The Gap Inc.

Part
01
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Part
01

The Gap Inc - Total Ad Spend

Gap Inc. spent $179 million and $182 million on measured media advertising in the United States in 2018 and 2017, respectively. Gap Inc. spent $650 million on its global advertising in 2018, while it spent $673 million on the same in 2017.

GAP INC. UNITED STATES AD SPEND

  • In 2018, Gap Inc. spent $179 million on measured media advertising in the United States.
  • Gap Inc. spent $182 million on measured media advertising in the United States in 2017.
  • From January to December 2015, Gap Inc. spent $164 million in measured media advertising in the United States; this was a 26.4% decline over 2014 figures.
  • However, from January 2016 to November 2016, the company spent $118.7 million in measured media advertising in the United States.

GAP INC. GLOBAL AD SPEND

HELPFUL INSIGHTS

  • In 2015, Banana Republic's marketing spend was $14.3 million on measured media, which was a 54% reduction over 2014 figures. Between 2014 and 2013, the marketing spend also reduced by 39%.
  • An article published by the New York Times in 2008 noted that "In recent years, the Banana Republic annual ad budget has ranged from about $30 million to $50 million."
  • It has been reported that Athleta is increasing its marketing spend given the growing competition in the women's athletic apparel market, with particular focus on "paid social, and looking to new partnerships to amplify its voice."
  • According to Arthur Peck, CEO of The Gap, "We spend close to $200 million a year on marketing today through this new Gap Inc."

RESEARCH STRATEGY

Our research commenced on Gap Inc.'s website, as the parent company of Gap, Banana Republic, Athleta, Intermix, Hill City, and Janie & Jack. We looked through the company's annual report, investor presentations, news articles, and press releases for direct data points into each brand's ad spend in the United States and /or worldwide. The only available expenses provided in the annual report are the operational, cost of goods sold and occupancy expenses, yet these data points were not segmented by the different brands. In the annual report, the company notes that operational expenses are inclusive of marketing expenses, but a breakdown of this was not provided. While the investor presentation contains details of marketing plans for the various brands, no ad spend or marketing budget figures were attached.

Next, we looked through third-party companies that provide advertising intelligence such as Kantar Media and Red Books for each individual brand's ad spend. Our findings indicate that Red Books may have the requested data, however, this is behind a paywall requiring paid access, although there's an option for a free trial.

Our next strategy was to conduct a press search on each brand to identify direct ad spend figures. While this approach did not yield answers, it provided insights into why the segmentation of the ad spend by the different GAP Inc. brands is not available. For example, this article by CNBC notes that "Gap doesn’t break out how much it’s been spending on the marketing behind Athleta or how that will evolve down the road. But a spokeswoman said, 'We are continuing to grow our marketing investments to fuel our business growth.'" We also found that GAP just launched Hill City in 2018, and only recently acquired Janie & Jack March 2019. Through this approach also we were able to provide relevant insights on some of Gap Inc.'s brands, which we have presented above.

Additionally, we tried to identify various data points that may enable us to triangulate each brand's ad spend. For example, if we could identify the percentage of revenue each brand commits to marketing or advertising. However, despite perusing various interviews (here and here) from company executives and articles, we found no such data points. As such, we have presented Gap Inc.'s ad spend in the United States, as well as worldwide too.


Part
02
of six
Part
02

The Gap Inc - Ad Spend Breakdown

Thirty-two percent of The Gap, Inc.'s advertising spend was for digital display ads. Twenty-one percent of the company's 2018 national television advertising spend was for Old Navy. The Gap, Inc. had a 2018 total advertising spend of $523 million in the US. Additionally, the company's US measured media spend for the same year is approximately $179 million.

BREAKDOWN OF ADVERTISING SPEND

  • According to Pathmatics, The Gap, Inc. spends most of its digital advertising budget on display and desktop video placements. The company only spends 7% of its digital advertising budget on mobile ads.
  • Thirty-two percent of The Gap, Inc.'s advertising spend was for display and desktop video placements. MediaMath, a demand-side advertising platform and the company's top adtech partner served, served those advertisements.
  • AdAge estimates The Gap, Inc. spent a total of $523 million on US advertising in 2018. AdAge also estimates that the company's US measured media advertising spend for the same year was $179 million.
  • AdAge estimates that The Gap, Inc. spent a total of $533 million on US advertising in 2017. AdAge also estimates that the company's US measured media advertising spend for the same year was $182 million.
  • The Gap, Inc. estimates that its total global ad spending in was $601 million in 2016, $673 million in 2017, and $650 million in 2018.

BREAKDOWN OF ADVERTISING SPEND BY BRAND

GAP

  • The breakdown of the Gap brand's digital display advertising spending is 59% direct buys, 39% funneled through MediaMath (DSP), 1% through Ad Network, and 1% through unknown.
  • The top sites for the Gap brand's display ads were AllMuxic, Cheezburger, Sneaker News, KnowYourMeme, and Complex.

BANANA REPUBLIC

  • The breakdown of Banana Republic's digital display advertising spending is 94% direct buys, 5% through Complex Media (Banana Republic's top display Ad Network partner), and 1% through supply-side platforms (SSP).
  • The top sites for Banana Republic's display ads were AOL, The New York Times, Slate, Fox News, and Popsci.com (Bonnier).

ATHLETA

  • The breakdown of Athleta's digital display and desktop advertising spending is 49% direct buys, 46% through MediaMath (DSP), 2% Ad Network, 2% unknown, and 1% through Exchange.
  • The top five sites for Athleta's display ads were ESPN, PopSugar, Realtor, Reddit, and Well + Good. (s4)

OLD NAVY

  • The breakdown of Old Navy's digital display advertising spend is 70% direct buys and 30% through MediaMath (DSP).
  • The top sites for Old Navy's display ads were SlickDeals, ChicagoCubs.MLB.com, MLB, AOL, and Fox News. (s4)
  • MediaRadar estimates that Old Navy's total advertising spend was $100 million in 2018.
  • Kantar Media reports, via Chain Store Age, that Old Navy's national television advertising spend was $21 million (21% of the total advertising spend) in 2018.

HELPFUL FINDINGS

GENERAL US ADVERTISING SPENDING BY MEDIA

  • According to a report by Zenith, via AdAge, the breakdown of advertising spend by major media in 2019 is 46.4%, internet or digital ad spend; 29.4%, television; 7.7%, radio; 6.1%, newspapers; 5.7%, magazine; 4.3%, outdoor; and 0.4%, cinema.

THE GAP, INC.

  • According to Art Peck, President and CEO of The Gap, Inc: "Gap’s marketing spending skews heavily toward advertising on social media rather than traditional media."
  • The Gap, Inc.'s newest brand, Hill City, is spending its advertising budget on Facebook Messenger (specifically, its chatbot feature) as a primary marketing channel.
  • According to ModernRetail, Athleta is spending most of its advertising budget on both traditional channels (e.g., catalogs) and digital channels (e.g., paid social media marketing on Facebook, Instagram, and YouTube).
  • According to AdAge, Banana Republic's total advertising spend for measured media was roughly $14.3 million in 2015. (s3)

RESEARCH STRATEGY

We began our investigation with an inquiry into The Gap, Inc's corporate website to determine the breakdown of advertising spending by the company and its brands by platform/channel. While we sought data from the company's annual reports, news articles, investor presentations, and press releases, we did not locate any relevant information concerning the breakdown of advertising spend. However, we were able to locate the company's global advertising spending and net sales per brand.

Our next step was an inquiry into advertising intelligence companies (e.g., Kantar Media, Zenith, eMarketer, Pathmatics, MediaRadar, and Forrester). We were able to locate information on the breakdown of total digital advertising spending and estimates of total advertising spending. We were unable to determine the television, OOH, and radio advertising spends for The Gap, Inc. and most of its brands due to a lack of publicly available information. But we were able to use the available data to make the following calculation concerning Old Navy's national television advertising spend.

The percentage of Old Navy's television advertising spend in 2018 = Old Navy's 2018 national television spend / Old Navy's 2018 total ad spend = $21,000,000 / $100,000,000 = 0.21 * 100 = 21%

Our final strategy was a further inquiry into business and industry intelligence sources (e.g., AdAge, Retail Dive, AdWeek, TechCrunch, ZDNet, Modern Retail, The Drum, and Extreme Reach); statistical databases like Statistia; and media outlets (e.g., CNBC, Biz Journals, and Forbes). We found data on The Gap, Inc.'s annual advertising spend in the US and its advertising spending priorities. However, we found no information related to the breakdown of that advertising spending by channel or brand. Furthermore, we were unable to locate any data that could be used to triangulate the requested information.
Part
03
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Part
03

The Gap Inc - Links to Ad Campaigns

Some advertising campaigns by Gap's brands over the last year include: the 'Love Your You' campaign by GapBody, the 'Legacy Denim' campaign by Banana Republic, the 'Show Her What’s Possible' campaign by Athleta, the 25th Anniversary campaign by Intermix and the 'There’s Magic in The Woods' campaign by Janie & Jack.

GAP GLOBAL ADVERTISING CAMPAIGNS OVER THE LAST YEAR

BANANA REPUBLIC ADVERTISING CAMPAIGNS OVER THE LAST YEAR

ATHLETA ADVERTISING CAMPAIGNS OVER THE LAST YEAR

INTERMIX ADVERTISING CAMPAIGNS OVER THE LAST YEAR

JANIE & JACK ADVERTISING CAMPAIGNS OVER THE LAST YEAR

RESEARCH STRATEGY

While the research was straightforward for the most part, we were not able to find links to advertising campaigns for Hill City. We started our research by checking the company website. We were hoping to find information on currently running campaigns or those that took place in the past year. However, we were not able to find any such information on their website.

Next, we looked through advertising campaign databases such as Coloribus, WeLoveAd, Moat, AdEspresso and iSpot.tv. These websites usually have information on advertising campaigns run by different companies. However, our search did not yield any helpful results for Hill City. We were only able to find a digital desktop ad on Moat, and it was not clear if this ad was part of a campaign.

Lastly, we decided to check Hill City's social media pages such as YouTube, Instagram and Facebook. This is because most campaigns are usually also posted on the company's social media pages. However, once again, our efforts proved futile as there were no publicly available campaigns on their social media pages. We found some videos on their Facebook page such as their launch video as well as videos featuring Jeff Johnson and Ime Archibong. However, we were not able to tell if these videos were part of advertising campaigns. Nevertheless, we have included them in the sources as helpful insights. We were not able to find Hill City on YouTube and this could be due to the fact that they do not have a channel yet.

On Hill City's Instagram page, they recently mentioned a Fall 2019 campaign in one of their posts. Given the recency of this post, we have concluded that the campaign is not yet publicly available. We have also concluded that Hill City's campaigns are not publicly available because it is a relatively new company which began operations in late 2018.
Part
04
of six
Part
04

The Gap Inc - Number of Campaigns

Gap, Inc. brands ran between 2-6 campaigns in the United States in 2018: Gap (6), Banana Republic (5), Old Navy (4), Athleta (4), Intermix (3), Hill City (2), Janie & Jack (2). A search was made for the campaigns launched by each brand in 2018. The campaigns have been listed below.

GAP

BANANA REPUBLIC

  • Banana Republic Fall 2018 Campaign (celebrating 40 years)
  • Feel the Magic: Holiday 2018 Campaign
  • Banana Republic Summer 2018 Campaign
  • Banana Republic Spring 2018 Campaign
  • Banana Republic Men's Promotional Campaign
  • Total number of digital & TV campaigns in 2018: 5

OLD NAVY

ATHLETA

INTERMIX

  • Intermix Fall Campaign
  • Intermix Holiday Campaign
  • Intermix Spring 2018 Campaign
  • Total number of digital & TV campaigns in 2018: 3

HILL CITY

  • Hill City is a direct-to-consumer brand that was launched in September 2018. It does not do traditional advertising.
  • Hill City's marketing mix is "40% social media (primarily Facebook, Instagram, and Twitter), 20% search and 40% programmatic".
  • Based on Hill City's social media platforms posts, Hill City had two campaigns: Spring '19 collection and #wearespringcity
  • Total number of digital & TV campaigns in 2018: 2

JANIE & JACK

  • Gap purchased Janie & Jack, a children's wear brand, in March 2019.
  • ispotTV, Moat, Aban Commercials, and Models.com do not show any advertisements for Janie & Jack.
  • A search on social media indicated that the company ran promotional discount advertisements.
  • Through media sources, we found that Janie & Jack ran two campaigns in 2018: Janie & Jack Spring/ Summer (Pastel) Campaign; Janie & Jack's Holiday Collection Campaign.
  • Total number of digital & TV campaigns in 2018: 2

RESEARCH STRATEGY

In order to fulfill this request, we began by searching for any precompiled statistics on the number of campaigns that Gap, Inc's brands launch every year. We looked through several industry portals and media sources such as Ad Age, Ad Week, Branding Forum, Kantar, Marketing Dive, The Drum, and Ad Exchanger; additionally, we also looked through the websites of agencies such as Blue Flame and Ogilvy that work with Gap, Inc's brands. However, we did not find the required data precompiled. Given the limitation, we searched for all the TV and digital campaigns launched by the brands in 2018 and determined the total.

We searched advertisements databases such as ispotTV, Aban Commercial, Moat, and Models.com, and industry and media sources such as Ad Age, Ad Week, Kantar, Branding Forum, Marketing Dive, The Drum, and Ad Exchanger, and social media platforms--Facebook, Instagram, and Twitter-- of the brands. Based on our search across multiple sources, we determined the number of campaigns of each brand in 2018. All seven of Gap's brands were researched.

All campaigns identified are US-specific. Some sources like Model.com do not indicate the region of the advertisement. However, as the listed advertisements are largely seasonal campaigns (Fall, Summer, Spring, and Holiday) and the apparel companies are based in the US, it is assumed that seasonal campaigns were also run in the United States. In other instances, the sources either explicitly say that they are US advertisements, or indicate that they are aired on US TV channels. Hill City, Janie & Jack, and Intermix are based in the United States/ North America.

Also, the research was done assuming that the total number of campaigns on TV and digital combined was required as campaigns are often run on both media.
Part
05
of six
Part
05

The Gap Inc - International Sales Revenue

Old Navy's national (U.S.) revenue in 2018 accounted for 91% of total revenue while its international revenue accounted for 9%. Gap Global's national (U.S.) revenue in 2018 accounted for 57.9% of the total revenue while its international revenue accounted for 42.1%. Below further information can be found on the sales for other Gap brands.

OLD NAVY GLOBAL

  • Old Navy's national (U.S.) revenue in 2018 was 91% of the total revenue, equivalent to $7,134 million.
  • Its international revenue in 2018 was 9% of the total revenue, equivalent to $706 million.
  • Its international sales revenue can be broken down as follows: Canada's sales were $584 million, Asia's sales were $50 million, and the sales of other regions was $72 million.
  • Old Navy's national revenue in 2017 was 90.8% of total revenue, equivalent to $6,570 million, while its international revenue was 9.2% of total revenue, equivalent to $668 million.

GAP GLOBAL


BANANA REPUBLIC

  • Banana Republic's national (U.S.) revenue in 2018 was 85.3% of the total revenue, equivalent to $2,095 million, while its international revenue was 14.7% of the total revenue, equivalent to $361 million.
  • Its international sales revenue can be broken down as follows: Canada's sales were $227 million, sales in Europe were $14 million, Asia's sales were $94 million, and the sales in other regions amounted to $26 million.
  • Its national revenue in 2017 was 84.7% of total revenue, equivalent to $3,065 million, while its international revenue was 15.3% of the total revenue, equivalent to $2,253 million.

ATHLETA, INTERMIX BRANDS, AND HILL CITY

  • The sales revenue for Athleta, Intermix brands, and Hill City were grouped by the company.
  • The national (U.S.) revenue for this group in 2018 was 99.7% of the total revenue, equivalent to $1,121 million, while their international revenue was 0.3% of the total revenue, equivalent to $3 million.
  • The international sales are all from Canada ($3 million).
  • This group's national revenue in 2017 was 99.7% of the total revenue, equivalent to $916 million, while their international revenue was 0.3% of the total revenue, equivalent to $3 million.

JANIE & JACK

  • This brand was acquired on March 4, 2019, and no information on its revenue has been released yet.

RESEARCH STRATEGY

To find the percentage of national revenue, the research team divided the relevant brand's national revenue by its total revenue and converted the answer to a percentage. We repeated this formula for the percentage of international revenue and divided the relevant brand's international sales by the total revenue and converted it into a percentage. The calculations were done in the excel file attached. Additionally, the team found that Gap Inc does not disclose the revenue for Athleta, Intermix brands and Hill City separately. It grouped these brands and reported their revenue as one figure. Lastly, there was no revenue information for Janie & Jack since the brand is a new acquisition and its revenue has not been reported yet. The team went a step further and provided percentage revenue for the year 2017 for comparison.


Part
06
of six
Part
06

The Gap Inc - Change in Spend

The total advertising spend of Gap Inc. in the United States declined by 1.88% year-over-year in 2018 while the total United States Measured Media Advertising expenditure increased by 2.96% CAGR over the period 2015-2018. It was also found that the global advertising expenditure of Gap Inc. has a CAGR of 0.46% for the period 2012-2018.

Gap Inc. US Advertising Spend

  • The total advertising spend of Gap Inc. in the United States was $523 million while the total United States measured media advertising spend amounted to $179 million in 2018.
  • In 2017, the total advertising spend of the company amounting to $533 million while the total US measured media advertising spend was $182 million.
  • In 2016, it was found that Gap Inc.'s measured media advertising expenditure in the United States was reported to have been $118.7 million. Gap Inc. spent $164 million in measured media advertising in 2015.
  • According to Ad Age's Datacenter, Gap Inc.'s measured media advertising expenditure declined by 26.4% over the period 2014-2015.
  • The year-over-year change in the total ad spend in the United States by Gap Inc. can be calculated by utilizing the following formula,
    • Year-over-year advertising spend = [(Ad spend in 2018/Ad spend in 2017) — 1] x 100
    • Year-over-year advertising spend = [($523 million/$533 million) — 1] x 100 = -1.88%
  • The CAGR change in the measured media advertising spend for the period 2015-2018 can be calculated as follows,
    • CAGR (2015-2018) = [[(Measured media spend in 2018/Measured media spend in 2017)^(1/number of years)] — 1] x 100
    • CAGR = [[($179 million/$164 million)^(1/3)] — 1] x 100 = 2.96%
  • Therefore, the total advertising spend of Gap Inc. in the United States is estimated to have declined by 1.88% year-over-year in 2018 while the total measured media advertising spend has a CAGR of 2.96% for the period 2015-2018.

Gap Inc. Global Advertising Spend

  • Gap Inc. global advertising spend has remained range-bound over the past six years and has not veered significantly. The company spent over $650 million in advertising expenditure worldwide in 2018, $673 million in 2017, $601 million in 2016, $578 million in 2015, $639 million in 2014, $637 million in 2013 and $653 million in 2012.
  • In 2015, Gap Inc. spent $14.3 million on measured media advertising for its 'Banana Republic' brand which was 54% lower then the marketing spend in 2014. The brand also saw a decline of 39% in its marketing spend between 2014 and 2013.
  • The CAGR for the global advertising spend of Gap Inc. for the period 2012-2018 can be calculated as follows,
    • CAGR (2012-2018) = [[(Ad spend in 2018/Ad spend in 2012)^(1/number of years)] — 1] x 100
    • CAGR = [[($650 million/$653 million)^(1/6) — 1] x 100] = 0.46%
  • Therefore, the global advertising spend of Gap Inc. has a CAGR of 0.46% for the period 2012-2018.

Other Useful Information On Advertising Efforts

  • Gap Inc.'s 2018 annual report underlines that the company has been increasingly relying on social media and digital advertising through online dissemination of marketing and advertising campaigns.
  • Gap Inc. has been focusing on personalizing its digital marketing strategy across its brands as it believes that "each consumer has a unique reason to shop the brands". The company has evolved its advertising efforts to leverage a data-driven approach to personalized advertising.
  • Gap Inc. has built a proprietary customer data platform (CDP), which allows them to develop a holistic view of the consumer that can then be used for marketing. Using both, first-party and third-party data, Gap Inc. targets consumers across various digital advertising channels to help with customer clustering, segmentation, and resolution.
  • The company leverages "dynamic content optimization technology, which can personalize ads based on data about the viewer at the moment of ad serving" in order to customize the creative and messaging for each audience segment.
  • Gap Inc. has partnered with Amperity, an AI start-up which enables the company to execute real-time probabilistic customer matching, resulting in more effective match rates with high levels of accuracy.
  • The company has also initiated the use of tools such as Persado, an AI solution that optimizes a text copy against a consumer's emotional sentiment for any associated descriptions and headlines.


Research Strategy

We began our search by looking into Gap Inc. and its brands' websites, press releases, and various financial documents and reports such as annual reports, 10-Q statements, 8-k filings, company presentations, and supplement filings for the advertising efforts and spend over the past five years. However, after a thorough search through these channels, we found no relevant information. All the data found catered around the overall ad spend by Gap Inc. and the revenues for certain sub-brands like the Banana Republic. While the reports provided information on the company's current plans in using digital advertising channels, no specific information was available for the different sub-brands' advertising efforts.

We then expanded our search to include industry and market reports from research websites such as Nielsen, Deloitte, and Pew Research; databases that track ad spend such as Ipsos AdWatch, WARC Adspend Database, and Standard Media Index; company databases such as Crunchbase and Hoovers; media websites such as Forbes and WSJ; and blogs where CEO interviews are generally published such as The CEO Magazine and Independent.co. However, there was no relevant information on how the advertising efforts and spend has changed from each of Gap's brands over the past five years. All the information found centered around the various advertising efforts undertaken by the company, the evolving marketing strategy of the brand, and data on the new brands launched by the company.

We then attempted to triangulate the information required by using the available data on the company's advertising expenditure. While there was information on the revenues from certain brands of the company, no data around the percentage share of individual brands in the overall ad spend of Gap Inc. could be located to calculate the ad spend of each brand over the past five years. The lack of data on the subject can be because the company does not disclose its advertising expenditure at a brand level due to confidential and competitive reasons and hence no financial report or external database contains this information.

Sources
Sources

From Part 01
Quotes
  • "Gap has also reined in Banana Republic's marketing spend. Last year, the brand spent $14.3 million on measured media, a 54% drop over 2014, according to Kantar Media. The decline follows a 39% decrease between 2014 and 2013."
Quotes
  • "In 2015, Gap Inc. spent $164 million on measured media in the U.S., a 26.4% decline over 2014, according to Ad Age's Datacenter."
Quotes
  • "In recent years, the Banana Republic annual ad budget has ranged from about $30 million to $50 million."
Quotes
  • "As the women’s athletic apparel market gets more crowded, Athleta is upping its marketing spend, particularly on paid social, and looking to new partnerships to amplify its voice."
Quotes
  • "And the second is marketing effectiveness. Imperative for this company is to bring the younger customer into the fold. We spend close to $200 million a year on marketing today through this new Gap Inc."
Quotes
  • "Gap doesn’t break out how much it’s been spending on the marketing behind Athleta or how that will evolve down the road. But a spokeswoman said, 'We are continuing to grow our marketing investments to fuel our business growth.'"
Quotes
  • "Late last year, Gap Inc. launched Hill City, an activewear line that is its version of Athleta, but for men."
Quotes
  • "Gap plans to acquire Janie and Jack, a high-end children’s clothing brand formerly owned by Gymboree, for $35 million, according to The Wall Street Journal."
From Part 02
Quotes
  • "We spend close to $200 million a year on marketing today through this new Gap Inc."
Quotes
  • "Today, Gap’s marketing spending skews heavily toward advertising on social media rather than traditional media, Peck continued."
From Part 03
From Part 04
From Part 05
Quotes
  • "On March 4, 2019, the Company acquired Janie and Jack, a leader in premium children’s fashion, from Gymboree Group, Inc. The purchase price was approximately $35 million with an additional agreement to purchase the Janie and Jack inventory at cost plus additional fees and expenses."
  • "Primarily consists of net sales for the Athleta and Intermix brands. Beginning in the third quarter of fiscal 2018, the Hill City brand is also included."
  • "We identify our operating segments according to how our business activities are managed and evaluated. As of February 2, 2019, our operating segments included: Old Navy Global, Gap Global, Banana Republic Global, Athleta, and Intermix. Each operating segment has a brand president who is responsible for various geographies and channels. Each of our brands serves customers through its store and online channels, allowing us to execute on our omni-channel strategy where customers can shop seamlessly across all of our brands in retail stores and online through desktop or mobile devices."