Global advertising spending forecasts indicate that the industry can take a small breath of relief looking to 2010, because data indicates the market is stabilizing. A number of direct and digital marketing experts told DMNews in light of those forecasts they’re expecting spending growth of at least 10% next year.
According to Interpublic Group’s Magna, global ad spending will jump 6% next year to about $380 billion from $358 billion this year. Publicis Groupe’s ZenithOptimedia and WPP’s GroupM predict global ad spending growth of 0.9% and 0.8%, respectively, with both projecting global totals of about $448 billion
For North America specifically, GroupM predicted that spending will decrease from $155.8 billion to $149.6 billion, while ZenithOptimedia said North American spending will fall from $157 billion to $153 billion. Magna predicted a North America increase from 2009’s $140.5 billion to 2010’s $141.7 billion.
While television still takes the lion’s share of ad dollars when spending is broken down by medium, the Internet is the only medium that will see its share grow significantly in 2010, according to ZenithOptimedia. The share of Web advertising will rise from 12.4% to 13.7%, and its global spending total is on pace to reach $60.3 billion from $54.1 billion this year. TV advertising is also predicted to grow its overall share from 39.2% to 39.7%.
“Just like in the old days, direct marketing used to be the safe haven because it provides quick, measurable results. Online has assumed that safe haven role now,” said Adam Smith, futures director at GroupM.
According to Magna, global media suppliers’ total online ad revenues are expected to see a compounded annual growth rate of 10.5% between 2010 and 2015.
In terms of how these numbers apply to direct mailers, many are still recovering from an extremely difficult 2009. Ed Mallin, president of the services group at InfoGroup, said 2009 was “the most challenging year that a marketer could ever expect.” He elaborated that quarters one and two of this year made marketers feel like a “deer in headlights.”
“We saw an average of 20% to 30% to 35% in cutbacks in terms of circulation and volume of direct mail pieces,” Mallin said.
Though it’s normal for there to be an uptick in the second half of the year due to holiday marketing, Mallin added, he thinks there will be an increase in 2010 budgets and that “most marketers would be happy and hopeful to see a 10% increase.”
Sarah Baehr, VP and national media lead at digital agency Razorfish, said that the Magna, ZenithOptimedia and GroupM predictions are conservative because they include all media. She expects Razorfish clients to increase their spend by “10% on the low end” and “20% on the high end,” depending on industry and vertical.
“Consistently our clients are asking us to do more with less, but with digital, we can really take advantage of online environments and tap into audiences directly,” she explained.
Stormy Simon, SVP of marketing and customer care for Overstock.com, agrees that many marketers are seeing Internet advertising as a better way to reach customers than rival media.
“Our online spend is judged by performance, so as an online retailer, we just spend as much as folks will respond to because it’s so trackable,” she said.
She said Overstock doesn’t break out its marketing spend by channel publicly. However, Simon said she expects Overstock’s spend to remain about the same in 2010 as it was in 2009.
Bryan Wiener, CEO of digital agency 360i, said that his agency is “seeing from our clients, which are a broad cross-section of big brands, double-digit growth in search, video and social media.”
“We’re expecting 10% to 15% growth in search,” he continued. “Video and social will have much higher percentage growth, but they’re starting at a lower basis.”
Simon added that while the e-commerce giant does use some direct mail, digital marketing is more reliable.
“If we send a direct mailer, it’s an absolute impression, but is it as trackable? Will the consumer, for example, type Overstock.com/directmailer? It’s fuzzy. Some people do and others don’t,” she explained. “But I do know that when I spend on online marketing, I’m able to say ‘I spent a penny and I got a penny [back].’”
Andrew Bast, SVP and GM of agency Purple@Epsilon, said that while his firm has seen decreased budgets this year, a large number of clients are pouring more of their budget into CRM rather than traditional marketing. CRM has eclipsed the more general awareness marketing, and we expect that to continue into 2010,” he said.
“In 2009, clients became very risk-averse,” Mallin agreed. He explained that clients may have, in the past, been more daring, trying many different strategies, yet today they’re only betting on a few campaigns or channels.
Another thing to consider for agencies and marketers alike, he said, is that budgets, for the most part, are no longer planned on a yearly basis.
“We’re seeing people look at their budgets month to month and quarter to quarter,” he said. “It used to be much more predictive, but today they’re being micromanaged. We’ll continue to see that in 2010 but not to the extent in 2009.”
For 2010, Bast predicted that overall marketing budgets would begin to increase. “We think we’ll see budget increases easily north of 10%,” he said.
