|National advertisers have left the global financial crisis behind them in Australia and predict growth in main media advertising expenditure of 5.3 per cent in 2010.
Just one year ago, the budget growth outlook among national advertisers was grim in light of the emerging GFC, with an average contraction of the domestic advertising market of 2.4 per cent, the largest decrease in advertising expenditure ever predicted. However, as economic indicators continue to strengthen, national advertisers are significantly more optimistic about the year ahead.
The survey is conducted by Roy Morgan on Starcom's behalf in November each year via both telephone interviewing and online methodologies. Respondents are drawn from a representative sample of Australia's top 450 national advertisers and senior media executives from free-to-air television, subscription television, newspapers, radio, internet, magazines, out- of-home and cinema.
For the coming year, national media executives are also more upbeat about the advertising industry with an average growth rate of 4.6 per cent in above-the-line media expenditure, up from only a marginal expected growth rate of 1 per cent that was predicted for 2009.
"The predictions of main media expenditure by advertisers for the coming year are encouraging and reflect Australia's resilience to the GFC," Starcom MediaVest Group CEO John Sintras said.
"It's pleasing to see that advertisers have turned around from a mood of caution and uncertainty so quickly and that 2010 is set to return to strong growth for most sectors of the media. That said, the predicted growth would still see mainstream ad budgets below the levels of 2008."
The internet is once again anticipated to be the biggest beneficiary of ad expenditure next year, followed by free-to-air television, subscription television, newspapers and radio. In 2009, the internet was the strongest performing media channel.
Below-the-line activity is also expected to boom again during 2010, as it did last year. Online and viral email, public relations, point-of-sale and addressed direct mail will all benefit from a predicted 5 per cent increase in advertiser budgets across total below the line media.
The Media Futures report is divided into two sections - national advertiser perspectives and media executive perspectives. Highlights from these two sections are detailed below.
National Advertisers Perspective
Among national advertisers, slightly more than half expect to increase their total above-the-line spending during 2010 compared with their 2009 activity, while around one in five anticipate further cuts to their advertising and media budgets.
As seen in previous years, the internet appears to be the key media to benefit from the increase in advertising spend within the market. Almost nine in 10 national advertisers intend to include online activity as part of their advertising strategies during 2010, and across the total market around two-thirds of national advertisers anticipate an increase in budget allocations to online.
In other main media, around one quarter expect to increase total advertising spend on free-to-air television, subscription television, newspapers and radio. However, total spending on newspapers and free-to-air television in particular is likely to be tempered by the 24 per cent and 18 per cent of advertisers respectively who intend to cut their budget allocations in the coming year for these media . Magazines and out-of-home can expect lower overall advertising spend growth with slightly fewer than one in five total national advertisers expecting to boost their budget allocations to these specific media for 2010.
Below-the-line activity is also expected to boom during 2010. All bar one national advertiser respondent reported an intention to integrate below-the-line activities in their marketing plans for the coming year, with online and viral email, public relations, point-of-sale and addressed direct mail expected to be used by at least half of all national advertisers. In addition, total below-theline advertising budgets are expected to see a healthy increase of 5 per cent over the coming year.
Not surprisingly, after a year where many national advertisers were focused on tightening their advertising budgets, almost all national advertisers agree that investing in ROI activities to measure the effectiveness of their advertising campaigns remains key. During 2009, 87 per cent of total national advertisers invested in some form of return on investment activity, and more than nine in 10 expect to measure their campaign effectiveness during 2010.
National Media Executive Perspective
According to national media executives, the advertising market has already shown signs of improvement in late 2009. Overall, only one third of national media executives reported better sales revenue overall for 2009 compared with their expectations set at the beginning of the year. However, when probed on the last quarter in particular, almost nine in 10 media executives across all main media channels reported improved sales revenue results compared with revenue for the end of the third quarter.
Overall, almost three-quarters of media executives are expecting an increase in total advertising budgets over the coming year, while the remaining executives either expect no change or were unable to estimate a projected growth rate. This represents a significant shift in attitude from the previous survey, in which only 58 per cent of national media executives were optimistic about revenue growth.
In reporting on expected advertising revenue growth in industries other than their own, the internet again looks to be the main winner of increased advertising activity throughout 2010. When asked to predict performance of main media other than their own, two in five national media executives anticipate the internet to perform better than expected over the coming 12 months, while almost three in 10 expect subscription television to perform better next year.
Print media on the other hand is not expected to fare as well, with only 9 per cent predicting improved sales performance for the newspaper industry and 8 per cent expecting improved sales performance for the magazine industry.
Interestingly the key growth industries for total advertising expenditure during 2010 are those which felt a significant impact from the global financial crisis - the automotive and the finance sectors.
Overall, more than three-quarters of national media executives are expecting an increase in total advertising expenditure from these two sectors. Government, retail and telecommunications are also expected to show significant growth with at least seven in 10 media executives expecting increased advertising revenues from these industries.
Conversely, the technology sector is expected to show a slower response to market movements, with around one-quarter predicting increased advertising expenditure from the dot com industry and one-third expecting improved advertising revenues from the information technology sector.
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