Pivotal: 'Tepid' Marketing Spend Growth In Q3

Pivotal Research analyst Brian Wieser has issued a third-quarter spending report that corroborates what agency executives have been saying all year — traditional marketers aren’t spending a whole lot more on marketing-related activities than they have in the past.

And actually, if you’re a marketer competing in the current economic climate, that’s probably the right path. I mean, they’re already spending a bundle. Why should they spend more?

But that’s not great news for publicly traded ad-holding companies, whose investors — taskmasters that they are — want to see consistent growth, which the holding companies as a group have failed to deliver in the last couple of quarters.

According to Wieser, median spending growth (based on a composite of nearly 30 “traditional” marketers reporting their spending for the quarter) was a “tepid” 1.6%.

Wieser cites a bunch of traditional marketers that pulled way back on spending during the quarter, including Nike (-18%) and American Express (-12%).



But the trend is the reverse for what Wieser terms “web endemic” marketers, among which the median spend was up 20%.

The numbers are not really surprising, but rather reinforce the ongoing digital transformation. As Wieser notes, “the data continues to reinforce our view that large traditional advertisers are increasing their spending at a much slower pace that faster growing digital oriented marketers.”

Of course, it’s no secret that marketers, in a further bid to cut costs, have been putting the squeeze on agency fees for some time now.

And in a trickle-down kind of way, that explains why the holding companies and are demanding, and receiving concessions of their own, from companies like Ascential, the organization that puts on the Cannes Lion festival. 

1 comment about "Pivotal: 'Tepid' Marketing Spend Growth In Q3".
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  1. Ed Papazian from Media Dynamics Inc, November 15, 2017 at 12:37 p.m.

    The problem with using "ad spending" totals as a barometer of marketing initiatives is that we dont know what kinds of "advertising" activities are involved---especially in digital media---branding, search, direct response, etc.----and we don't know the extent of so -called "promotional" spending that is not classified as "advertising" by the sources utilized. Often promotional spending exceeds "ad" spending. Last but not least, we don't know the types of buys that are being made. For example, when sales growth becomes sluggish, it is not unusual to see TV advertising brands reallocate portions of their budgets away from high CPM broadcast to much cheaper CPM cable,or reducing primetime in favor of more cost efficient dayparts, in order to garner the same number of GRPs ----or more GRPs----without increasing total spending. Such maneuvering is not accounted for in the total spend estimates---you must dig deeper to unearth what is really happening.

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