Study: US Ad Agencies Optimistic For 2017

Confidence among US advertising agencies is high for 2017, with almost half expecting business growth in the first quarter, according to new research.

A fourth-quarter survey of US agencies by marketing software company STRATA found that 43 per cent believe their business will grow in the first quarter 2017, while only 11 per cent expect a decrease.

Forty-two percent of respondents anticipate the need for additional staff this year, and not a single agency reports plans to reduce staff sizes. STRATA noted that this is in contrast to the second quarter of 2016, which found that the rate of hires was decreasing, and concerns over needing to reduce staff sizes were increasing rapidly.

When asked what the challenges ahead were, 51 per cent of agencies said expanding their client roster was their biggest concern, followed by determining the right media mix (22 per cent). Only 13 per cent of agencies felt that client retention was their chief concern.

The survey also found that video advertising remains the dominant focus among US agencies, with 34 per cent noting their clients’ primary focus was local TV and cable.

For the first time the survey’s history, digital video claimed the second spot, with 27 per cent of agencies listing it a their primary focus – a 79 per cent increase on the previous year. Display advertising fell to third, with 15 per cent reporting it as their clients’ main focus.

According to the survey, six per cent of agencies report plans to allocate between 26 and 50 per cent of their budgets to paid social this quarter – an uplift of 321 per cent compared to the previous corresponding period.

The majority of agencies reported that paid social media accounts for the smallest portion of their budget (zero to five per cent), and 18 per cent of agencies noted that it accounted for 11 to 25 per cent of their budget – up 80 per cent from last year.

In terms of which platforms agencies are using in social campaigns, Facebook remains dominant, with 94 per cent planning to use the social network.

YouTube, Instagram, and Twitter reclaim their second, third, and fourth spots, respectively, while Snapchat remains sixth, with more than 20 per cent of agencies now planning to use the messaging app – an increase of 58 per cent from the second quarter of 2016.

Heading into 2017, STRATA noted agencies have also indicated an increased appetite for programmatic buying options, with 36 per cent allocating 10 to 20 per cent of their budgets to programmatic (up 33 per cent on the second quarter of 2016), and 27 per cent planning to dedicate 20 to 40 per cent of their budgets to programmatic (up 43 per cent).

The percentage of agencies refraining from programmatic buying has declined, with 24 per cent of agencies reporting that they will not devote any of their budget to programmatic – down 39 per cent from the second quarter of 2016.

STRATA vice president Judd Rubin said the survey shows that US agencies are much more optimistic about 2017 after having major concerns about budget and revenue last year.

“We’re excited to see how this new confidence impacts advertising strategies [this year],” he said.

“Local and cable video continue to be the top focus, but digital video is increasingly coming to the forefront. With mobile advertising and rapidly growing social players like Snapchat also making strides, 2017 could prove to be a very exciting year.”

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