ChasNote

Talk about stating the obvious! But a glance at the charts in Ad Age’s Annual 2008 report got me thinking that it may not be obvious to some of the biggest players in the industry. For those of you looking at the print edition, I’m on Page 10: The top brands in various categories ranked by ad spend and share of sales in their respective markets.

Advertising among the Detroit automakers in 2007 was, it appears, a defensive operation at best. GM spent $2.2 billion in media as their marketshare slipped to 24.5% from 26.2%. Ford spent $1.7 billion only to see their share decline to 17.5% from 18.6%. Toyota invested $1.2 billion in ads — less than GM or Ford — and grew share to 15.4% from 13.3%. Honda increased share by half a percentage point (9.1% from 8.6%) on an ad budget that was less than $1 billion.

Of course it’s hard to isolate the precise cause from among the many possibilities — product offerings; oil at $100 a barrel; the mix of media spending across print, TV and digital; creative messaging; dealer incentives; etc. Across the categories data-fied in Ad Age’s report, I couldn’t find a consistent correlation between marketing spend alone and sales performance. Both Walmart and JCPenney spent nearly half a billion dollars to hold steady their marketshare (Walmart at 10.6%, JCPenney at 0.8%). Dunkin Donuts spent $108 million to boost share by a tenth of a percent (1.3% from 1.2%), while McDonalds spent $776 million to lose a tenth of a percent (7.7% from 7.8%) in the same category.

Among brands that held 10% or more of their markets in 2005, only Toyota, American Express, and all for big wireless players (AT&T, Verizon, Sprint and T-Mobile) increased share in 2007. It suggests that innovation — which I’m defining here as investments of any kind that pay higher dividends for one company than similar investments by competitors — is most active among the underdogs. Surprise, surprise. But perhaps there’s a lesson for the big dogs: If what you did last year and the year before isn’t working, try something new.

A recent McKinsey report (see Business Week) suggests one thing isn’t working so well: “Traditional TV advertising will be one-third as effective in 2010 as it was in 1990.”