There’s so much choice available that customers can pick and choose who they buy from and where, when, and how it happens. They want to discover, research, evaluate, and purchase on their preferred channel. Give them that option, and they’re more likely to choose you. That’s the whole point behind the multi-channel approach.
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.
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.
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