In doubt for the principle of hope
Advertising market The advertising trends study shows: Budgets will rise and fall in equal measure in 2005.
Advertising market The advertising trends study shows: Budgets will rise and fall in equal measure in 2005.
The upturn cannot be talked out of existence. The past year has made this clear. Accordingly, advertising clients, advertising and media agencies are cautious in their forecasts for 2005. Clients in particular have given up hope that everything will improve in the second half of the year. 50 percent of clients expect a slight increase in total advertising volume in the first half of the year, while 4.2 percent even expect strong growth, according to the advertising trends study by Media Research Group and HandelsZeitung. Expectations for the second half of the year are hardly any different: 51% anticipate slightly more volume, 2.1% significantly more. However, despite the cautious attitude, the mood is not negative. Only 9.3% of clients expect a slight or strong decline for the first half of the year and 12.5% for the second half.
Agencies are in good spirits
The agencies are even less pessimistic. Not a single one expects a sharp decline in the current year. For the first half of the year, 8.5% are predicting a slight decline, while no one is forecasting a decline for the second half. 48.9 percent of agencies believe in a slight increase from January to June, 61.7 percent expect a slight to strong increase in advertising volume from July to December.
Agencies are also optimistic about their own budget turnover. Almost two thirds expect an increase. Not a single one of the advertising agencies surveyed believes that turnover could shrink. Among the media agencies, 10.5 percent are expecting a decline.
The agencies' confidence is only partially supported by clients' expected spending. The increases are balanced out by the cuts: 25.2 percent of clients have more or less money available for communication in 2005 than in the previous year. Just under half have unchanged resources.
The multi-year comparison again paints a picture of an industry that has become more cautious. Never since 2001 have so few clients increased their budgets. There have also been more cuts than last year, although significantly fewer than in the crisis years of 2002 and 2003. The proportion of companies sticking to their established budgets is higher than ever before.
Looking at the individual sectors, there are clear differences. Only in IT/telecommunications and leisure/tourism do increases and cuts balance each other out at around 30%. In 2004, twice as many companies invested as cut back in both sectors.
The healthcare sector is very keen on advertising. 40 percent of companies have increased their budgets, while only 20 percent have reduced them. Last year, only 18.2 percent had more money available. The automotive and transport sectors have radically reversed last year's trend. While 46.2% slammed on the brakes back then, this year no cuts are being reported at all. One-fifth are spending more, while four-fifths are leaving the budget unchanged.
In contrast, retailers are now filling their piggy banks. In 2004, the sector was still lonely at the top with 57.1 percent increases and no cuts. Now, at 37.5 percent, it has the highest number of budget cuts. However, a quarter of the companies surveyed want to further increase their advertising expenditure.
Media and services earned the title of the most cautious sector. Not a single company that took part in the study invested more in communication in 2005 than in the previous year. 14.3 percent are cutting back. The sector was not included in the 2004 advertising trends.
The fact that clients are investing more than half (51%) of their communication budgets in traditional advertising again this year for the first time in a long time can probably also be interpreted as a sign of caution. This is at the expense of direct advertising, reversing last year's trend. Trade fairs and public relations are also suffering losses.
Within traditional advertising, television is benefiting in particular. Its share of the media mix of clients grew from 19.3 to
22 percent. The worst sufferers are magazines, whose share fell by 2.9 percentage points to 24.7% - and online media, which dropped from 5.8% to 4.8%. The clients' long-term forecast suggests that these shifts also have something to do with the current economic situation. In 2010, they again expect less TV advertising in the media mix (20.9 %). On the other hand, they predict growth in Internet advertising to 7.5%.
Newspapers, traditionally the strongest media category, are only losing around half a percentage point this year. Over the next five years, however, they are expected to fall by 2.5 points to 30 percent. Posters, which are now up 1.5 points to 10.8%, will be trimmed back to 9.4% according to the clients' estimates, while magazines could make up two thirds of their loss. Radio advertising will remain at 3.5% this year and will only gain 0.4 points by 2010.
While television was the winner in the media mix, it had to settle for second place in the ranking of lead media for the most important communication tasks. Although it improved by two places, it was unable to overtake the new number one: the commuter newspaper. The Sunday press had to vacate pole position and take fourth place. The daily newspapers, which had slipped from the top spot to sixth place last year, are now the third most important medium again. Trade journals, which were third in 2003, have dropped out of the rankings completely. Instead, e-boards are now in fifth place.
Under the magnifying glassFor the 2005 Advertising Trends Study, the communications managers of the 500 most advertising-intensive Swiss companies as well as 60 advertising and 25 media agencies were surveyed. While 35.5% on the client side took part in the survey, the response rate among advertising agencies was 55% and among media agencies a whopping 95%. The responses were collected by means of an online questionnaire between mid-January and mid-March 2005. The study was carried out by the Media Research Group on behalf of HandelsZeitung.
The annual advertising market study, which also contains the basic data for determining advertising trends, is available at www.mediaresearchgroup.ch. Special evaluations for media providers, agencies and advertising clients are also available. (sm)
Stefano Monachesi
The upturn cannot be talked out of existence. The past year has made this clear. Accordingly, advertising clients, advertising and media agencies are cautious in their forecasts for 2005. Clients in particular have given up hope that everything will improve in the second half of the year. 50 percent of clients expect a slight increase in total advertising volume in the first half of the year, while 4.2 percent even expect strong growth, according to the advertising trends study by Media Research Group and HandelsZeitung. Expectations for the second half of the year are hardly any different: 51% anticipate slightly more volume, 2.1% significantly more. However, despite the cautious attitude, the mood is not negative. Only 9.3% of clients expect a slight or strong decline for the first half of the year and 12.5% for the second half.
Agencies are in good spirits
The agencies are even less pessimistic. Not a single one expects a sharp decline in the current year. For the first half of the year, 8.5% are predicting a slight decline, while no one is forecasting a decline for the second half. 48.9 percent of agencies believe in a slight increase from January to June, 61.7 percent expect a slight to strong increase in advertising volume from July to December.
Agencies are also optimistic about their own budget turnover. Almost two thirds expect an increase. Not a single one of the advertising agencies surveyed believes that turnover could shrink. Among the media agencies, 10.5 percent are expecting a decline.
The agencies' confidence is only partially supported by clients' expected spending. The increases are balanced out by the cuts: 25.2 percent of clients have more or less money available for communication in 2005 than in the previous year. Just under half have unchanged resources.
The multi-year comparison again paints a picture of an industry that has become more cautious. Never since 2001 have so few clients increased their budgets. There have also been more cuts than last year, although significantly fewer than in the crisis years of 2002 and 2003. The proportion of companies sticking to their established budgets is higher than ever before.
Looking at the individual sectors, there are clear differences. Only in IT/telecommunications and leisure/tourism do increases and cuts balance each other out at around 30%. In 2004, twice as many companies invested as cut back in both sectors.
The healthcare sector is very keen on advertising. 40 percent of companies have increased their budgets, while only 20 percent have reduced them. Last year, only 18.2 percent had more money available. The automotive and transport sectors have radically reversed last year's trend. While 46.2% slammed on the brakes back then, this year no cuts are being reported at all. One-fifth are spending more, while four-fifths are leaving the budget unchanged.
In contrast, retailers are now filling their piggy banks. In 2004, the sector was still lonely at the top with 57.1 percent increases and no cuts. Now, at 37.5 percent, it has the highest number of budget cuts. However, a quarter of the companies surveyed want to further increase their advertising expenditure.
Media and services earned the title of the most cautious sector. Not a single company that took part in the study invested more in communication in 2005 than in the previous year. 14.3 percent are cutting back. The sector was not included in the 2004 advertising trends.
The fact that clients are investing more than half (51%) of their communication budgets in traditional advertising again this year for the first time in a long time can probably also be interpreted as a sign of caution. This is at the expense of direct advertising, reversing last year's trend. Trade fairs and public relations are also suffering losses.
Within traditional advertising, television is benefiting in particular. Its share of the media mix of clients grew from 19.3 to
22 percent. The worst sufferers are magazines, whose share fell by 2.9 percentage points to 24.7% - and online media, which dropped from 5.8% to 4.8%. The clients' long-term forecast suggests that these shifts also have something to do with the current economic situation. In 2010, they again expect less TV advertising in the media mix (20.9 %). On the other hand, they predict growth in Internet advertising to 7.5%.
Newspapers, traditionally the strongest media category, are only losing around half a percentage point this year. Over the next five years, however, they are expected to fall by 2.5 points to 30 percent. Posters, which are now up 1.5 points to 10.8%, will be trimmed back to 9.4% according to the clients' estimates, while magazines could make up two thirds of their loss. Radio advertising will remain at 3.5% this year and will only gain 0.4 points by 2010.
While television was the winner in the media mix, it had to settle for second place in the ranking of lead media for the most important communication tasks. Although it improved by two places, it was unable to overtake the new number one: the commuter newspaper. The Sunday press had to vacate pole position and take fourth place. The daily newspapers, which had slipped from the top spot to sixth place last year, are now the third most important medium again. Trade journals, which were third in 2003, have dropped out of the rankings completely. Instead, e-boards are now in fifth place.
Under the magnifying glassFor the 2005 Advertising Trends Study, the communications managers of the 500 most advertising-intensive Swiss companies as well as 60 advertising and 25 media agencies were surveyed. While 35.5% on the client side took part in the survey, the response rate among advertising agencies was 55% and among media agencies a whopping 95%. The responses were collected by means of an online questionnaire between mid-January and mid-March 2005. The study was carried out by the Media Research Group on behalf of HandelsZeitung.
The annual advertising market study, which also contains the basic data for determining advertising trends, is available at www.mediaresearchgroup.ch. Special evaluations for media providers, agencies and advertising clients are also available. (sm)
Stefano Monachesi
