Study: Ad Execs Optimistic About 2012
Despite the wobbly economy, new research from Chicago-based Strata indicates that a majority of the ad shops the company surveyed nationwide believe business conditions will
improve -- or at least not worsen -- in the second half of 2012. And 40% said they expect improvement during the second half.
Strata, the ad buying and selling transaction processor, polled over 100 media-buying shops about conditions in the second quarter and the outlook for the second half of the year.
The Strata survey paints a rosier picture than other recent forecasts for the U.S. The firm believes the results are driven -- at least in part -- by the influx of political spending, which Borrell & Associates estimates could top $9.4 billion this year. And ad rates for non-political advertisers often increase in political years as inventory loads tighten.
“The positive remarks we are seeing from ad agencies on spending and business are quite encouraging, especially as the rest of the world is telling us things are not going to improve just yet,” stated Strata CEO John Shelton. “Our data shows that political advertising is pushing ad sales for the second and third quarters of this year.”
Shelton said that in June and July, over $640 million in TV buys flowed through the company’s ePort transactional system, largely driven by political ads. Shelton called that a record for the time period. So far this year, 40% -- or about $480 million of the ad buys flowing through the Strata system -- have been for political ads.
While political advertising is creating more demand and pushing up ad costs, 42% of non-political advertisers surveyed said they will be competing for ad space during the campaign season. Another 40% are using alternative media to avoid the rate hikes driven by political ads. Just over 85% of political advertisers anticipate increased or steady ad spending this year compared to 2010, the survey found.
Fifty-two percent of respondents said their business increased during the second quarter. The improved results for those agencies came despite a slowdown in the growth of the U.S. economy during that quarter. Last month, the U.S. Department of Commerce reported that the economy grew just 1.5% from April through June, down from the 2% growth achieved in the prior quarter.
The positive Strata report follows a series of revisions of forecasts for 2012 ad spending by other firms. The revised predictions sent mixed signals about the near-term outlook for U.S. ad spending.
Financial firm Barclays upgraded its U.S. forecast projecting 4.6% growth this year, up from its earlier forecast of around 4%. WPP’s GroupM recently downgraded its overall U.S. forecast, now predicting ad spend growth of just 3.6% versus the previously projected 4%. In June, Publicis Groupe’s Zenith Optimedia said it was standing by a prediction of 3.6% growth, which it had forecast earlier in the year.
Despite the unemployment rate in the U.S., which stood at 8.3% in July, 94% of the ad agencies surveyed by Strata indicated that they are planning to either increase staff or hold to their current employee levels.