What you need to know:

• A survey of fresh earnings commentary from nearly 20 FMCG, beauty, luxury, IT&T and auto firms tracked by Madison & Wall shows advertising and promotional spend in the main has been increasing.
• Colgate, Mondelez, Hershey, Kimberly-Clark, Clorox, Estee Lauder, L’Oreal, PepsiCo and Ford all indicated advertising and promotional spending is up as a percentage of sales or in terms of year-on-year outlay.
• It’s not a blanket increase in budgets though – General Motors, LVMH, Diageo and Pfizer all curtailed advertising and marketing spend over the last quarter or year, citing market pressures.
• But while the topline spend figures might indicate a buoyancy to marketing, don’t be fooled: There’s a relentless and ruthless efficiency streak running through all organisations featured in Madison & Wall’s financial round-up.
• Agency consolidation, AI for efficiency, productivity and optimisation gain, minimising non-working marketing spend and scrutiny of media channel performance are all being employed to up marketing’s effectiveness.

If you were looking for definitive proof advertising and marketing budgets are not being slashed and are heading into positive territory, you could be assured by the financial results across nearly 20 of the largest tier-one companies.

Executive-level earnings commentary tracked by US-based equities analyst firm Madison and Wall to ascertain marketing resource allocation and activities indicates advertising and promotional spend as a ratio of sales and operating expense was largely up over the last quarter and year-on-year.

In FMCG for example, Colgate reported a 9 per cent lift in advertising spend in Q4, 2024, up 110 basis points as a percentage of net sales. This was off the back of rising 15 per cent full-year, and 19 per cent in FY2023. Advertising is expected to be at least on par, if not up, as a percentage of net sales in 2025, the FMCG giant said. Colgate’s global net sales cracked US$20 billion for the first time in 2024, up 3.3 per cent year-on-year, although Q4 organic sales were largely flat at $4.944bn.  

“Our commitment to increasing [advertising] investment to drive household penetration and brand health, in order to drive category growth and market share, continued in 2024,” said Colgate CEO, Noel Wallace. “We believe our record level of advertising spending, on both a dollar and percentage of sales basis, enabled our broad-based volume growth and lifted our brand health metrics.”

Likewise, Kimberly-Clark has doubled ad spend since 2018 and closed out 2024 with what CEO Michael Hsu sees as a “healthy” 6.5 per cent advertising-to-sales ratio. This was despite a 1.8 per cent slide in 2024 net sales of US$20.1 billion, and 0.8 per cent dip in Q4 to $4.9bn.

“Overall, we’re very comfortable with our current investment level in marketing,” said Hsu. “We’re comfortable investing more to support faster, more profitable growth also.

“Our advertising spend has more than doubled since 2018 and we feel like we’ve gotten very strong returns on those investments. And Patricia Corsi, our new chief growth officer, she’s… here focused on helping us become world-class brand storytellers. So under her direction, we’re doing a lot of things to improve our creative. ”

Both Hershey and Mondelez increased advertising and related consumer marketing expense by single digits – a 2.4 per cent in Hershey’s case in Q4, 2024, and 2.6 per cent year-on-year at Mondelez.

“It is important to underscore that we continue reinvesting in our brands to drive faster growth,” said Mondelez CEO, Dirk Van de Put. “Our high-single digit investment increase in A&C continues to strengthen consumer and customer loyalty to our brands.”

So too did Clorox, with advertising and sales promotion expenses similarly up 2.6 per cent to US$191m in Q4, 2024. Clorox CEO, Linda Rendle, described the strong investment in its brands in a slightly depressed market as a winning decision.

“We increased our percentage of sales against advertising and sales promotion this year and we did that intentionally to remind them of the value,” she said. “We continue to invest in innovations working really well. And if you look at the outcomes of that, we grew share in seven of our eight categories.”

Walk across into the drinks category, and PepsiCo can equally be found to be spending more year-on-year: US$100m more. This spend is expected to be consistent as a percentage of sales in 2025.

Yet it wasn’t a blanket win for ad spend. Diageo’s advertising and promotion investment decline €37 million or by 2 per cent organically, driven by a -14 per cent decline in spent in Asia-Pacific and China specifically. Overall, Diageo reported a 1 per cent drop in reported net sales to €10.9bn, 5 per cent dip in reported operating profit to €3.155bn, over the six-month period.  

“We remain agile with our A&P spend, ensuring that we invest as and where appropriate,” said CFO, Nik Jhangiani, noting specific increases in its US Don Julio investment plus Guinness in Europe.

Luxury products appears another area where advertising expenditure is being curtailed, with LVMH’s CFO Jean-Jacques Guiony confirming it held back on marketing and brought down costs by 5 per cent. In 2024, total advertising and promotion expenses fell by -3 per cent in constant currency terms. General Motors was another to cut spend by US$300m between 2023 and 2024 to $3.3bn.

However, it’s a different story with beauty brands, with Estee Lauder and L’Oréal upping their advertising game. Operating expenses at Estee Lauder in 2024 reflected a 210-basis point increase in advertising, promotion and innovation expenses, said CFO, Akhil Shrivastava. This included investments designed to fuel performance during the holidays and key shopping moments and drive engagement with new product launches.

Similarly, L’Oreal advertising and promotional expenses rose 5 per cent to €14bn, equivalent to a whopping 32.2 per cent of sales, while these expenses on a comparable basis increased 10 basis points against revenue. Others flagging ad spend boosts included Ford (U$2,8 billion in 2024, up from $2.5 billion in 2023) and Amazon (rose to $21.4bn in 2024).

BUT: Making marketing work harder proves a relentless pursuit

Those are the topline marketing allocation numbers. But if you wanted consistent proof that relentless optimisation and scrutiny of effectiveness of marketing is underway, then there’s plenty.

Consolidating agency partners, reducing non-working capital, employing AI for efficiency and instilling more rigour around effectiveness of advertising and marketing are common threads through the latest earnings calls of some of the largest global FMCG, technology, beauty, luxury and automotive brands. Yes, many CEOs and CFO are recognising business growth is coming out of advertising and marketing activities and they’re prepared to largely keep backing them. But only if they are assured marketing is working hard enough.

Just take Estee Lauder. “We will… boost consumer-facing investments to accelerate new consumer acquisition. First and foremost, we plan to do this by increasing visible advertising spending, optimising marketing programs and eliminating current A&P spending that is unproductive,” said its CEO, Stephanie de La Faverie.

Similarly, L’Oreal’s extending its AI-powered BETiq tool for measuring and optimising return on advertising and promotional investments from two to six countries, with eight expected to come online. This will see it go from 45 per cent to 60 per cent of consumer-facing advertising and promotion.

“Thanks to the gradual rollout of our AI-powered BETiq in more countries, we continue to improve the returns on our A&P,” said CEO, Nicolas Hieronimus.

Like many c-suite counterparts in their earnings commentary, Jhangiani described Diageo’s optimisation approach as one of making marketing work harder for its brands.

“While I remain fully committed to investing for both the short and long term with A&P spend, we will be adding more rigour on measuring the effectiveness of this spend. This includes fully leveraging data using our updated Catalyst [bespoke analytics] tool, and ensuring that we are ruthless in allocating the right level of spend of non-working and working marketing dollars,” he said. “With the latest technology developments, we clearly see opportunities to reduce non-working spend. Our marketing teams are now structured around ‘conscious create’ and agile brand communities, teams on our global brands to help embed this focus around the globe.

“We will continue to be highly focused on media efficiencies, which will enable us to get a more balanced approach to reinvest savings back into the business, but also drop to the bottom line where appropriate.”

To offset some price pressure, Mondelez CFO, Luca Zamarella, cited “unprecedented cost measures, particularly in the productivity area of our manufacturing network”, but also extending into marketing. “We also have reduced overheads and the non-working media spending,” she said.

Then there’s Colgate CEO, Wallace, who said: “We’re being far more deliberate with our advertising spend”.

“What I mean by that is more choiceful on the opportunities that we see in terms of driving category growth and growth for the Colgate franchise… we’re using data analytics and our digital transformation [which] has really unlocked a lot more efficiency in our spend,” he said.

Specifically, Wallace noted significant focus with a lot of the company’s tech platforms, plus work around programmatic media [and] personalisation through data to optimise and continue to find ways to “be more precise with our spending”.

“We’ve obviously gotten into a much better place than we were years back… and you take all of the metrics that we used to assess brand health, which ultimately is the most important proxy [for] whether your advertising is working or not, we continue to see very strong inflections on the strength of our brands around the world. We do have unique opportunities in certain parts of the world to continue to improve that,” Wallace added.

For its part, PepsiCo appears to be going hard on shorter-term, lower funnel efforts. “Our partners have been great partners in expanding space for us in stores and giving us the tools to maximise consumer impact,” said CEO Ramon Laguarta, hinting retail media has many more runs to come. “That will be big in 2025, and we’re pivoting a lot of our A&M into those spaces.”

Agency consolidation is the other one to watch. “We’re consolidating our agency partners both behind creative and the media side and that’s going to both improve the content we have and also the efficiency and spending,” said Kimberly-Clark’s Hsu.

“I’d say we’re expecting to spend at a similar level in 2025 and we feel good about that. And as we drive additional productivity, we’re going to continue to look for opportunities to spend more.”

Another company that’s rationalised agency ranks is Pfizer, which is down to one “powerhouse global advertising company”,  said CEO, Albert Bourla: Publicis, which replaced a mix of IPG and itself.

The more with less quandary

Managing partner at executive and board recruitment firm 100 Percent Partners, Michele Phillips, told Mi3 the thing worrying CEOs and boards the most is that they need to do more with less.

“Investor and financial markets are relentless,” one board and executive-level recruiter told Mi3. “They want leaders that can therefore make hard and strategic choices – what will you do, what won’t you do? As a leader, you have an overall budget that includes not just your marketing dollars, but your people dollars and your tech/data stack dollars.

“You can increase, reduce, insource, outsource and so on. Don’t just tell us how you will optimise a campaign. That’s good, but not enough. Tell us the big choices you are making. From within your existing budget, what are you focusing investment on, what will it cost, and how will you fund it?”