Economics & Research Blog
Common Wisdom Makes for Bad Excuses
Now that we&
By Dr. Joe Webb
Published: February 11, 2008
Now that we're heading into rather uncertain economic times for the next couple of quarters, companies are commenting on their declining fiscal performance.
It will be common to blame a decrease in advertising expenditures for a decline in sales of capital equipment. Sounds reasonable, doesn't it?
If advertising expenditures are declining, then why is adverising employment increasing? Why is graphic design employment increasing? If advertising expenditures are declining, employment should be decreasing. Even if bad economic factors hit these industries, their employment declines will be less than the general economy.
The real reason is that the shift to digital media is just part of a large shuffling of communications media allocation. These include greater use of public relations, events, trade shows, seminars, sponsorship, product placement, promotions, and less use of printed materials overall.
One could make the case that there is more advertising not just because of employment, but because communicators have more choices, and it seems they're intent on using every single one of them.
A recent study by Alterian notes that "offline direct marketing spend is reduced as online budgets are increased." That is, budgets may stay the same, but print and other offline media will get a lesser share.
The report also says "the number of respondents who increase their offline spend is decreasing steadily over time, from 60% in 2004 to 44% in 2007... there is an increasing trend to keep offline budgets static..." Forty-five percent of their respondents were doing exactly that.
The bulk of advertising dollars worldwide is still in broadcast. Non-broadcast media have a bright future in emerging markets, as do total advertising expenditures in those countries. Emerging countries have only had a taste of the wide range and depth of product selection that is common in a competitive economy. Advertising will be needed in those countries to differentiate competitive suppliers. Advertising has a bright future; its traditional methods do not. Markets are more complex and segmentation opportunities are greater than ever, hence more pressure to advertise and use more methods.
Also implicit in the advertising expenditure excuse is that when advertising expenditures rise, printing will rise. That has not been the case for almost ten years now, when commercial printing decoupled from GDP growth.
Let's be clear: the printing industry is competing for the same dollars as other media. While those dollars might be constrained in a slower economic environment, it ignores the multi-year shift in communications methods that have led to a rise in advertising, design, and public relations billings and employment.
Also recommended: the CMO Council has released their 2008 marketing report.