far as marketing initiatives…obviously, this is something important that we continue to fuel. We have a lot of them surrounding launch of products, surrounding new advertising campaigns or events that we know how to publicize I would say. And you'll see some initiatives that will be as spectacular as what we've done over the last quarters. And we expect the second half or the last part of the year to be extremely full with a large number of initiatives.”
- Jean-Jacques Guiony, CFO
Mondelez (Nov. 1, 2023)
“Our A&C (advertising and consumer promotion) investment is up 28.5% for the quarter and 21.5% for the year, which demonstrates our commitment to continue to build the strength of our brands.”
- Dirk Van de Put, CEO
“We have been selectively investing in 3 areas: digital services, sales and marketing, and that will continue into next year….where do we spend in terms of investments? We will continue investing in sales capabilities, particularly in emerging markets. We will continue to invest in marketing, both people and A&C,
- Luca Zaramella, CFO
Nestle (Oct. 19, 2023)
“Across the board, we continue to increase our marketing investments, and we see the benefits of our portfolio optimization program kick in.”
- Mark Schneider, CEO
“RIG (Real Internal Growth – a proxy for volume) was already positive in the third quarter. This step-up in RIG is being driven by the moderation of new pricing, the benefits of portfolio optimization and increased marketing investments.”
“We plan to invest about 100 basis points more in marketing in the second half of the year versus last year.”
“in 2023, our focus is essentially on increasing our marketing spend, which was at a relatively low level last year.”
- François-Xavier Roger, CFO
P&G (Oct. 18, 2023)
“On the gross margin versus marketing spending side, when I say we're ROI-driven, I really mean we're ROI-driven. So there's no direct correlation between availability of funds and investment levels. If we continue to see strong response to the marketing spend, increases that we deliver in quarter 1, I think there's a strong incentive for us to continue that level of investment.”
“We continue to see opportunities in media. As we get sharper and sharper on our targeting across media around the world and our capabilities of scale, the ROI gets better. So we'll continue to drive up reach. We continue to drive up frequency. And again, that is a core driver for us, to drive household penetration, drive trial, which will turn into loyalty and repeat.”
“You can see our ability to grow in markets even when we see private label shares expand. And so we don't expect a significant change in that profile. And we believe we are well set up to grow even if the consumer feels a bit more of a pinch here going into the fall or winter season. The main intervention for us continues to be investing in innovation and continue to invest in media supports to communicate the strength and the value that our brands can provide.”
- Andre Schulten, CFO
Progressive (Nov. 1, 2023)
“Many of the actions we took and continue to take to address profitability have an adverse impact on unit growth. New (applications) in personal auto were down 20% in the third quarter compared to the prior year…This is a reflection of our self-imposed pullback in media spend as we seek to manage our combined ratio through the acquisition expense ratio and find the right balance in cohort pricing…We continue to assess our marketing spend. And as always, we endeavor to find the right balance between profitability and new business growth.”
“We have a robust media spend planned for 2024. Again, that's a plan.”
“Well, we're always looking to reduce expenses, especially on the non-acquisition expense ratio. But we've pulled back significantly in advertising, and that obviously hits the expense ratio as well as the increase in premium.”
“If weather is sort of normal in the next several months. And we see some of the non-rate actions that we're pulling back on to achieve new business, then we are going to be able to likely put a lot more media spend into play in the first quarter.”
- Susan Griffith, CEO
“(In the) first quarter of 2023, we had sort of the perfect storm of lots of ad spend in a really hard market. And what we don't yet know is how much ambient shopping remains in market and how much shopping fatigue could be in market.”
- Patrick Callahan, President of Personal Lines
(Advertising expenses declined 52% year-over-year in 3Q23)
Samsung (Oct. 30, 2023)
“SG&A expenses grew KRW 0.7 trillion quarter-on-quarter to KRW 18.4 trillion, as advertising and promotional spending increased with the release of new smartphone models.”
- Ben Suh, Samsung Electronics Co., Ltd. - SVP of IR
Unilever (Oct. 25, 2023)
“We will increase the absolute level of brand and marketing investment, just as we did in 2022 and are on course to do in 2023. This is a must but we will also ensure that our brand and marketing investment spend is more focused with deliberate allocation behind bigger platforms, more consistent, fully funding our power brands, more digital and more effective increasing returns of marketing spend. Taken together, these levers driving unmissable superiority scaling multiyear innovations and increasing brand investment can positively impact our growth profile. And as I said, we will maximize their effectiveness by prioritizing their application across our top 30 power brands.
- Hein. Schumacher, CEO
“India saw a gradual recovery in the market with growth led by urban areas, whilst the rural market remained subdued. We saw the reentry of smaller players in the more commodity-driven categories, categories like skin cleansing. And consequently, we also saw some increased media intensity.”
- Graeme Pitkethly, CFO
Wayfair (Nov. 1, 2023)
“Advertising came in at 11.4% of net revenue as we drove improved efficiency across our paid channels, in part supported by the learnings from the advertising holdback tests we performed in the second quarter.”
“We expect to drive 100 to 200 basis points of advertising leverage coming from a combination of our own efforts to push for higher efficiency in our paid channels as well as the normalization of the mix between free and paid traffic to our category.”
“Some of you have asked if this is the floor on advertising as a percentage of net revenue. And to that, I would say no. We have framed this journey around a discrete set of goalposts and expect advertising to come down by 100 to 200 basis points on the pathway to 10% adjusted EBITDA margins.”
“Ad spend, we do not think of something you just use as a dial to make yourself feel good on revenue. So we've really scrubbed ad spend to make sure every dollar works really hard for us. So we would spend dollars if we would think that the return we would get would be at that higher threshold that we've now established. But we're not going to -- it's not -- the outcome is not measured in market share. Market share is something you then end up getting if you did it well.”
“And so ad spend is yet another cost line that we expect to work really hard for us. And then as you can tell, we've reduced it. So obviously, revenue growth would be even far higher than it is now if we didn't reduce it. But we think it was the right move to make -- expect every dollar to work harder. We're going to keep that expectation. We're seeing good results from that expectation. That's the way we think about that.”
- Kate Gulliver, Wayfair Inc. – CFO
(Advertising expense declined 4.5% year-over-year)