It’s Not All Doom And Gloom

It’s Not All Doom And Gloom
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In response to Starcom’s Mid-Year Update, The Interactive Advertising Bureau’s CEO Alice Manners argues why it doesn’t paint the whole picture.

As everyone who works in this industry well knows, data can tell many different stories, depending on how it’s packaged.

This week’s Media Futures Mid-Year Update for 2014 by Starcom is a perfect example. The report noted that advertisers are expecting a year-on-year reduction in advertising expenditure, including online media, of 3.8 percent in the second half of 2014.  This ‘correction’ from earlier predictions of a 2.6 percent increase was described by Starcom CEO Chris Nolan as “unprecedented” and “unusually large.”

While I can’t argue with his data, I have to disagree with his conclusions about the industry and in particular online for one simple reason – the Starcom report only looks at the advertising revenue flowing through media buying agencies.

In online, as with a number of other channels including radio and newspapers, there is a lot of direct activity between advertisers and media owners.  Then of course in online the majority of search advertising expenditure is direct, as is a healthy proportion of social media dollars. So while Starcom’s report may indeed accurately reflect their client base and direct activity with agencies, it’s not the full industry picture.

The IAB / PWC Online Advertising Expenditure Report (OAER) provides a much more rounded view thanks to its multiple sources.  It’s showing that online advertising expenditure has had four consecutive years of steady growth and it reflects a dynamic, expanding industry. The next OAER is due out end of August and we’re expecting to see strong growth in mobile, social, video and search and an overall increase on the already strong 17 percent year on year growth reported in the March quarter.

Starcom’s Report also made the distinction that paid media is declining, while owned and earned media would rise.  I’m not so sure about that.  The industry works hard to find the right balance of P-O-E (Paid, Owned and Earned) but its focus is allocating, optimising and attributing advertiser investments on all platforms rather than putting one over another. It’s all about connecting consumers with brand messaging and brand experiences in all paid and organic online media channels.

Another voice in support of the growth of online media is Mary Meeker, a leading commentator on the digital economy.  She has spoken often about the disconnect between time spent with media and the allocation of marketing investment by channel. Meeker’s expectation is that the eyeballs and the advertiser dollars will reach parity.  There is no doubt we are getting closer to seeing her prediction come true, with online across all channels continuing to grow.  This is due at least in part to the hard work and innovations from media owners, both digital and traditional, to invigorate the paid media sector with responsive assets and data that adapt to channel, use state and device.

Indeed in the most recent CEASA report, digital had increase to 30 percent of total advertising expenditure in Australia for the financial year and it’s expected to exceed 35 percent for the full calendar year.

Regardless of whether we agree or not on the Starcom Report findings, there is one very important underlying message. Everyone in the media industry has to work harder to gain the same or even more marketing dollars.  We have to provide value and we have to get better as an industry at proving that what we are doing is working for our clients.

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