OWM survey 2017: Advertising spend continues to rise, moving image benefits
As in previous years, advertising companies in Germany are optimistic about the future. They expect higher sales and profits and plan to further increase their advertising spending. However, they also face major challenges, particularly in terms of performance metrics, demonstrating advertising effectiveness, and digitalization in marketing.
Advertisers are optimistic about 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 29 November. More than half of those surveyed (53%) expect sales to increase, 45% expect sales to remain the same and only 3% expect sales to decrease. This means that the forecasts are higher than the assessments for the current year. The picture differs slightly for the earnings situation, where only just under a third (32%) expect earnings to increase, while the majority expect results to remain the same. Only a small proportion (5%) expect earnings to fall.
Increasing advertising expenditure planned
The picture for advertising expenditure in the current year is very mixed: around a third have reduced their budgets (31%), increased them (33%) or kept them at the same level. The forecast for 2018 is more optimistic: only 16% expect budgets to fall, while 46% anticipate rising expenditure. For a quarter of respondents, the increases are in the range of inflation compensation (up to +2%), while 16% plan to increase their budgets by more than 10%, which means that the forecast in this category is significantly higher than last year (3%).
A look at the classic genres in the media mix shows an overall continuation of the previous trend: while out-of-home (budget increases for 20 percent, budget decreases for 20 percent of respondents) and radio (increase: 15%, decrease: 21%) remain stable overall, budgets are being withdrawn from sponsorship (increase: 12%, decrease: 32%) and print (increase: 14%, decrease: 35%) in total, TV (increase: 35%, decrease: 22%) can expect a rising plus.
In the digital channels, increasing investments are planned for online video (increase: 68%, decrease: 9%) and mobile video (increase: 58%, decrease: 9%) in particular, while mobile display (increase: 38%, decrease: 24%) also continues to grow, with online display (increase: 29%, decrease: 32%) showing signs of saturation similar to the previous year. The planned budget increases for Search (increase: 53%, decrease: 3%), Social (increase: 57%, decrease: 9%) and the newly surveyed area of Technologies & Tools (increase: 55%, decrease: 3%) are similarly significant.
Digital quality deficiencies remain serious
"Despite all the euphoria and in view of the many opportunities, the digital market is still characterized by serious quality deficiencies," warns OWM Chairwoman Tina Beuchler. "The topics of digital transparency, brand safety, ad fraud and efficiency in programmatic are of particular concern to OWM members." For example, 60 percent of the members surveyed have already been the victim of a brand safety incident at least once, and more than a quarter (27%) have recorded an increase in ad fraud. Accordingly, the majority (82%) are concerned about the increase in brand-damaging misdeliveries, and the concern is even greater for ad fraud in the context of programmatic bookings (91%). Overall, respondents are still very cautious about using programmatic advertising: Currently, a third do not use programmatic buying; in 2018, a third of respondents plan to make up to 20 percent of their bookings programmatically. Beuchler continues: "Less than half of those surveyed consider this form of buying to be more effective (44%) or more efficient (49%). This uncertainty is due to the major transparency and quality deficiencies, which we will continue to clearly address."
Media agencies remain in business
According to the survey results, media agencies can be pleased about a slight improvement in trust (57%, +9% compared to the previous year) in terms of purchasing and consulting services. Joachim Schütz comments: "This is an important development for the cooperation between agencies and clients, which we very much welcome. Our survey also showed that media consulting remains the responsibility of media agencies. 90 percent want this to continue to be provided by media agencies and not by alternative providers. This is a clear signal that advertisers are aware of the value of media consulting. However, this is no reason to sit back and relax. Transparency in the business relationship remains a core requirement of advertising companies - both globally and in Germany." The situation in media buying is different: 27 percent of the advertisers surveyed already use in-house models, 20 percent are currently implementing them and 17 percent are planning a changeover. The majority of respondents (74%) also agree that algorithm-driven media planning systems will significantly change the market.
