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What’s Going On With Advertising?

Something very strange has happened in the last few months, which has bucked a trend that’s been going on for at least the last 5 years.

It’s to do with advertising. To qualify this, I’m talking about the traditional media-buying arm of our company. Looking back, prior to the last 5 years, media buying would have made up close to 50% of our annual billings as a full-service agency specialising in the construction industry. Then two things changed. The first was the downturn in 2007, which saw advertising spend decimated; the other was a shift in media, the decline of print in favour of on-line advertising, followed by the rise of social media.

This shift could have spelled the end of publishing houses making any revenue from advertising. Many have predicted it, with some evidence to support it, with titles in our sector moving from print to digital editions, followed by a lower return on investment in on-line ads. Having said that, it hasn’t affected all parts of the titles within the building industry. As a simple rule, the more professional end of the market (such as architecture, engineering, construction management) has seen a gradual migration to on-line only titles, whereas the trade side of media (plumbing, electrical etc.) has remained fairly stable with print dominating, with very few examples of a shift to on-line only editions.

However, it seems many publishing houses have defied the doom merchants and are discovering ways of fighting back.

I can shed light on this in two ways.

Firstly, looking at our own business, we have seen a gradual decline in our media buying from around the 50% talked about earlier, to around 30% of our overall annual revenue. Therefore, when it came to projecting this year’s media budget, we looked down rather than up.

Then we came to this month, which has seen the biggest media buying activity we have experienced in a long, long time. Four times larger than we would have expected. In fact, I believe that it could be the largest in CIB’s history. Is it an anomaly? No, as the coming months look to support this trend in a return to companies gaining visibility through media spend.

The second piece of evidence that supports this shift is from the IPA Bellwether Report for Q2 2016, which begins with the headline ‘Further uplift in total marketing budgets’ A short extract from the report supports what we have experienced,

‘Firms also felt confident enough over the quarter to engage in higher levels of main media advertising, with the respective net balance climbing to a two-year high of +9.3% (Q1: +1.7%).’

With other elements of marketing suffering, ‘there was an element of macroeconomic uncertainty affecting decision-making over the quarter, in a number of cases linked to the (at the time for the vast majority of panelists) unknown outcome of the EU referendum. This led in a number of cases to the freezing of budgets, which was reflected in the data by the fact that 68% of respondents indicated no change in marketing budgets, the highest such reading in the survey history.

In these instances, marketing executives commented on shifting existing funds around various areas of marketing while operating within agreed overall budget caps. Net losers from such policies included market research, sales promotions and direct marketing which all posted various degrees of decline in budgets over the quarter.’

Now that advertising spend is back in the frame, it is for us to see if we can spot a trend, within this trend. I believe that there has been a return to advertising spend with more focus on higher visibility for brands. I mentioned earlier that publishers had to up their game in order to evolve or perish. Many of them thankfully have, offering suppliers the ability to gain greater presence and thought leadership through media placement, by offering more than traditional print advertising, or banner ads on magazine sites. It is through talking to the market and understanding the needs of agencies and their customers that the most progressive publishers are able to offer many more innovative commercial opportunities.

This makes it a very exciting time to enable us to work with clients and publishers to gain greater ground.

Long may it continue.

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