Advertising demonstrates resilience in tough economy in the US: Strata

MUMBAI: Advertising showed its resiliency this quarter by achieving solid gains consistent with spending trends from third quarter 2010, according to a new Strata quarterly survey of ad agencies.

However, client attraction and decreasing budgets remain the chief challenges affecting overall agency growth.

The survey also noted a possible shift for the top advertising channel, with Digital and Spot (Local) TV now only separated by a margin of 1 per cent.

Strata, which claims to be the system of choice for over 900 agencies and roughly half of ad agencies in the US, found that 52 per cent of respondents noted that their business is increasing compared to the same time last year (only 16.5 per cent saw a decrease in business, down 30.52 per cent from a year ago).
Job growth also made a steady upswing this quarter, with 24.52 per cent of agencies surveyed noting they will hire before the end of the year (up eight 52 per cent since last year).

When listing their biggest business challenges, attracting new
business remains tops for agency respondents (38.52 per cent) followed closely by client spending (22.52 per cent). In fact, most feel that their business won‘t return to a strong growth period until after 2012.

If market volatility continues, Print and Local TV would be the media most hit by ad spending cuts (Print 52 52 per cent and Local TV 24 52 per cent). The auto industry (30%) and entertainment industry (21 52 per cent) are the two top industries that agencies say are asking to cut advertising.

The Strata survey suggests its now a tight race for the top
advertising avenues. Local TV remains the medium of choice (35 52 per cent), though it is just barely beating out Digital (34 52 per cent), which is up 43.52 per cent since last quarter. Taking a closer look, 85 per cent say clients are focusing on Digital more than last year.

Local cable noticed a bump as 31 per cent say they are more focused on it than they were last year (up 13 52 per cent over last year). Radio had a downturn as 37.52 per cent say that they are less focussed on it as they were a year ago. Network TV noticed an uptick with 12.52 per cent saying they are more focused on Network TV than they were a year ago (up 86.52 per cent since third quarter 2010).

Social and mobile are helping digital challenge traditional advertising, according to Strata‘s third quarter survey. In fact, 89.52 per cent of respondents indicated that they would use Facebook in their campaigns (up 10.52 per cent from last quarter). For the first time, YouTube (39%) is the number two most desirable social medium for campaign, surpassing Twitter (37%).

Google+ is still on the outside looking in with only 14.52 per cent planning to use it this quarter (down 47% since last quarter). LinkedIn was a strong fourth at 22 52 per cent. Mobile advertising sees the iPhone as the convincing leader with 78 52 per cent of respondents noting it is the device their clients are most interested in advertising on (down 10 52 per cent since last quarter).

Android is closing the gap at 54.52 per cent (up seven 52 per cent since one year ago). The iPad remains strong at 46.52 per cent (up 85.52 per cent since last year). With Amazon and Apple continuing to focus on content for tablets, 69.52 per cent say that focus will make this medium more attractive to advertisers.

Strata CEO, president John Shelton said, "If one looks for another sign of a nominally growing economy, one should look to the advertising industry right now. Attracting new business is still a challenge for agencies, but, and it‘s a key point to emphasise, client retention is stabilizing, and market volatility is not immediately effecting long-term goals and campaigns. As we‘ve seen throughout the year, the Strata survey is a good indicator of advertising growth and definitely highlighted third quarter challenges such as client attraction. But with the holidays right around the corner, it will be interesting to see if the industry can leverage short-term boosts to create long-term optimism."

Other key findings of the Strata survey:

20 per cent of respondents say that they anticipate having a greater spend on Digital than Traditional within 1-3 years.

36 per cent say that they will never have a greater spend on Digital than Traditional.

Facebook‘s Open Graph launch did create some buzz, but agencies aren‘t quite sure yet with 64 per cent saying it is too early to tell if it will help stabilize social media advertising.

Agencies question whether their clients see the value in Digital. In the survey only 56 per cent say their clients understand the value in Digital with 44 per cent saying that they don‘t see the value.

29 per cent say that clients are more focussed on Local TV than they were last year.

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