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 newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

Conversations over a cuppa with CMO: ABC's Leisa Bacon

In this episode of Conversations over a Cuppa with CMO, ABC's director of audiences, Leisa Bacon, shares how she's navigated the COVID-19 crisis, the milestones and adaptability it's ushered in, and what sustained lessons there are for marketers as we start to recover.

More Videos

Hi everyone! Hope you are doing well. I just came across your website and I have to say that your work is really appreciative. Your conte...

Rochie Grey

Will 3D printing be good for retail?

Read more

Zero proof spiritsUsa since 2011 www.arkaybeverages.com🤪🤟

Sylvie

How this alcohol-free spirits brand rode the health and wellness wave

Read more

okay this a good newsmaybe i gonna try it

kenzopoker1

CMO's top 8 martech stories for the week - 9 July 2020

Read more

Very insightful. Executive leaders can let middle managers decide on the best course of action for the business and once these plans are ...

Abi TCA

CMOs: Let middle managers lead radical innovation

Read more

One failing brand tying up with another failing brand!

Realist

Binge and The Iconic launch Inactivewear clothing line

Read more

Blog Posts

Why CMOs need a clear voice strategy to connect with their customers

Now more than ever, voice presents a clear opportunity to add value to an organisation in many ways. Where operational efficiencies are scrutinised, budgets are tighter and discretionary consumer spend at a low, engaging with an audience is difficult.

Guy Munro

Head of innovation and technology, Paper + Spark

MYOD Dataset: Building a DAM

In my first article in this MYOD [Make Your Organisation Data-Driven] series, I articulated a one-line approach to successfully injecting data into your organisation’s DNA: Using a Dataset -> Skillset -> Mindset framework. This will take your people and processes on a journey to data actualisation.

Kshira Saagar

Group director of data science, Global Fashion Group

Business quiet? Now is the time to review your owned assets

For businesses and advertiser categories currently experiencing a slowdown in consumer activity, now is the optimal time to get started on projects that have been of high importance, but low urgency.

Olia Krivtchoun

CX discipline leader, Spark Foundry

Sign in