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.

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

Tapping behavioural science for consumer influence

We know full well the business we’re in as marketers is really the business of choice. But recent discoveries from behavioural science are leading to a psychological revolution that challenges many of the accepted models of how communication, creativity and advertising influence a consumer’s preferences.

Kyle Ross

Account director, TRP

10 ways of changing your culture through self-awareness

Did you hear about the manager who always shot the messenger whenever they brought bad news? He eventually stopped hearing bad news. Unfortunately for him, this wasn’t because there was none to report.

Steve Glaveski

Co-founder, Collective Campus

How to create a compelling customer experience vision

Organisations are seeking new ways to engage customers, drive new sales and increase customer satisfaction by providing engaging customer experiences. A customer experience initiative that lacks a strong, clear vision often fails to achieve its intended result.

Olive Huang

Research director, Gartner

There are lots of feature of microsoft dynamics crm by using these features you can grow your businesses. Some of them is lead management...

Dynamics Square

How Port Container Services is finetuning lead management with CRM

Read more

Agreed. I see the opposite problem quite often where people are tasked in an organisation just with "be creative" - thus offering no boun...

Dr Fiona Kerr

The great debate: Is data killing creativity?

Read more

By far, this is the best article I've come across so far that has a relevant information regarding the future of marketing. Although the ...

Jayden Chu

​Six ways to prepare for the future of digital marketing

Read more

These are some good ideas. You didn't touch on the overarching goals and results of brand loyalty. This article does a good job at provid...

hgsupport

Four ways to use social media to boost customer loyalty

Read more

This read like a PR PLUG for the agency. Very flowery language for the agency and very little details about the deal or the project.

Digital_Marketer

Why Tourism Victoria decided to go agile

Read more

Latest Podcast

More podcasts

Sign in