Philip Morris Edges P&G; Out of Top Slot in Ad Spending

The Marlboro Man has put the squeeze on Mr. Whipple.

Philip Morris, the Marlboro cigarette maker, has overtaken Procter & Gamble, the manufacturer of Charmin bathroom tissue, to become the world’s largest advertiser.

For 24 years, Procter & Gamble--maker of Ivory soap, Tide detergent and Pampers disposable diapers--held fast to the advertising top spot. It nudged General Motors out of the top spot in 1963.

But on Monday, the trade publication Advertising Age, which annually ranks the world’s biggest advertisers, will report that P&G; is out and Philip Morris is in as No. 1.

With its 1987 worldwide ad spending listed at $1.56 billion, Philip Morris has knocked P&G;’s annual budget of $1.39 billion to the No. 2 slot. General Motors, meanwhile, held onto third place with spending of slightly more than $1 billion.

“We’ve all gotten accustomed to calling Procter & Gamble the world’s largest advertiser,” said Fred Danzig, editor of Chicago-based Advertising Age. “This will take some getting used to.”

P&G; Cuts Back

Last year, Philip Morris relied heavily on advertising in response to new competitive pressures. This stepped-up advertising spending was not only in its tobacco division but also in its newer General Foods and Miller Brewing divisions, Danzig said. Overall, Philip Morris last year increased its annual ad spending by 7.4%.

At the same time, Procter & Gamble clamped a tight lid on new product introduction last year. Instead, Danzig said, the company spent much of last year pumping millions of dollars into improvement of its existing products, including Citrus Hill and Pringle’s potato chips. As a result, its ad spending in 1987 dropped 7.6%.

But with total U.S. advertising spending estimated at $109 billion in 1987, does it really matter who’s rated No. 1 or No. 2?

“That, of course, depends on who you ask,” said Danzig. “At a company stockholders’ meeting, people want to know why the company wasted so much on advertising. But advertising executives will tell you that advertising generates increased sales. So who are you going to believe?”

Procter & Gamble officials in Cincinnati had no comment late Friday on the packaged goods company’s demotion from the top spot.

For that matter, Philip Morris executives weren’t exactly boasting over the unexpected rise to No. 1. “I don’t think as a company that we really care if we’re No. 1 or No. 2,” said Thomas Ricke, director of corporate communications at Philip Morris in New York. “But if nothing else, it certainly reflects the fact that we’re growing as a company.

Still Tops on TV

The hefty increase in ad spending at Philip Morris last year, however, was not the result of some sort of division-wide company policy. “There’s no ad guru at Philip Morris who simply says, ‘OK, we’ll increase ad spending across the board by 7%,’ ” said Ricke. Instead, he said, the decisions were made individually at each of the company’s divisions.

Procter & Gamble, however, did remain the world’s largest television network advertiser, even though its 1987 TV budget of $377.6 million was 15% lower than the previous year.

The only company to drop out of the Top 10 was K mart, which increased its annual ad spending last year but still slipped to the No. 11 spot from the No. 10 spot, said Danzig.

And the one newcomer to the Top 10 was Eastman Kodak, which jumped to the No. 7 slot after ranking 34th the year before. Danzig said the Rochester N.Y. company’s 7.9% increase in ad spending was primarily attributed to Kodak’s $5.1-billion purchase of Sterling Drug. Sterling is the New York maker of such products as Bayer aspirin and Lysol deodorizer and ranked 37th in ad spending in 1986.

As for who will rank No. 1 in 1988, it’s too early to tell, said Danzig. “It’ll be a real horse race,” said Danzig. “These two companies will really battle it out for the next few years.”

TOP 10 U.S. ADVERTISERS

‘87 ’86 TOTAL U.S. AD SPENDING rank rank Advertiser Headquarters 1987 1986 1 2 Philip Morris New York $1.56 billion $1.45 billion 2 1 Procter & Cincinnati 1.39 billion 1.50 billion Gamble 3 5 General Motors Detroit 1.02 billion 838.9 million 4 3 Sears Chicago 886.5 million 1.11 billion 5 4 RJR Nabisco Atlanta 839.6 million 894.2 million 6 10 PepsiCo Somers, N.Y. 704.0 million 641.5 million 7 34 Eastman Kodak Rochester, N.Y. 658.2 million 610.2 million 8 8 McDonald’s Oak Brook, Ill. 649.5 million 591.8 million 9 6 Ford Dearborn, Mich. 639.5 million 650.9 million 10 7 Anheuser-Busch St. Louis 635.1 million 643.9 million

‘87 rank % chg. 1 7.4 2 -7.6 3 22.2 4 -19.8 5 -6.1 6 9.7 7 7.9 8 9.7 9 -1.7 10 -1.4

Source: Advertising Age