Daily Archives: December 12, 2012

2012 Ad spend falls again

Within the space of 24 hours what looked like a 4.1% overall global growth for 2013 across the market, became 2.5% after Zenith downgraded the performance of every medium, with the exception of Cinema this year.

This has meant this year’s UK growth has been reduced from 2.2% to 1.6%.

The UK saw an increase in press performance during the Olympics, but the months following saw a 10% drop, and it is now believed it will fall to 7.3% this year with only £2.33 billion being spent on newspaper ads.

The national newspaper advertising is set to fall by £127 million and the regional newspapers by £120 million, compared to what was originally forecast in December 2011.

Zenith believe that; “The print market in the UK remains extremely volatile… whilst many had hoped the relatively good performances of the summer months heralded some sort of recovery, this theory was quickly dispersed by the performance in September and October.”

In line with the press, magazine ad spend saw its year-on-year prediction from September fall from a 3.2% decrease to 6.3%.

Unexpectedly, digital has also seen its 2012 growth forecast downgraded, however, the change is very small in comparison, with 2012 decreasing from 11% to 10.5% and 2013, from 9.9% to 9.2%.

Figures are not all entirely negative; outdoor advertising is set to see a 6% growth compared to the 3.9% predicted in September.

As can be expected, in line with the changing ways in which we now consume media, the internet is set to grow by 10.5% this year, largely due to the increasing use of social media and video.

Whilst traditional press is seeing a reduction in spend, budgets are being redistributed across other media.

The fall in digital ad spend could be due to the fact it is a still a relatively new medium, we believe that as the use of the iPads and other tablets becomes increasingly more popular, there will be  growth in ad spend for digital media in 2013.

Further to this, with more people moving away from print media, and instead consuming it online, we agree with Zenith’s forecasting that; “internet advertising to overtake newspapers for the first time in 2013, and then exceed the combined total of newspaper and magazine advertising in 2015.”

UK Advertising Expenditure – Current Prices (£ million)

Year Total Newspapers Magazines TV Radio Cinema Outdoor Internet
2011 11,978 2,519 836 3,290 452 150 753 3,978
2012 12,172 2,335 784 3,258 455 147 798 4,396
2013 12,481 2,276 767 3,225 459 154 800 4,800
2014 12,879 2,259 762 3,257 464 156 806 5,174
2015 13,150 2,259 762 3,290 469 157 815 5,397

UK Advertising Expenditure – Year on Year change at current prices

Year Total Newspapers Magazines TV Radio Cinema Outdoor Internet
12 v 11 1.6 -7.3 -6.3 -1.0 0.7 -2.0 6.0 10.5
13 v 12 2.5 -2.5 -2.2 -1.0 0.9 4.8 0.3 9.2
14 v 13 3.2 -0.7 -0.7 -1.0 1.1 1.3 0.8 7.8
15 v 14 2.1 n/a n/a 1.0 1.1 0.6 1.1 4.3

Where ad investment should really go

New research due for release in early 2013 by the IPA (Institute for Practitioners in Advertising) will endeavour to shed light on the effectiveness of short and long term advertising.

In recent years the trend in advertising has been to focus on building loyal relationships with customers. However, the research, which has examined thousands of advertising campaigns over the past thirty years, has concluded that stirring consumer emotions as well as providing highly creative advertising will always bring in the highest profits.

Other key findings and recommendations include:

• Advertisers must ensure that their campaigns strike the balance between long-term investment in brand-building using mass media and short-term, direct methods that stimulate sales.

• Long-term (3+ years) investment in advertising delivers double the profit of a short-term approach (less than 1 year), but investing in both delivers the highest returns.

The report also advises that price promotions can maximise customer response rates and sales in the short-term but can also lead to increased price sensitivity and erode long-term profits.

Tight audience targeting, whilst desirable for reducing wastage may not contribute to the long term success of a campaign. The IPA suggests that a campaign which reaches a mass audience of existing and new customers is much more efficient.

Attempting to build deep and loyal relationships with existing customers is less effective than investing in advertising that reaches as wide an audience as possible. Ad campaigns which target new customers report 60% larger sales effects (effects include increased profits and sales or market share) in the first six months alone.

According to the IPA, none of the 1,000 ad campaigns included in the study achieved substantial long-term profit growth without investing on TV advertising. TV advertising remains the most effective way to build a brand and creates larger business effects than other forms of advertising.

The research suggests that using emotional advertising is almost twice as effective as rational messaging, and delivers twice the profit.

Highly creative advertising is the most effective of all, but even the best creative will fail if it does not have sufficient scale and is not evaluated over the longer term.

The IPA findings of 1,000 advertising case studies (over 700 brands in 83 categories) contradicts some fashionable thinking in modern advertising, where the emphasis on nurturing one-to-one connections with customers seems to be the norm.

Four concurs with this view in that while social media has become the ‘holy grail’ we still believe long term brand value building via strong quality media activity is vital to maintaining a Brand’s position in the marketplace.

Google Advertisers Move Closer to Clarity

Google is central to the majority of people’s internet usage, however, at present, it is also seems to be one of a collection of companies in the firing line. The reason for this is the sheer size of companies like Google and Apple, what they know about their users and how much of the market they control.

Regulatory bodies in both Europe (European Commission (EC) and the USA (Federal Trade Commission (FTC) have been investigating Google for 18 months for apparent monopolisation of the search and search-related advertising markets, along anti-trust laws.

Google hold 90% of the search market in Europe and around 65% in the USA and as such are the key player in the search market in both regions. The way it behaves, in such a consumer and advertising driven market is likely therefore, to raise comment and possible concern.

It now seems though fairly likely that regulatory intervention against the way that it displays search results for example, may be taken.

Both regulatory bodies have met to discuss their respective cases, which are based on complaints by other companies such as Microsoft, who have raised concerns that Google use their control of the search market to take advantage and give their own products preferential treatment and position. One example of which was noted as the positioning of Google shopping ahead of organic search options.

If they were to rule against Google, one option open to the EC and FTC is to impose a fine of a value up to 1% of the company’s value.

It is widely believed that if these bodies are to both rule against Google, who would be forced to bow to pressure for a rearrangement of the positioning of their search results. Google have previously suggested to the EC that it could label all of the options they offer, so as to highlight that Google had chosen them. This seems to have been rejected.

The EC and FTC do seem to closing in on rulings, something welcomed by Google who believe that the investigations have gone on for long enough.

Search advertisers and companies that rely on search engines as their main source of traffic, as yet, remain in anticipation of the rulings and how they are likely to affect their online marketing strategies. Would this have an effect on their PPC campaigns or SEO activities?

This question will only be answered once the regulators have reached a decision, but this now seems imminent.