Money for Something
This past December Advertising Age published a list of the “World’s 25 Largest Advertisers.” The auto industry is doing one heck of a job in that space. According to the publication’s data, the vehicle manufacturers’ rankings and amount of spending are as follows:
4. Volkswagen $6.6 B
6. General Motors $5.1 B
7. Daimler $5.0 B
11. Ford $4.3 B
12. Toyota $4.1 B
14. FCA $3.9 B
25. BMW $3.1 B
Seven of the top 25. A cumulative spend (this is based on 2015 data) of $32.1 B. What’s interesting to note is that while almost any list of anything having to do with the “top” includes Apple and Google, but in this case, Apple isn’t even on the list and Google is down at number 22, with $3.2 B.
But like most companies on the list, the vehicle manufacturers have a suite of products that they must sell, which puts them among the ranks of Procter & Gamble (#1, with a whopping $10.4 B), Nestle (#9, $4.6 B) and Nike ($3.3 B).
But another study, one that shows where companies spend their time and attention—as well as resources, including money—is particularly germane. It is the 2016 Clarivate Analytics Top 100 Global Innovators.
Clarivate is the former IP & Science Business of Thomson Reuters. The primary metric it uses to calculate the rankings is patents, which the organization has plenty of data on. However, it isn’t just the quantity of patents. As the study points out, “For a patented invention to be valuable, it must be of good quality, have a wide market and lay the foundations for further development and refinement.”
There are 11 industries categorized in the study, from Aerospace & Defense to Telecommunications. Automotive is one of the sectors. And it does well in the rankings: Automotive has nine firms in the top 100. This puts it in a tie with Chemicals & Cosmetics in third place. That’s behind Hardware & Electronics at #1 with 29 companies and Manufacturing & Medical with 15.
If you look at the Advertising Age list, pretty much all of the usual suspects are there with a couple of exceptions: Honda and Nissan. However, in the Clarivate rankings, just three OEMs make the list: Honda, Nissan and Toyota. Honda and Toyota have made the list six years running, and Nissan has been on the list for the past four.
The balance of the Automotive companies in the Top 100 are, in alphabetical order, Aisin Seiki, Bridgestone, Delphi Automotive, JTEKT, Valeo and Yazaki. Which is a somewhat surprising list from the companies that aren’t there, like Bosch, Continental and Denso. (Google, incidentally, is in the Software category, so presumably, if Google Self-Driving Cars, now Waymo, was calculated, it was part of the overall company.)
But the bigger surprise is in the OEM category. Three Japan-based companies. So when you index back to the Advertising Age list you see European, American and Japanese companies promoting their wares.
Then there’s the PwC Strategy & Global Innovation 1000 study. There are two lists of interest. One is subjective and the other objective. There’s “10 Most Innovative Companies,” which is based on a survey of global innovative experts. There is “Top 10 R&D Spenders,” which is based on data. One of the interesting findings from the study is that “The 10 Most Innovative companies continue to outperform the Top 10 R&D Spenders on key performance metrics.” So what you do is perhaps more important than what you spend, although arguably you could say that the spending shows a commitment that otherwise might not be taken on board.
On the list of the innovators, there is one automotive company, in fourth position: Tesla. There’s little question that Silicon Valley has had a transformative effect on the global auto industry in a way that no other company has since Ford Motor Company was established.
On the list of spenders, there are two vehicle manufacturers, one in the first position and one in 10th: Volkswagen and Toyota, respectively.
Volkswagen’s diesel issues aside (issues which will undoubtedly cause a trimming in spending for everything including R&D), its aggressive electrification plans speak to the plausibility of its aggressive electrification plans.
Spending on advertising is important for any company with a product or a service to sell. But spending on R&D, the place from which great products come, is more important in the long run. When you see companies like Toyota on all the lists you can realize why.