Strata Survey: Ad Industry Strengthens Despite Weak Economy
August 8, 2012 at 3:50 AM (PT)
The outlook for advertising spending is positive for the remainder of 2012. That optimism is heavily backed by a solid year of political advertising along with media buyers spreading their buys to available venues, according to a new STRATA Survey. Spot radio advertising saw an increase purchase by advertisers of 16%, up 80% over last quarter.
STRATA conducted the survey of over 100 media buying agencies across the country. The second quarter survey revealed that more than half (52%) of agencies polled saw their business increase in the second quarter of 2012 compared to a year ago, up 12% from the first quarter. Roughly 94% of agencies expect business conditions to improve or stay the same in the second half of the year, with about 40% projecting growth.
The STRATA Survey also found that contrary to the somber U.S. economic outlook, only 6.6% of agencies polled forecast a decrease in future growth in the second half of 2012. That is the lowest negative sentiment on record since STRATA began its survey in 2008, suggesting that the economy may improve at a faster rate than most economists think.
The advertising industry has long been considered a leading indicator for consumer spending and confidence. At the beginning of the current recession in Q4 2008, less than a quarter of agencies polled in the STRATA Survey saw an increase in ad spending. Today, that number stands at more than half. Despite the high unemployment rate in the U.S., 94% of ad agencies are planning to either increase staff or hold their current levels.
"The positive remarks we are seeing from ad agencies on spending and business are quite encouraging, especially as the rest of the world is telling us things are not going to improve just yet," said STRATA Pres./CEO JOHN SHELTON. "Our data shows that political advertising is pushing ad sales for the second and third quarter of this year, and in JUNE and JULY we witnessed over $640 million in TV buys flowing through our ePort system -- a record for that time period. These were driven by political advertising."
Of the over $1.2 billion worth of ad buys going through ePort so far this year, 40% were political advertising.
"Even the segments of the industry not supported by political ads are confident about the future," added SHELTON. "In fact, less than a quarter of buyers are waiting until after the elections to advertise, which indicates the willingness of advertisers to buy ad space during a competitive political ad season."
While political advertising is creating more demand and pushing up ad costs, 42% of non-political advertisers surveyed said they will be competing for ad space during the campaign season, and another 40% are using alternative mediums to avoid the political ad costs. 86% of political advertisers anticipate increased or steady ad spending this year compared to 2010.
* On the social media front, 87.3% of advertisers are using FACEBOOK while TWITTER is the second most used social media platform at 38%, marking a large gap between the two.
* As a whole, digital advertising is up 26% and has seen steady growth in twelve out of the last fourteen quarters.
* 79% will focus on online display advertising, which continues to see steady growth, up from 69% in Q2 2010.
* Although digital media spending has grown, 44% still do not see it outpacing traditional media expenditure
* PINTEREST was used in 15% of advertising campaigns in the second quarter of 2012, beating out the more established social network FOURSQUARE (7%) and closing in on GOOGLE+ (18%).