STRATA Agency Survey Finds Strength Of Advertising Economy Reaches 5-Year High
However, Advertisers Express Doubts On Web Traffic Numbers
May 22, 2014 at 3:57 AM (PT)
A recent survey of advertising agencies conducted by STRATA found that confidence in the ad economy is the highest it has been in the past five years. Sixty-two percent of agencies polled said they see business increasing this quarter compared to the same time last year, the highest level ever recorded in the history of the STRATA survey. More than half (53%) projected future growth to be better in the first half of 2014 as compared to the last half of 2013, while 29% are increasing their ad budgets from last year, representing the highest level recorded by STRATA since 2008. Almost a third (32%) of agencies said they plan on hiring staff this year, the second largest group in two years, while only 3% plan on reducing staff.
As the advertising economy strengthens, trust issues have been brewing below the surface. The STRATA survey found that a majority of advertisers doubt the legitimacy of Web traffic flowing to online advertisements. Over half of the agencies polled (56%) said they do not trust the Web traffic numbers and analysis provided by publishers with whom they advertise. When asked if they agree with an earlier report released by the IAB that found that 36% of Web traffic is fraudulent, 31% of agencies responded that they felt the figure was actually higher than the IAB reported, and an additional 43% answered that the IAB's assessment was accurate. When asked about programmatic buying, 58% are still undecided on whether they trust those systems to accurately execute their ad orders. Respondents also question the ROI of social media and online video advertising.
"Ad agencies revealed an interesting dichotomy within the advertising industry; agencies are displaying high levels of confidence and are increasing their ad spend while they question the accuracy of reported Web traffic numbers and the inflated CPMs they may command," said STRATA Pres. JOY BAER. "Another interesting parallel was the optimism many agencies felt while they looked cautiously at rising ad costs as a major concern. The strength that our clients are reporting bodes well for the rest of the year."
For only the second time in history of the STRATA survey, advertising costs appeared in the top two leading concerns for ad agencies. Twenty-one percent of agencies chose ad costs as their top concern, second only to client attraction at 37%. Client spend came in at third (16%), trailed closely by media mix concerns (15%).
Other key findings:
- FACEBOOK leads social media as 86% of agencies said they will likely use the platform in client campaigns, followed by YOUTUBE (62%), TWITTER (57%), and LINKEDIN (38%).
- 49% of advertisers are most likely to use Promoted Posts for their FACEBOOK ad purchase, followed by Page Post ads (27%).
- YOUTUBE is still the top online video site for advertisers at 76%, followed by HULU (34%).
- 51% are more interested in streaming/online radio remains strong compared to last year.