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Back to Office Trends Halts Spending in Key Areas

After plunging into an unexpected work-from-home experiment nearly 3 years ago, some companies are calling their workers back to the office. According to a Microsoft study, 50% of companies want workers back 5 days a week.

Despite the pushback by millions—38% of fully remote workers would prefer hybrid work—bosses have the edge, with estimates projecting that 54% of workers will return to the office in 2023.

As the slow-but-steady migration continues, some advertisers are spending more. That said, some are spending less—and we looked at our data to find out which ones. 

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Maybe Breakfast Isn’t That Important

Dr. John Harvey Kellogg, the man behind the beloved Kellogg’s Corn Flakes, is widely credited with coining the phrase, “breakfast is the most important meal of the day.”

The validity of the phrase is largely in question, but what’s not up in the air is society’s love for breakfast, which grew stronger during the pandemic. Kellogg’s, for example, increased revenue by 1.41% and 2.98% in 2020 and 2021, respectively (a sizable jump from a growth rate of 0.23% between 2018 and 2019.)

With people returning to work, however, they may have less time for their morning meal. In any case, advertisers promoting breakfast foods, including dairy, eggs, sausage, granola/snack bars, cereal, and breakfast foods, are spending less on ads. 

Overall, ingredients for breakfast foods are down by 31% YoY.

Comparing January through August 2022 with the same period in 2021, spending dropped by 4% to $3.5b (that’s $141mm less than what was invested during the same time in 2021). 

Cereal advertisers, for example, including Kellogg (down by 53%), General Mills (down by 23%), and Post Holdings (down by 12%), collectively reduced their spending by 34%. 

At the same time, dairy advertisers spent 57% less than they did in 2021 as top spenders, including Daisy, Lactalis, and Ornua Foods North America (Kerrygold) pulled back.

The downward trend continued across most of these categories, with the exception of bacon advertisers who increased their spending by 143% YoY. 

For the bacon advertisers, the spike could indicate they’re feeling the heat from plant-based products, like Beyond Meat, that continue to innovate (despite some trouble brewing on the financial side of business). 

It could also simply be because people love bacon—only 4% of Americans asked in the survey said they don’t like bacon.

While these advertisers are all figuring out how to generate sales when people are spending less time at home—and more likely to pick up breakfast on the road—the tide may be turning as kids return to school. 

In August, most of these advertisers increased their budgets.  

Advertisers for breakfast foods, for example, spent 17% more YoY in August, while egg advertisers, like Eggland’s Best, increased theirs by 88%. 

Alcohol Advertisers Are Cut Off

Between boredom, isolation, layoffs and an unprecedented amount of uncertainty, alcohol consumption rose during the pandemic. In fact, excessive drinking increased by 21%. 

With people heading back to the office, consumption is decreasing and ad spending is following suit. 

The total investment from advertisers across the alcohol category, including those promoting beer, hard seltzers, and whiskey, decreased by 23% YoY.

A level deeper, beer advertisers, including Anheuser-Busch, Constellation Brands (Corona, Modelo, etc.), and Molson Coors (Blue Moon, Coors, and Miller brands) reduced their spending by 19%. 

That said, spending was flat in August, which makes sense given the start of the NFL season. With the season running through February, this trend will likely continue or even increase moving forward. 

At the same time, hard seltzer advertisers decreased their budgets by 35% through August. 

While a dip in spending was inevitable, the summer should warrant an uptick. But, for whatever reason, it didn’t.

For example, Constellation Brands reduced spending for Corona Hard Seltzer by 84%, 76% and 77%, respectively, in June, July and August. Meanwhile, Molson Coors decreased spending for Topo Chico and Vizzy.

That said, a couple of hard seltzer brands did invest. 

Truly Hard Seltzer and Truly Lemonade, advertised by The Boston Beer Company, increased their spending by 2% and 99% YoY in July and August, respectively, thanks to a big push to promote Truly Hard Seltzer and the new “margarita style” product.

Advertisers for White Claw increased their spending by 39% YoY, with July experiencing a 131% YoY spike. That said, spending is down in August as the summer season comes to a close. 

For hard seltzer advertisers, the contrasting strategies could point to where the market is heading—one that has Truly and White Claw on top—but also a shift in the go-to-market strategies of the others. 

Of course, it could also be a mix of both. 

Office Supply Advertisers Adjust

Office supply advertisers, including those promoting computer hardware, computers, printers, desks, office supplies, and monitors, find themselves in a unique situation. 

While many alcohol and breakfast food brands are finding demand for their products decrease, those for office supplies are simply adjusting as demand shifts. 

During the first 8 months of 2021, these advertisers spent $432mm—a 2% YoY decrease—driven by decreases by computer advertisers such as Alphabet (down by 92%), Denali (down by 48%), and HP (down by 71%). That number would be lower if Apple hadn’t increased its budget by 53% leading up to the launch of the iPhone 14

The rest of this category—printers, desks, office supplies, and monitors—are up YoY, although their spending is far from stable. 

Printer advertisers, for example, were up by 88% overall, but experienced a double-digit decrease in August.

For desk advertisers, decreases in June, July and August by 35%, 14% and 64% YoY, respectively, put a damper on a 69% YoY increase. 

Meanwhile, advertising for office supplies was up by 189% YoY, but down in August by 16%. 

The same goes with computer monitors, which saw spending increase by 36% YoY, but decline in July and August.

For these advertisers, the up-and-down nature of their spending could be the result of initial surges upon office doors re-opening—and thus a demand for supplies—and a subsequent pullback once demand was met.

For computer advertisers, the decrease in spending could also have to do with market troubles, evident by Intel announcing a series of layoffs in the “face of PC slump.”

Either way, substantial increases give way to stabilizing spending, although product launches could warrant increases here and there (similar to Apple’s push to promote the iPhone 14).

RTO Policies Stifle Ad Spending for Some

Return-to-office (RTO) policies are sparking a mixed response for advertisers; some, such as those promoting baby/children’s products and cosmetics, increased spending in light of back-to-work trends. On the flip side, advertisers for breakfast foods, alcohol, and, understandably, home office tools, have decreased their spending.

That said, just like their contemporaries who are benefiting from the workplace shift, the advertisers finding themselves in a pinch may find their fortunes turn.

For example, the new COVID variant could force some companies to back-track their RTO plans and, thus, spark the spending of these advertisers. In a market consistently throttled by new variables, only time will tell.

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