2009
April 24th, 2009 | Read more articles from 2009 or Visit the News ArchiveAGENCIES EXPERIENCE A CHALLENGING SHIFT IN CLIENT FOCUS
CHICAGO, April 24, 2009—Where are the ads? A recent study by Strata showed that media buying agencies are struggling with a decline in client spending. Many are uncertain of an economic recovery and are looking at new advertising avenues this year. These were key findings from a quarterly survey conducted by Strata, a leader in media buying/selling software. The sample group is comprised of 40 agencies of varying sizes across the country.
Since the start of the year, many agencies have changed their focus from retaining clients to a drop in client spending. According to the Strata survey, client spending was the biggest challenge that agencies were facing at the end of the first quarter, up 150% from their fourth quarter 2008 study. In the previous study, client attrition was agency’s largest challenge, but that has dropped from 45% to 25% of the respondents. In the first quarter 2009, 77.5% of agency respondents felt their clients were cutting back their ad buys for this year – up 29% from the previous quarter.
Strata’s findings fell in line with a recent report by J.P. Morgan. Alexia S. Quandrani, J.P. Morgan Managing Director, also touched on the drop in client spending in her presentation at the ANA Financial Management Conference earlier this month. The report states that “spending declined at the end of 2008 and is expected to remain weak through 2009 as advertisers try and navigate through the global economic slowdown. As such, we expect U.S. ad spending to decline 9% in 2009, with global spending down 5.5%.”1
“Those decreases in ad spending have also led to advertisers being more creative and precisely target their media placement.” said John Shelton, Strata CEO/President.
One avenue agencies are considering is Advanced Advertising (Digital Media, i.e. video on demand, interactive television, etc.). As far as advertising planning, 55% of the respondents say their customers are either very likely or somewhat likely to have Advanced Advertising in their plans this year.
Canoe Ventures, which was formed by the nation’s six biggest MSOs: Comcast, Time Warner Cable, Cox Communications, Charter Communications, Cablevision System and Bright House Networks – is currently working to make Advanced Advertising more readily available in 2009.
“While Advanced Advertising is a niche arena, it provides advertisers the opportunity to target certain consumers while taking television to a new level,” commented Shelton, whose company is a pioneer in Advanced Advertising buying/selling software.
When asked at what point they see the economy and their business returning to a strong growth period, there was a shift of opinion in the Strata survey. Most still felt they wouldn’t see a strong growth period until 2010, but there was a considerable increase in those who felt there would be a strong growth period in the third quarter of this year. That group increased 125% from 10% to 22.5% of the respondents. The J.P. Morgan report echoes this finding with their prediction of a recovery in late 2009 to early 2010.
More results of the Strata survey…
62.5% see their customers focus on internet increasing from last year (11% decrease from the fourth quarter 2008)
52.5% of the agencies see their business decreasing in compared to the same time last year (5% increase in that category)
The percentage of agencies that are planning on hiring staff in 2009 has decreased 29% since the fourth quarter 2008 (10% say they plan on cutting staff)
57.5% of respondents are focused on Spot TV above all other ad choices (down 4%)
1J.P. Morgan, Advertising & Marketing Services Advertising 101: A Primer with a Focus on Macro Trends, 02 April 2009.
