Advertising's Share of Marketing Budgets Declines 12% in Past Decade

A decade ago, in 1998, media-based advertising represented 35 percent of total marketing communications budgets, totaling $136.7 billion. Direct mail generated $39.7 billion, a 10% share of marketing budgets, while consumer and trade sales promotions, including events and public relations, represented 55% of the total spend -- $215.0 billion. Ten years later advertising budgets have declined to 30.6% of marketers' total marketing investments; direct marketing has more than doubled its share to 22.8% of communications spending; consumer and trade promotions (including events and PR) represents 46.6% of the marketing communications spend.

Even as advertising has increased 70% in a decade, total marketing budgets have increased by 94% and direct marketing investments have increased more than 400%. $12.4 billion, or 7.2% of total direct marketing has moved into online search engine marketing. The full Jack Myers Advertising and Marketing Investment Forecasts 2008-2010 is available for free at www.myersreport.com

As media companies deal with the projected four percent decline in ad spending and more than two percent decline in total marketing communications budgets in 2009, the clear opportunity is to open the door to increased focus on driving direct response metrics and tapping into both direct marketing and sales promotion budgets. It's highly unlikely that advertising investments will increase as a share of the total marketing communications pie in the next decade unless media sellers find ways to tap into the 70 percent of marketing communications budgets that are typically tied directly to corporate sales revenues.

This means increased emphasis on search, interactive and response-based links to consumers, retail incentives, couponing, sampling, experiential marketing and other forms of marketing that are tied to sales department analytics.

Jack Myers is available to share his view of the advertising and media economy at your corporate meetings and events. Contact jm@jackmyers.com