• by Joe Mandese  @mp_joemandese, August 29, 2003

With signs that the U.S. economic expansion is accelerating, the financial picture also is improving considerably for the nation's leading advertisers. The top U.S. advertisers beat their second quarter earnings estimates by an average of 10%, according to a MediaDailyNews compilation of Wall Street data posted by Yahoo! Finance.

Among the 70 of the 100 leading national advertisers for which data was reportable, 62 either matched or beat Wall Street analyst consensus estimates for their second quarter earnings. Only eight failed to achieve those levels.

Leading National Advertisers Exceed Q2 Estimates

Hit Earnings Estimate:          13 
Beat Earnings Estimate:         49       
Missed Earnings Estimate:        8

Average % Over/Under Estimate: +10% 

Source: MediaPost compilation of data from Yahoo! Finance (Analyst consensus estimates versus actual second 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 believed to be important forward indicators of future ad spending levels, 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 second 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 one of the top 10 advertisers, beat their earnings estimates. And as a group, they outperformed their earnings estimates by double the rate of smaller advertisers (see table below).

General Motors, the nation's largest advertiser, for example, beat its second quarter estimates by 33%. AOL Time Warner, the No. 2 advertiser, beat its estimates by 20%. Of the top 10, only Sears, Roebuck & Co. missed its estimates - by 5.3%.

While their typically are lags between upswings in U.S. economic expansion or in the financial performance of individual marketers, a variety of ad market trackers have been finding stronger than expected results for the second quarter (see related story in today's MDN).

Meanwhile, broader economic indicators also appear to be firming up. The Conference Board reported a pronounced rise in the Consumer Confidence Index for July and the Commerce Department reported the U.S. economy grew at a revised annual rate of 3.1% during the second quarter, a stronger rate than most economists had forecasted and a rate many feel will begin to stimulate the job market. That in turn will likely have a positive impact on consumer confidence, which will have a cyclical effect on consumer spending.

Q2 Earnings Performance Among Ten Leading National Advertisers

Advertiser        Actual    Estimate    $ Difference   % Surprise 
General Motors      1.58       1.19         +0.39         +32.8% 
AOL TW              0.12
0.10         +0.02         +20.0%   
Procter & Gamble    0.87       0.86         +0.01          +1.2% 
Pfizer              0.30       0.29         +0.01          +3.4% 
Ford
0.22       0.19         +0.03         +15.8% 
DaimlerChrysler     0.13       0.07         +0.06         +85.7% 
Walt Disney Co.     0.19       0.16         +0.03         +18.8% 
Johnson &
Johnson   0.70       0.69         +0.01          +1.4% 
Sears, Roebuck      0.90       0.95         -0.05          -5.3% 
Unilever              NA       0.97            NA             NA

Source: MediaPost compilation of data from Yahoo! Finance (Analyst consensus estimates versus actual second quarter earnings per share). Top 10 rankings from Advertising Age's 2003 Leading National Advertisers report. NA = Not available.