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Ad spending slips; TV still top

August 1, 2011

Advertising spending decreased during the second quarter, a reversal of positive spend during Q1, according to a STRATA quarterly survey of major advertising agencies. However, continued investment and interest in Digital is on the rise.

STRATA found that optimism at the start of 2011 waned during the second quarter, with 17 per cent of agency respondents noting a reduction in overall business (compared to a 38 per cent jump during 1st quarter). TV is still the top form of traditional advertising, but Digital focus increased this quarter due to such major launches as Google+.

The STRATA survey suggests that TV is still tops for advertisers (41 per cent), but the medium is steadily losing ground against Digital (24 per cent), with Radio rounding out the top three advertising options at 13 per cent. When asked about Digital focus at the agency level, 76 per cent responded with more interest, which is up 9 per cent over last quarter. Print advertising continued to struggle this quarter, with 56 per cent of agencies saying they are less focused than a year ago.

Consistent with STRATA’s first quarter survey, Facebook leads Social Media for campaigns (81 per cent), followed by Twitter (39 per cent) and YouTube (36 per cent). Newcomer Google+ is not only on agency radars, but 27 per cent plan to use it on client campaigns. Online Display dominates as the leading Digital advertising option (78 per cent), followed closely by Search (64 per cent), Social Media (52 per cent) and Mobile (26 per cent, which had the largest jump from last quarter, up 24 per cent). The survey says that Apple still owns mobile, with the iPhone as the top mobile device of choice (87 per cent), and iPads were third for the first time at 47 per cent. Android is in second and quickly closing the gap with iPhone (62 per cent, up 36 per cent from 2010). Even with more industry buzz in Q2, location-based advertising isn’t a significant spending target, as 68 per cent of advertising agencies say it isn’t in their plans this year.

“Advertising truly mirrors the economy right now. As consumers continue to tighten their belts, advertisers are doing the same, which even further emphasises the importance of maximising ad spend,” said John Shelton, STRATA CEO/President. “It’s important to keep these numbers in context, because we still see a promising trend of agencies planning to hire (33 per cent). We also see advertisers exploring new affordable advertising avenues, like Digital and Radio, while the more expensive traditional platforms, like TV, are seeing a slight dip in spend. Even though its not all doom and gloom, national events continue to impact the fluidity of the advertising industry, and most agencies do not feel it will return to a strong growth period until after 2012.”

Merging traditional and Digital into one campaign is still a top concern for advertisers and their clients. For example, over 61 per cent of respondents felt that cross-channel ROI reporting is the most important measurement issue today. Cloud-based programming was buzz worthy this quarter, but there’s still scepticism concerning its impact.

Other key findings of the STRATA survey:
– 29 per cent indicate clients are making budget cuts.
– Video and recording options aren’t killing TV advertising, yet. 45 per cent say that DVRs, Hulu, Netflix and others aren’t impacting purchases.
– For mobile advertising, Display is tops for Mobile (48 per cent, up 19 per cent over last quarter).
– In-Game advertising didn’t garner a single response as being an interactive option for their advertising spend.
– Ad Networks (Google, Yahoo, Yellowbook, etc.) were the top option for buying Digital, followed by traditional media sites and direct from the publisher.

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