German advertising expenditure under pressure, marketing technologies on the rise
As in previous years, advertising companies in Germany expect higher sales and earnings, but are showing greater restraint when it comes to advertising spending. As in previous years, they see major challenges in demonstrating performance and advertising effectiveness, as well as in transparency.
Our neighbors are optimistic about their own development in the coming year. This is the result of the latest survey conducted by the Organization of Advertisers in the German Brands Association (OWM) among its member companies in October and presented by Chairwoman Tina Beuchler at the OWM symposium on 21 November. More than half of those surveyed (56%) expect sales to increase, 38% expect sales to remain the same, while 6% expect sales to decrease. The picture differs slightly when it comes to earnings. Here, only 42% expect earnings to increase, while just under half (48%) expect earnings to remain the same. One in ten expect earnings to fall.
Advertising expenditure under pressure
The picture for advertising expenditure in the current year is mixed: around a quarter have reduced (26%) or increased (24%) their budgets, while half have worked with the same level. The forecast for 2019 is very similar to the current year: while 27% expect budgets to fall, 22% anticipate an increase in expenditure (previous year: 46%). This means that, for the first time, significantly fewer advertisers are planning budget increases for the coming year than in previous years. OWM Managing Director Joachim Schütz sees the restraint in budget planning primarily in correlation with the current economic outlook: "Despite our own positive development, the economic dips are having an impact on the advertising investments of OWM members. In times of economic downturn, advertising expenditure is often the first area to be cut."
Mixed prospects in the media mix
A look at the classic genres in the media mix shows diverging trends: While sponsorship expenditure remains stable (budget increases and budget decreases planned by 13% of respondents), out-of-home (increase: 14%, decrease: 3%) and radio (increase: 20%, decrease: 13%) are likely to grow slightly. Overall, print must continue to expect significant budget reductions (increase: 9%, reduction: 54%), while TV (increase: 16%, reduction: 35%) will also come under pressure.
In the digital channels, increasing investments are planned for mobile video (increase: 78%, decrease: 9%) and online video (increase: 69%, decrease: 9%) in particular, while mobile display (increase: 40%, decrease: 23%) also continues to grow, with online display (increase: 18%, decrease: 32%) showing signs of saturation similar to the previous year. The planned budget increases for search (increase: 47%, decrease: 0%), social (increase: 59%, decrease: 6%) and the newly surveyed area of influencer marketing (increase: 60%, decrease: 10%) are similarly significant.
New forms of advertising on the rise
There is also a lot of movement in the new, mostly digital forms of advertising: At 92%, the respondents attributed by far the greatest increase in importance to addressable TV. Video (70 percent), digital out-of-home (68 percent), location-based marketing (66 percent) and digital audio (62 percent) are also expected to increase in importance over the next two years. OWM Chairwoman Tina Beuchler is delighted with this development: "The results show that advertisers are open to new forms of advertising and are willing to pilot them for the benefit of future-proof marketing."
Marketing technologies increasingly important
Various new technologies are currently turning things upside down in marketing. The OWM members surveyed attribute by far the greatest importance to programmatic buying (79%), voice assistants (76%) and artificial intelligence (69%). The latter is already used by at least a third of respondents, while programmatic buying is used by more than 90 percent. However, visual search, augmented reality and blockchain are also classified as important future technologies.
Tina Beuchler: "Data-driven approaches are used in all new marketing technologies. However, their efficiency gains have so far been sobering. More than half (58%) of those surveyed are only partially satisfied." And further: "The situation is not much better when it comes to data quality. Here, too, it is clear that there is still a lot to be done. Only a few OWM members are satisfied with the data quality of their campaigns (somewhat satisfied: 14%, satisfied: 0%). A topic that will keep us busy in 2019!"
Focusing on people
At the same time, the respondents see the need for a stronger focus on people: 97 percent of respondents believe that consumer centricity is important in their company's marketing and more than half (58 percent) believe that the focus on people has at least partially been lost in the course of technologization.
The OWM members surveyed also agree that a digital society needs guard rails in the form of digital ethics. At the same time, they see themselves as having a responsibility and agree 100% that companies have a social responsibility.
