• by Joe Mandese  @mp_joemandese, March 8, 2004

With the U.S. economy entering what is expected to be a solid expansion year, the vast majority of the nation's largest advertisers ended 2003 on a solid financial note. Of the 69 of the 100 leading national advertisers that reported fourth-quarter 2003 earnings, all but nine either met or exceeded their earnings estimates, according to a MediaDailyNews compilation of Wall Street data posted by Yahoo! Finance. That's an improvement from the third quarter, when 15 of the leading national advertisers missed their earnings estimates.

Nineteen of the marketers met their fourth-quarter estimates, and 41 beat them. On average, the marketers exceeded their earnings estimates by 2.5 percent.

The findings point to a continuation of the underlying economic stability of the nation's largest marketers, and come at a time when many were expected to accelerate advertising spending in light of an improvement in the nation's economy, as well as the extra stimuli of the 2004 Olympics and elections.

Leading National Advertisers Exceed Q4 Estimates

Hit Earnings Estimate:           19 
Beat Earnings Estimate:
41        
Missed Earnings Estimate:         9 
Average % Over/Under Estimate: +2.3% 

Source: Source: MediaPost compilation of data from Yahoo! Finance (Analyst consensus estimates versus actual third-quarter earnings per share). Reportable earnings data was available for 70 of the top 100 advertisers (Based on Advertising Age's 2003 Leading National Advertisers report).

The results are considered an important forward indicator of future ad spending plans, because major national advertisers are known to cut marketing budgets to improve earnings and spend more freely when they achieve or exceed them.

The indicators are especially strong coming out of the fourth quarter, because the largest national advertisers--the ones that account for the lion's share of spending in most major media--had some of the strongest results. All but two of the top 10 (Time Warner -7 percent; and GlaxoSmithKline -17 percent), beat their earnings estimates.

And as a group, they outperformed their earnings estimates by roughly four times the rate of smaller advertisers (see table below).

For example, General Motors, the nation's largest advertiser, beat its third-quarter estimates by 20%. The two other major domestic automakers are DaimlerChrysler (+22 percent) and Ford (+11 percent). Interestingly, the Big 3 auto marketers have been lagging behind the rest of the top national marketers in terms of an expansion of their advertising budgets, something that has been contributing to a lackluster start to 2004 advertising expenditures.

Q4 Earnings Among Top Ten Reporting Advertisers

Advertiser        Actual    Estimate    $ Difference   % Surprise   
General Motors
1.47       1.22         +0.25         +20.0%   
Time Warner         0.14       0.15         -0.01          -7.0%     
Procter & Gamble    1.30       1.28         +0.02          +2.0%

Pfizer              0.53       0.51         +0.02          +4.0%   
Ford                0.31       0.28         +0.03         +11.0%   
DaimlerChrysler     0.99       0.81         +0.18
+22.0%   
Walt Disney Co.     0.33       0.23         +0.10         +43.0%  
Johnson & Johnson   0.57       0.56         +0.01          +2.0%   
Sears, Roebuck      2.24       2.02
+0.22         +11.0% 
Glaxo SmithKline    0.54       0.65         -0.11         -17.0% 

Source: Source: MediaPost compilation of data from Yahoo! Finance (Analyst consensus estimates versus actual third-quarter earnings per share). Top 10 rankings from Advertising Age's 2003 Leading National Advertisers report. Glaxo SmithKline ranks 12th. Data was not available for advertisers ranked 10 (Unilever) and 11 (Sony).