Q3 Earnings Of Top Advertisers Beat Wall Street Expectations

With signs that the U.S. economic expansion is continuing to accelerate, the financial performance of the majority of the nation's leading advertisers also is continuing to improve. The top U.S. advertisers beat their third quarter earnings estimates by an average of 8.6%, 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, 65 either matched or beat Wall Street analyst consensus estimates for their third quarter earnings. Only 15 failed to achieve those levels. And among those, only one. DaimlerChrysler, ranked in the top 10.

Leading National Advertisers Exceed Q3 Estimates

Hit Earnings Estimate: 10
Beat Earnings Estimate: 45
Missed Earnings Estimate: 15
Average % Over/Under Estimate: +8.6%

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

General Motors, the nation's largest advertiser, for example, beat its third quarter estimates by 20%. Time Warner, the No. 2 advertiser, beat its estimates by 33%. Ford, the No. 5 advertiser, beat its estimates by 236%.

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 third quarter. Nielsen Monitor-Plus, for example, showed a pronounced expansion in the rate of ad spending growth for the major measured media during the third quarter of 2003. And network TV executives are reporting that contrary to the dismal fourth quarter scatter ad marketplace, demand for first quarter inventory is strong on most networks, with the exception of NBC, which many marketers and agencies deem to be overpriced.

Meanwhile, broader economic indicators also appear to be firming up. The Conference Board reported a pronounced rise in the Consumer Confidence Index for November and the Commerce Department reported the U.S. economy expanded at a higher than expected rate during the third quarter.

Q3 Earnings Among Top Ten Reporting Advertisers

Advertiser Actual Estimate $ Difference % Surprise
General Motors 0.79 0.66 +0.13 +20.0%
Time Warner 0.12 0.09 +0.03 +33.0%
Procter & Gamble 1.26 1.25 +0.01 +1.0%
Pfizer 0.47 0.44 +0.03 +7.0%
Ford 0.15 -0.11 +0.26 +236.0%
DaimlerChrysler 0.57 0.63 -0.06 -10.0%
Walt Disney Co. 0.17 0.15 +0.02 +13.0%
Johnson & Johnson 0.69 0.68 +0.01 +1.0%
Sears, Roebuck 0.84 0.82 +0.02 +2.0%
Glaxo SmithKline 0.66 0.61 +0.05 +8.0%

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).
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