Tech spending holding steady despite gloomy economic indicators. Digital now on par with TV. Display and email still working. Is mobile cutting into paid search revenue?
While forecast after forecast comes into our inboxes projecting another humdrum year on the ad spending front, we thought we’d point out a few glimmers of hope.
2012 is a quadrennial Olympic and election year. That means we get plenty of juice from the networks sports media and political campaigns regardless of which media properties you own.
Digital media—which includes online, social and mobile--has approached parity with TV as the most important medium among agency executives, according to the latest quarterly survey from Strata, a media data processing provider. Asked what their No. 1 medium of choice was during the third quarter of 2011, more than one third (34%) of agency executives cited digital, only one point lower than the 35 percent who cited local TV. According to Media Post’s Joe Mandese, that's the closest point of parity in the three years since Strata began querying its agency clients on the dominance of various media in their workflow and budgeting, and represents a 43 percent leap from the second quarter of 2011.
The findings, which are based on a segment of more than 900 agencies. In fact, the survey indicates that digital may be at the tipping point of overtaking all other media in terms of importance, especially if the economy becomes any more unstable. While the third-quarter survey indicated that advertising budgets remain relatively stable and continue to grow overall, the agency respondents said print (52%) and local TV (24%) are the media most likely to take a hit by ad spending cuts.
“The economy is forcing many advertisers to look for more affordable ad avenues--i.e., digital and radio,” said Strata President John Shelton. However, Only 56 percent of the agency execs said they believe their clients “understand the value” in digital, while 44 percent said they don’t see the value.
Corporate profits, spending decoupled from rest of economy
As expected, last week’s post “Financial Markets Decoupled from Economy” got us a lot of attention and some naysayers, but IBM’s strong quarterly profit reported earlier this week gives more credence to our argument. Corporations continue to spend on information technology despite the lousy economy. They’re hording cash and investing in systems, infrastructure and efficiency—not in people—to cut costs and get more productivity out of the headcount they already have in place. The IBM’s of the world sell to big corporate customers, not to Main Street, so that’s why they can report solid profits at a time when the jobless rate is still so painfully high.
Lots of analysts consider IBM a bellwether of IT spending because it’s the largest supplier of computing technology, hardware, software and services to corporations. IBM’s results mirror what we reported to you from Oracle, Salesforce.com and others corporate technology players over the summer.
Our take: In a tough market, there’s always a flight to quality. Smart media owners will find a way to pry that cash out of CMOs’ and their agencies, tightly wadded fists by stressing audience quality, editorial integrity and measurable ROI.
Display advertising shifts from direct response to branding media
Most media buyers and some media owners still think clicks, impressions and conversions are the way to measure performance of online display advertising, but researchers say the more important metrics often point to return on ad spend, online searches for brand names, product recall, and sales.
"The Digital Advertising 2011: A Portrait of Conflict" study released by Collective finds that 57 percent of agencies believe the majority of their display objectives are to build the brand, yet only 11 percent cite ad creative as critical to the campaign's success. Still, three in five (60%) of agencies cite brand recall and intent to purchase as the most important measures of online success. However, clicks and conversions remain the key criteria agencies say they use to evaluate media, according to the Collective study.
OUR TAKE: Through a combination of laziness, arrogance and feeling overwhelmed, agencies tend to fall back on McMetrics, things that are easiest to measure rather than business-building metrics that are harder to measure, but derive real value from a campaign.
Is mobile cutting into paid search ad revenue?
More searches being done on mobile phones where people are less click on ads and the ads cost less. Even mighty Google received 5 percent less for clicks in the second quarter of this year, vs. 2nd quarter last year according to a New York Times report late last week. E-mail remains most popular way to market events. Social media, the least effective.
On average, business use 5.5 different methods to promote their events and email remains the most popular, according to a new eBook released jointly by HubSpot and Constant Contact. More than 70 percent of marketers surveyed by the two aforementioned organizations cited email, followed by word-of-mouth (65%). Social media was deemed least effective.
Just as in a sluggish stock market, there’s always a flight to advertising quality in a tight economy. Savvy marketers and media owners know they have to keep their minds open to new ways of reaching—and measuring—their target consumers, but they should ignore time-tested legacy media such as display, print, broadcast and live events. Those legacy media have been around longer, but they’re still improving at the same rate, if not faster, than some of the new kids on the block.
Resist the urge to go “EITHER/OR” in your media planning process. Just go with a balanced portfolio of media options and make sure you’re always using best in class. Not cheapest in class.
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