A new quarterly survey of leading advertising agencies suggests that the media buying industry is regaining optimism after notching strong gains during the 2011 fourth quarter.
The industry appears confident that business and client spending on advertising will continue to rise this year. However, the STRATA survey noted that digital advertising was flat during the fourth quarter, but that mobile is building momentum.
STRATA, a Chicago-based system provider that connects media buyers and sellers and is owned by Comcast Cable, found that 81 percent of those surveyed expect their clients' approach to advertising and marketing to either increase or stay about the same.
That's up 14 percentage points from the third quarter. Adding to this positive economic surge, nearly half of respondents said they expect business to be better the first half of 2012 than it was in the latter half of last year. A third of agencies said they plan on hiring in 2012, which is up 29 percent over the 2011 third quarter.
Digital advertising dollars were nearly unchanged during the fourth quarter compared with the previous quarter. When agencies were asked about their clients' focus on digital, four of five said it was more than it was a year earlier, which is actually down 4 percent from the previous quarter. There is also significant confusion around digital due to the fact that agencies still contend clients don't understand the value (54 percent). On the social front, Facebook continues its dominance in ad campaigns with 89 percent of agencies planning to use the medium for clients, followed by Twitter (39 percent), YouTube (36 percent), LinkedIn (21 percent), and Google Plus (18 percent, up 28 percent over the previous quarter).
Agencies reported mobile advertising during the fourth quarter 2011 was up 39 percent. The iPhone remains the top choice as reported by 83 percent of agencies surveyed, though Android continues to close the gap, up 32 percent from the third quarter, and up 50 percent from the year-earlier period. Although the iPad is still third for mobile advertising, 76 percent of respondents said that with Apple and Amazon continuing to focus on building tablet content, there will be an increase in interest in advertising on the newer medium.
The STRATA survey said the top medium of choice for clients in the fourth quarter was spot television, both broadcast and cable, as reported by 51 percent of agencies surveyed. Digital was second at 31 percent, which was down 9 percent from the third quarter, followed by spot radio, at 8 percent. Spot TV continues to be an area of interest as 28 percent of respondents said that they're more focused on it than a year ago, up 12 percent from the 2010 fourth quarter. As for spot cable, 26 percent say they're more focused on it than they were a year ago, which is up two-thirds from last year.
"The key word for advertisers in 2012 is growth," says John Shelton, CEO and president of STRATA. "Agencies started to reap the benefits of balance sheets turned in their favor during the fourth quarter 2011, brokering a bright early 2012. The STRATA survey shows that many advertisers are confident that their business and the economy will return to a strong period by mid-year. That sentiment, coupled with strong numbers from the political race, provides an overall positive barometer for advertising in 2012."
Client attraction remains the biggest agency challenge for the second straight quarter, according to 37 percent of respondents in the STRATA survey. Client spending was the next area of concern with 19 percent reporting; however, it's not nearly as much of an issue as it was in the third quarter, with a decrease of 13 percent. A growing issue identified by 16 percent of participating agencies is advertising costs, which is nearly double the percentage reported a year ago.
Determining return on investment was the top issue in measuring campaigns (47 percent), followed by merging digital and traditional advertising (41 percent).
Other prominent findings of the STRATA survey included the following:
42 percent said their 2012 political ad spending will be more than in 2010.
46 percent said that during the political season, they will advertise in alternative media to avoid competition by politicians (41 percent will compete with politicians for space).
4 percent say that it will be three to five years before there is greater spending in digital than traditional media; but 38 percent still feel that shift won't ever happen.
Android is the second most popular mobile advertising choice at 71 percent; iPad remains third (46 percent).
For mobile advertising, the top option is display (46 percent) followed by text messaging (25 percent, but up 61percent from the year-earlier quarter).
Only 4 percent said they are more focused on print than they were a year ago.
STRATA provides systems designed to help clients buy and sell types of media, including cable, broadcast, newspaper, radio, outdoor and digital advertising. On average, more than $50 billion in advertising dollars flow through STRATA systems per year.
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