What the Swiss advertising market looks like in 2017

In 2016, the Leading Swiss Agencies advertising market study was once again conducted in collaboration with the Swiss Advertising Client Association (SWA) and the Institute for Customer Insight at the University of St. Gallen (ICI-HSG).Since its launch in 2013, the advertising market study has aimed to provide advertising clients and their agencies with insights into various areas of the communications market and enable them to make their collaboration even more effective and efficient.102 advertising clients took part in total. This corresponds to a response rate of 7.2 %. As in previous years, the participating companies came from a wide range of industries and included small and medium-sized companies as well as multinational corporations.The mood among advertising clients is predominantly positive.Over 60% of respondents rated the current mood in the company as positive. An increasingly positive sales trend has also been observed in the last two years, which is also reflected in the profit trend of the last two years: in 2015, 38% of clients expected a slight to strong increase for 2016. The outlook for 2017 is even more positive: 56% of those surveyed are forecasting a similar increase and only 17% are expecting a decline.The majority of clients are not making any further investments in communication despite the positive business development and are not increasing their budgets for 2017. Only 23% of respondents are planning to increase their communication budgets for 2017. There is little change in media budgets: roughly the same number of advertising clients are planning to increase or decrease their spending and a majority of 39% see no change compared to the previous year.More than 80% of respondents are planning to increase their digital communication budgets significantly.The advertising market study confirms the development of communication and media budgets in recent years: as in the previous year, advertising clients intend to invest more in digital communication and online advertising in the coming years. The 40% also shows an increase in investments for dialog marketing and direct advertising as well as for measuring the efficiency of communication tools. Clients are increasingly looking for target group-specific communication solutions and want to measure these more and more, while traditional advertising continues to lose ground. Around 60% of clients are investing less or not at all in traditional advertising in 2017.

Media budgets will continue to shift to online media in the coming years.Social media, search engine marketing, digital media and the company's own website recorded an increase in budget investments of over 60%. In traditional media, Out of Home, followed by sponsorship and radio, recorded the largest budget increase of 20%. Print continues to lose ground - investments are stagnating or declining.

Channel complexity, marketing automation and technological developments are the most frequently cited challenges for the study participants.As in 2016, the biggest challenge for 45% of respondents is to find overall communication solutions that are relevant to their target groups and their complexity. Technologies are merging more and more. New technological developments such as virtual reality are opening up many exciting new opportunities in the advertising market. "Trial and error is part of this and must be taken into account.

Content marketing, big data and mobile as the top 3 trends in the coming years.Content marketing, i.e. addressing consumers in a target group-specific manner, is the trend with the greatest potential in the communications industry according to 45% clients, while big data, knowledge about customers and how this can be used sensibly for marketing purposes, is cited by a third of clients as another important trend. As in last year's study, mobile marketing also remains in focus. The trends coincide with the current challenges in the communications market and are closely linked to digitalization in the communications world.

For the vast majority of respondents, recommendations and contacts with agency managers are currently the most important sources of information for agency selection. Agency websites are only consulted by just under 40% of advertising clients when searching for an agency. Rankings and awards are of lesser importance. Advertising clients therefore place more trust in the people who run and shape the agencies.In contrast to the previous year, there are signs of a change in the procedure for awarding contracts. 74% of respondents awarded contracts to agencies via project contracts. Only 11% of clients used competitive presentations and 15% opted for an agency evaluation.In 2015, 40% of respondents still absolutely required a competitive presentation and a further 40% would possibly consider one. This change is encouraging, as the preparation and implementation of competitor presentations is very time-consuming for both sides and in most cases less effective than entering into a project straight away or carrying out an agency evaluation.

The quality, passion and commitment of the agencies pay off.The most important success factor for a long-term business relationship, according to up to 70% of respondents, are effective, sustainable creative ideas, passion, commitment and likeability of the agency partners. Clients have recognized that precisely the complexity of today's communication requires creatively outstanding, strategically sound and target group-relevant communication concepts in order to achieve successful and effective communication work. This demands a great deal of know-how, competence, foresight and consistency in the work of the agencies.

Revenue models: cost-plus as the most important remuneration model in 2016.Over 60% of the clients stated that they most frequently paid their agencies by the hour with a cost cap (cost plus). Interestingly, despite its frequency, the cost-plus model is not the preference of the study participants. If they could choose, they would prefer the flat fee model to the cost-plus model. When asked about the use of performance-related remuneration components, only 21% of the clients use a corresponding model.

The 2016 Advertising Market Study shows the growing importance of digitalization in communication, which is both a challenge and an opportunity for clients and agencies. The quality of cooperation between clients and their agencies and the ability of agencies to develop innovative, target group-oriented and holistic communication concepts will be essential for success in the digital environment.