Report: Advertisers backflip from spending growth to decline

Media Futures Mid-Year Update from Starcom MediaVest Group finds marketers revising down initial predictions of a 2.6 per cent increase in spend this year to a 2 per cent "unprecedented"decline

Marketers have done a backflip and have switched from predicting growth in overall advertising spend to decline during the second half of this year, according to the latest MediaVest Media Futures report.

The Media Futures Mid-Year Update 2014 shows advertisers revising down initial predictions of a 2.6 per cent increase in spend this year to a 2 per cent decline in overall spend. The majority of this shift is expected in the second half of the year, where advertisers expect a year-on-year spend reduction of -3.8 per cent.

The report also found the first half of 2014 was virtually flat, with a -0.3 per cent decline in spend recorded by advertisers in the survey. Just 13 per cent expected to be spending more in the second half of the year, against 42 per cent who expect no change, and 38 per cent who now expect a decrease.

According to Starcom MediaVest, advertisers saw ad spend increase year-on-year so far, but either saw a decrease or no change to their ad spend during the first six months of the year. This has prompted belief that the downward trend will continue to the end of the year.

Starcom MediaVest CEO, Chris Nolan, was surprised by the significant leap in anticipated spend.

“We often observe mid-year corrections, however, this correction is unprecedented,” he commented. “It appears to correlate with a significant decline in the May consumer confident levels. It’s worth noting that the Federal Government budget was also released in May.”

The report claimed the decrease is most likely to impact free-to-air TV, but also expected advertisers to reduce spend across most media in the second half including online. In contrast, investment in owned and earned media, including social media, is still on the rise and in line with the original annual survey numbers.

Related: Suncorp CMO tells marketers to start thinking like publishers at the launch of Starcom MediaVest Group’s Media Futures report

Overall, advertisers have downgraded growth expectations for owned and earned media from 7.8 per cent, nearly trip the 2.2 increase stated for paid media budgets in the report, to 4.9 per cent in the mid-year update. Owned and earned account for almost 50 per cent of time and effort spent on media activities, which Starcom MediaVest claimed is significantly higher than its share of spend.

One interesting trend is that advertisers who increased spend in the year to date allocated those funds to television and magazines predominantly. Yet these are also the two media channels where spend was reduced among advertisers who have decreased their spend, along with paid search/SEM.

Forty-four per cent of advertisers who expect ad spend to decrease in the second part of 2014 versus the same period last year also indicated the reduction will be more than they anticipated at the beginning of the year.

In response, director of research at the Interactive Advertising Bureau (AIB), Gai Le Roy, told CMO the digital advertising industry continued to see healthy growth and expected the association’s forthcoming June quarterly figures to again show significant gains for mobile, social, video and search in isolation as well as combined.

However, she admitted the media industry was going through change and dollars were shifting and fragmenting around to a wider group of people as a result. She also noted the press around consumer confidence and wariness in recent months.

Le Roy was also witnessing the rising focus on owned and earned media spend but anticipated some swing back to above-the-line channels long-term, arguing a balance was always going to be needed by brands.

“I think advertisers will realise at a certain point that you have to talk to more than just your own customers and that paid media is still an important part of the mix,” she said. “We’re seeing a lot of new technologies and tools to talk to your own customers, which is great, but there still needs to be focus around awareness and new customers.”

Le Roy agreed everyone in the media industry has to work harder to gain the same or more dollars.

“Again it’s about proving the value. We have to get better as a paid media industry at proving that what we are doing is working for our clients.”

The SMG Media Future report is in its 29th year and was based on surveys of 600 media and advertising executives from November to January.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO Australia conversation on LinkedIn: CMO Australia, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Signup to CMO’s email newsletter to receive your weekly dose of targeted content for the modern marketing chief.

Read More:

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

The impact of uniforms on consumer brand preferences

Flight attendant uniforms attract attention. From a primary association with sex appeal during the 1960-70s, to the diverse role they perform today, the flight attendant’s uniform sits front and centre in the advertising imagery of many airlines. However, relatively little is known about the ways in which consumer behaviour is influenced by airline uniforms.

Are data and creativity like chalk and cheese?

The industry is experiencing an explosion in data-led initiatives like programmatic buying, as well as a simultaneous increase in the importance of creativity. A less adventurous marketer might see these trends as chalk and cheese, as two developments which have the power to markedly improve a brand’s bottom line, but which don’t have much room for crossover.

Ashley Madison is a wake-up call for all marketers on data retention

The recent Ashley Madison hack is a wake-up call not only for consumers, but also for marketers and companies – many of which still do not take their customers’ privacy or data security seriously enough.

We can see how companies are now developing and improving the digital marketing platform they are using and finding ways to add more feat...

TapAnalytics

CMO's top 10 martech stories for the week - 21 January

Read more

Very nice article, Thanks for sharing this necessary information about digital trends. Specially i like prediction no 3 " Marketers embra...

kevin marshall

Predictions: 16 digital marketing trends for 2016

Read more

Mobile has indeed becoming a big player in the marketing industry. It should be utilized by businesses and mobile campaigns should be pro...

TapAnalytics

Report: Mobile-based campaigns and coupons boost consumer brand sentiment

Read more

Very good points, thanks for this article :) I would also add Virtual Reality to the game changers in 2016 (especially after CES2016). I...

Piotr Maksymowicz

Predictions: 16 digital marketing trends for 2016

Read more

I would like to know if you shop at Big W and use your rewards card there. What happens? As woolworths has only a selected items that you...

Rosalie

Woolworths faces criticism after dropping frequent flyer points in new-look loyalty program

Read more

Latest Podcast

More podcasts

Sign in