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Advertising's Declining Share of Total Marketing Spend Reflects Procurement Influence
Published: August 23, 2010 at 01:34 PM GMT
Last Updated: August 24, 2010 at 01:34 PM GMT
Between 2007 and 2012, advertising's slice of the total marketing pie is forecast by Jack Myers Media Business Report to decline from 30.7% to 25.9%. That represents more than $100 billion that is shifting away from traditional media spending to alternative marketing options during this five-year span. Even with hundreds of millions of dollars invested in effectiveness, engagement and emotional connections™ research studies by media companies and agencies, advertising remains a cost center that is increasingly subjected to procurement oversight and intensifying cost controls.
In contrast, trade and consumer promotion investments are often under the management of corporate sales organizations and a priority for brand management teams, less subjected to the demands of procurement officers.
For decades, advertisers, agencies and media sellers have invested in a search for the "holy grail" of standardized advertising return-on-investment metrics in an effort to demonstrate the R-O-I value of advertising. But the goal of transitioning media spending from a cost center to an investment with standardized measureable R-O-I is as distant today as it was several decades ago. Until media companies and agencies begin connecting ad campaigns to marketers' trade and consumer sales promotion objectives, they will continue to be viewed as a cost center rather than an investment. Media and advertising can transcend traditional values when they can prove effectiveness in delivering measureable distribution gains and increased consumer sales, not when they simply deliver impressions – even when those impressions are targeted to engaged and behaviorally relevant audiences.
To comment, visit www.jackmyersthinktank.com. JackMyersThinkTank and MediaBizBloggers are free and underwritten as an industry service by corporate subscribers to Jack Myers Media Business Report. For subscription information, visit www.myersreport.com. Visit the archives of JackMyersThinkTank and MediaBizBloggers. Jack Myers can be contacted directly at jm@jackmyers.com .
Source of advertising and promotion spending/investment data: Jack Myers Media Business Report Economic Forecasts.
Emotional Connections is a registered trademark of Jack Myers for research studies on media value and effectiveness. Jack Myers invested more than $1.5 million in Emotional Connections research between 1998 and 2006, underwritten by more than 20 media companies.
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Much of our time at the DPAA over the past year has been invested in meeting with agencies and brands to understand their needs, and also their perception and mindset about digital place-based media. Early on in this process, it became clear that the digital place-based media industry needs to more clearly define itself to these important constituencies. Our industry's tremendous revenue gains over the past couple of years notwithstanding, there is no question that our long-term growth hinges on clarifying what we are… and are not.
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