How Much Does Coca-Cola Spend on Advertising?

Coke's AI Generated Ad (Source: WSJ.com)

Ads are meant to evoke a reaction, an emotion, and an action. Great ads can bring you to tears or make you laugh, and those stories and, hopefully, the brands behind them will stick with you forever, generating revenue and increasing the brands' customer lifetime value.

Apple made some of the most iconic ads during the Steve Jobs reign.

• Think Different - This is on my list of all-time favorite ads.
• 1984—This ad aired during Super Bowl XVIII (18) in 1984 and forever changed the NFL and the ad market in the U.S.
• Nike "Failure"—Nike is known for its great ads, and this one by Michael Jordan evokes so much emotion and has thus stood the test of time. Nike spent $4.2 billion on ads in FY 2024 (See data below under the consumer discretionary sector).

Using Snowflake, I analyzed the advertising spending of some of the largest companies in the U.S. Here are some of my findings.

How much did Coca-Cola and Pepsi spend on advertising?

Coca-Cola spent $5 billion on advertising in fiscal year 2023, a 20% increase from its spending in 2022, when it spent $4 billion. Over the past decade, the company has consistently spent $4 billion on advertising (Exhibit 1). Recently, the company has started experimenting with AI to create some of its ads. AI promises massive cost savings for advertisers, and they are using it to stretch their ad budgets.

Exhibit 1: Coca-Cola Ad Spending

SEC.gov

PepsiCo spent $3.8 billion on advertising in 2023 (Exhibit 2), an increase of 8.5% from 2022, when it spent $3.5 billion. Over the past decade, the company has increased ad spending by 65%.

Exhibit 2: Pepsico Advertising Spending.

SEC.gov

Why are Coca-Cola and PepsiCo increasing their ad budget?

One might expect ad budgets to go up at the pace of inflation, but high-single-digit or double-digit growth is scarce. I hypothesize that consumer staples companies have struggled with the lack of volume growth ever since the Pandemic-fueled consumption ended. Many consumer staples companies also face increased competition from store brands such as Costco's Kirkland, Walmart's Great Value, and Amazon's many store brands.

Another reason is that the price increase regime is ending. Consumers globally are frustrated by the price increases and are pulling back on consumption. So, further price increases that would have driven revenue and profitability growth are difficult to sustain now.

Ad Spending By Consumer Staples Companies

Here's a list of some of the biggest ad spenders in the consumer staples sector (Exhibit 3).

Exhibit 3: Ad Spending by Consumer Staples Companies.

Sec.gov

Procter & Gamble, with its storied list of billion-dollar brands (Exhibit 4), protects its turf by spending close to $10 billion in ads annually.

Exhibit 4: Just a Few Procter & Gamble Brands

(Source: Procter & Gamble Website)

Ad Spending By Consumer Discretionary Companies

Here's a list of some of the biggest ad spenders in the consumer discretionary sector (Exhibit 5). Surprisingly, Amazon is one of the largest spenders on advertising in the consumer discretionary sector. Yes, Amazon is categorized under discretionary spending, although it generates vast profits from its AWS division. The General Motors data is from 2013, and the API seems to return data until the fiscal year 2013. General Motors spend $3.6 billion on advertising in fiscal year 2023.

Exhibit 5: Consumer Discretionary Companies Ad Spending (Top 10)

SEC.GOV

Exhibit 6: Consumer Discretionary Companies Ad Spending (Bottom 9)

SEC.GOV

Ad Spending By Pharmaceutical Companies

Big Pharma is a big ad spender. Nobody in the U.S. can escape those ads for new pharmaceuticals. Here are the biggest ad spenders among US-listed pharmaceutical companies. Pfizer remains the top advertiser in the pharma industry (US-listed stocks).

Exhibit 7: Ad Spending By Big Pharma

SEC.GOV

Companies are spending vast sums on advertising. This part of the corporate budget may not abate any time soon, but it remains to be seen whether AI can help create impactful stories to lure consumers to brands.

Snowflake is one of the most accessible data platforms for businesses to gain insights quickly. I used Snowflake to query the SEC data and present it here. You can try Snowflake here.

Disclosures: I am a Sales Engineer at Snowflake. All opinions in this blog post are solely mine and do not reflect Snowflake's views. I am not a Registered Investment Advisor, and any discussion on securities or investments is not an inducement to make a particular investment.