STRATA Survey Sees Advertising Gains, But Radio Stagnant

Survey Sees Some Ad Growth

Advertising showed some resiliency this quarter by achieving solid gains consistent with spending trends from third quarter 2011, according to a new STRATA quarterly survey of leading advertising 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 Local TV now only separated by a margin of 1%. Radio is trending down in the survey.

STRATA found that 52% of respondents noted that their business is increasing compared to the same time last year (only 16.5% saw a decrease in business, down 30% from a year ago). Job growth also made a steady upswing this quarter, with 24% of agencies surveyed noting they will hire before the end of the year (up 8% since last year).

When listing their biggest business challenges, attracting new business remains tops for agency respondents (38%) followed closely by client spending (22%). 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% and Local TV 24%). The auto industry (30%) and entertainment industry (21%) 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%), though it is just barely beating out Digital (34%), which is up 43% since last quarter. Taking a closer look, 85% say clients are focusing on Digital more than last year. Local Cable noticed a bump, as 31% say they are more focused on it than they were last year (up 13% over last year). Radio had a downturn, as 37% say they are less focused on it as they were a year ago. Network TV noticed an uptick with 12% saying they are more focused on Network TV than they were a year ago (up 86% since third quarter 2010).

Social Media Grows

Social and Mobile are helping Digital challenge traditional advertising, according to STRATA's third-quarter survey. In fact, 89% of respondents indicated that they would use FACEBOOK in their campaigns (up 10% 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% planning to use it this quarter (down 47% since last quarter). LINKEDIN was a strong fourth at 22%. Mobile advertising sees the iPHONE as the convincing leader with 78% of respondents noting it is the device their clients are most interested in advertising on (down 10% since last quarter). ANDROID is closing the gap at 54% (up 7% since one year ago). The iPAD remains strong at 46% (up 85% since last year). With AMAZON and APPLE continuing to focus on content for tablets, 69% say that focus will make this medium more attractive to advertisers.

"If one looks for another sign of a nominally growing economy, one should look to the advertising industry right now," said STRATA CEO/Pres. JOHN SHELTON. "Attracting new business is still a challenge for agencies, but, and it's a key point to emphasize, 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."

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