P&G looks to have a lock on the No. 1 spot in the upcoming global ranking, which Ad Age will release on Dec. 13. But P&G’s hold on the top spot may be only temporary as Amazon steps up spending.
Ad Age ranks Amazon based on stated “advertising and other promotional costs” rather than the retailer’s broader bucket of “marketing.”
Amazon’s marketing costs include advertising and payroll and related expenses for employees involved in marketing and selling activities, including sales commissions related to Amazon Web Services, the company’s cloud platform. Advertising and other promotional costs last year accounted for about half of marketing costs.
Amazon’s marketing costs last year increased 17%. But Amazon in 2020 trimmed ad and promotion spending by 1%, marking only the fourth time that Amazon cut annual spending, according to Ad Age Datacenter’s analysis.
Amazon has prospered in the pandemic, with worldwide net sales rocketing 38% to $386 billion in 2020 and 35% in the first half of 2021 vs. comparable prior-year periods.
With unprecedented demand for online shopping from homebound consumers, Amazon delivered the goods with “lower spending [in 2020] on marketing channels as a result of COVID-19,” according to the company’s annual regulatory filing.
Amazon marketing channels include sponsored search, social and online advertising, third-party customer referrals, TV advertising and other initiatives.
Amazon’s marketing spending in the first half of this year surged 50%. In a regulatory filing, Amazon said that increase was “primarily due to higher spending on marketing channels and increased payroll and related expenses for personnel engaged in marketing and selling activities.”
Given that spending trend, Amazon is destined to report an increase in full-year 2021 ad and promotion spending when it releases its annual filing early next year. It won’t be clear until next summer, when P&G reports fiscal 2022 results, how the two companies stack up. But Amazon is in a prime position to retake the top spot in the Ad Age global ranking coming out in December 2022.
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