Strata

REPORT SHOWS AGENCIES EYEING GROWTH AS DOWNWARD TURN FLATTENS

The decline in ad spending flattens and signs of an upswing emerge. That is the impression given in STRATA’s third quarter study of media buying agencies. A majority of the agencies polled saw an uptick in business, a change in ad placement and a shift in challenges heading into this fourth quarter. STRATA, a leader in media buying/selling software conducts a quarterly survey that notes trends of 40 agencies of varying sizes across the country. More agencies noted an increase in their business over the last year, a trend that STRATA has noticed in the last few quarters. Over a third of the respondents felt that their business was increasing compared to the same time last year. This is up 44% compared to the responses from the fourth quarter, 2008. Furthermore, of those polled, 67.5% felt that their growth would either be the same or better than the first half of the 2009. This growth may not be seen by all advertising avenues though. Of the media buying agencies polled, Spot TV is still the top choice for their customers, but the grip on #1 in the poll is slipping fast. Compared to STRATA’s first quarter report, the percentage of those who feel their customers are most focused on Spot TV above all else, decreased by 39%. This downward trend has been ongoing since STRATA’s poll at the end of last year, when 60% felt their customers were most focused on Spot TV (that percentage has decreased by 42% as of the latest poll). Those ad dollars are definitely not moving to Print, according to the study. 52.5% of the respondents felt that their customer’s focus on Print advertising has dropped since the previous year. So if media buyers aren’t purchasing as much Spot TV or Print, then where is the money going? Internet and Spot Radio are a pair of avenues receiving more attention. Of the customers polled, 72.5% say their customers were more focused on Internet advertising than they were a year ago. Spot Radio, which had struggling as late as 2008, has continued to have a strong resurgence. Spot Radio has witnessed a 700% increase as media buyer’s area of choice since last year. This holds true to STRATA’s second quarter results where 65% say that their customer’s focus on Spot Radio has remained the same or increased since last year. “Costs are a huge factor in Spot Radio and Internet’s emergence as an advertising avenue of choice,” said John Shelton, STRATA President/CEO. “Spot Radio and Internet generally have low production costs. If you couple that with the current economic environment, the stage is being set for these two more affordable avenues to move up in people’s media mix.” Media buying agencies have noticed a shift in their customers away from making considerable cuts to their budgets. The study revealed that 80% of agencies say their customers are staying the same or only making minor cuts to their budgets, versus 62.5% only one quarter ago. Agencies have also noticed a shift in their own focus. While client spending is a huge challenge for agencies, attracting new clients seems to be a bigger challenge than last year. Of those surveyed, client attraction increased 287% as agencies biggest challenge since the end of last year. That may continue for a while as the majority of agencies didn’t see the economy returning to a strong growth period until late 2010. More results of the STRATA survey: * 47.5% said that their clients are somewhat likely to fit Advanced Advertising or Digital Media (i.e. Video on Demand, interactive television, etc.) into their plans this year (a 73% increase from last quarter). * 59.2% of agencies will most likely use Facebook in their client campaigns. * 45% felt their customer’s focus on Spot Cable would be the same as last year. * Staffing plans remain stagnant as 82.5% of the agencies plan on not hiring staff for the remainder of the year.