In the Second Half of 2020, Advertising Budgets of Major Brands such as P&G and McDonald’s Will Increase

In 2020, the COVID-19 pandemic had a profound impact on the advertising industry. A key concern across the sector has been how advertising budgets and expenditures from various brands would be allocated.

Most brands experienced significant fluctuations in their operations throughout the year. With overall corporate budgets being reduced, marketing and advertising expenditures were among the first areas to be reconsidered. Over the past few years, cutting advertising budgets has become a trend adopted by many large companies.

However, the discussions surrounding budget reductions have reached a more comprehensive conclusion. Notably, some major brands have not decreased their budgets but instead increased them this year. The allocation of advertising spend across various channels has also shifted – companies such as P&G, McDonald's, and others have announced plans to increase their advertising budgets in the second half of the year. For instance, budgets allocated to informational advertising have declined, with a greater focus placed on brand advertising placements.

P&G's Advertising Spend Increased by 8% in 2020, the First Growth in Four Years

P&G reported its strongest annual sales growth since 2006. According to the report, as of June 2020, P&G's annual advertising spend increased by $575 million to $7.33 billion, representing an 8.5% rise.

Despite the impact of the COVID-19 pandemic, P&G's advertising expenditure saw its first annual growth since 2016. In the spring and early summer of this year, the demand for cleaning and paper products in the U.S. continued to surge, and the economic recovery in Vietnam, one of P&G’s major markets, also helped boost sales in the region.

McDonald's Increased Marketing Expenditure by $200 Million in the Second Half of 2020

McDonald's planned to increase its marketing spend to offset the operational challenges caused by the pandemic. The company anticipated raising its marketing budget by an additional $200 million for the remainder of the year.

Chris Kempczinski, President and CEO of McDonald's, stated during the financial report analysis meeting on July 28 that the company had cut marketing costs by 70% in the second quarter and would provide a "marketing recovery fund" for Q3 and Q4. In the first half of the year, McDonald's spent $200 million to assist franchisees with advertising efforts to stimulate sales.