Several reports released last month point to a rebound in advertising spending this year. One projection, issued June 24 by TNS Media Intelligence/CMR, said total U.S. ad spending is expected to reach $124.7 billion in 2003, up 4.3% from last year.
For the second half of the year, ad spending will grow 4% compared with the second half of last year, even without major events such as the Olympics or a presidential election, the report projected. This growth will be fueled by a strong upfront season for TV advertising, continued growth in Spanish-language TV and steady growth in new brand advertising, said Steve Fredericks, president-CEO of TNS/CMR.
He predicted that b-to-b advertising for the year will be up an estimated 3.6% over 2002. "Technology will lead the growth in b-to-b," Fredericks said. "As the economy starts to come back and technology companies start to introduce new products, spending will free up. Thatâs where weâll see new brand spending."
Revenue up but pages down
Magazine advertising revenue overall rose to $1.58 billion in June, up 8.5% from the same period a year earlier, according to the Magazine Publishers of Americaâs Publishers Information Bureau. However, ad pages were down 3.2% compared with the same period last year.
Seven of the 12 major ad categories tracked by PIB registered ad revenue growth, led by automotive, drugs and remedies, and furnishingsâall consumer categories.
B-to-b print advertising, which has been in a slump since 2001, is finally starting to show a rebound. The latest report from the Business Information Network, prepared by CMR for American Business Media, showed ad spending in b-to-b publications was up 5.8% in March over the same period a year earlier. It was the fifth consecutive monthly increase.
"Inch by inch, weâre beginning to improve," said Gordon Hughes, CEO of ABM. He said ad spending in b-to-b publications was up 3% in the first quarter of 2003, flat to slightly down in the second quarter and will be up slightly this summer. "September through the end of the year, which is when we see the largest expenditures, will drive us up to 3% for the year," he predicted.
Even industries that have been hit hardest by the recession are starting to show improvement. The telecommunications industry, which cut back dramatically the past two years, will spend $19.6 billion on advertising worldwide in 2004, a slight increase over this year, according to the Advertising Ratios & Budgets report issued last month by Schonfeld & Associates Inc. The research report examines spending by more than 5,900 companies in more than 300 industry sectors.
Ad spending by wireless communications services companies will continue to grow, rising 8.9% to $8.4 billion in 2004, Schonfeld predicted.
In the computer industry, ad spending by PC manufacturers will decrease 6.2% next year, while advertising by prepackaged software companies will rise 7.1%, the report projected. Advertising for semiconductors and related devices will be down in 2004, but spending by computer communication equipment manufacturers will be up 3.5%.
Online shows increase
And online advertising, which declined in 2001 and 2002 following the dot-com crash, will finally show an increase this year, with projected revenue of $6.3 billion, up 4.8% over $6 billion last year, according to the July Advertising Spending Report by research firm eMarketer. The company projected online ad spending will reach $8.1 billion by 2006, which will bring it back to the level of spending before 2000, the year of the market crash.
"This represents a fundamental shift among more traditional companies, including b-to-b, to move online," said Geoff Ramsey, CEO of eMarketer. "We see the technology sector coming back."
Also indicating increased interest in online advertising was the success of last monthâs @d:tech conference in San Francisco. The conference, which attracted more than 2,900 online advertising and marketing executives, was the biggest @d:tech event since 2000, in terms of the number of attendees and exhibitors. By comparison, last yearâs spring show in Los Angeles had only 1,700 total attendees.
Speakers at @d:tech stressed the importance of continuing to build relationships with customers to drive sales.
"You have to look at the customer experience more contextually," said Todd Forsythe, VP-global marketing at Oracle Corp., during a panel discussion on the best Web marketing strategies for 2003. "One of the marketing strategies that has worked well for us in the past year and a half has been extending our view of the customer to the organizational level."
Forsythe said Oracle has learned to focus its marketing efforts not only on the customer but on all the other people around the customer who are involved in making the purchase decision. "The results weâve seen in marketing have increased dramatically," he said.
Meanwhile, advertising agency executives are recommending strategies for their cash-strapped clients. Rob Cosinuke, president of global capabilities at marketing communications company Digitas, Boston, said clientsâ budgets wonât change much in the second half from the first, with the exception of those that start a new fiscal year this month. There may be some improvement in those budgets, he said. Otherwise, "budgets are locked and loaded at low levels," he said.
Cosinuke said the first thing marketers should do is look at their spending on awareness campaigns. "If you have an established brand, stop spending on awareness and shift money down the funnel closer to the purchase," he said, pointing to efforts such as demand and lead generation.
Focus on top customers
Another strategy b-to-b marketers should pursue is to focus on top customers. Cosinuke said 10% to 20% of customers still drive 80% to 90% of profits at most companies, so marketers should spend more support dollars on top customers. For example, they might make sure these key customers connect with a live sales rep when they call or log on to the Web, while directing lower-volume customers to self-service on the Web.
Another marketing strategy is to determine when prospects are likely to buy, using promotional campaigns such as sweepstakes or offers in exchange for key dataâthe size of the company, names of key decision-makers and when the prospect will be in the market. Then, companies can target these prospects when theyâre looking to buy, Cosinuke said.
ABMâs Hughes said that while spending is improving gradually, itâs clear the industry has come out of its slump. "The major hemorrhaging has stopped," Hughes said.
Carol Krol contributed to this report.