While the advertising market may appear soft, media agency bosses have suggested that brands are spending record levels in marketing. But there is no mechanism to report it.
Standard Media Index (SMI) collates media agency spend to provide subscribers with data on where ad dollars are going and who is spending them. As such, SMIs methodology is sound. But as it is based on media agency spend as put through agency billing systems, it does not measure ad dollars spent by clients directly with media owners. Other providers such as Nielsen estimate spend levels, but do not include some large digital elements such as search and social.
UM boss Mat Baxter said the existing paid media measurement tools gave an indication of market health but not the full picture, given the amount of money brands are channelling into owned assets.
“SMI has relevance but it is half the picture, the measure of health of paid media only, not a proxy for industry or marketing health. SMI and Nielsen numbers suggest the market is backwards. But the truth is that the market in terms of overall spend has never been more buoyant. So you have to put [paid spend figures] into context and quarantine that against what we are seeing in the overall market.”
Baxter suggested overall marketing spend was “rocketing” with owned and earned channelling dollars out of paid. That was hard to measure, he admitted. “But in a world where [more marketing spend] is unreported, you have to question the long-term viability of these current measures.”
ZenithOptimedia boss Ian Perrin agreed that “SMI is a blunt measure... and like all data points is open to interpretation.” But he also suggested that pointing to owned and earned shifts was simplistic.
“Is the paid advertising market soft at the moment, yes. Is it only because all marketers are focusing their efforts on owned media, yes and no.”
Categories that have strong direct relationships with customers such as banking, insurance and automotive, said Perrin “can afford to spend less on traditional paid advertising by activating these relationships”.
For others, there was less opportunity to do so. “So an emphasis on owned media is definitely having an impact on advertising spend, but only in certain categories,” Perrin added. “There are other factors at play as well, most noticeably business and consumer confidence as a result of the budget.”
Perrin said that one by-product of the shift to owned media was the impact is was having on the way advertisers use paid media – i.e using it to drive acquisition as well as build brand.
“The theory is that once a consumer is acquired, owned channels and product innovation can be used to build the brand in a more personal and direct way. If you are an airline for example, you are better off getting someone into a seat and then proving how good the service is, rather than by simply telling them about your brand in paid media.”
Atomic212 boss Jason Dooris agreed that there was no “single tool that gives you a rounded view of overall marketing effort.”
By way of example he cited Nike. “A team running around with Nike on their shirts versus a few spots on TV are hard to compare - but need to be compared to make an accurate decision if you are doing a comparative study of competitive spend between brands. So in that respect, [SMI] is not redundant but it is not effective on its own.”
Dooris pointed out that Nielsen data was estimated and did not include big chunks of digital spend, and Roy Morgan had issues with late data.
SMI boss Jane Schulze was unimpressed.
“SMI prides itself on being the industry standard for agency expenditure, which is by far the bulk of ad spend for most major media.
“If someone can find a methodology for measuring owned media I would be keen to see how that works because I fail to understand how you could do that in an accurate way.”
While PwC has confirmed that brands were spending a lot more money in earned channels, and suggests, two thirds (67%) of marketers are shifting their spend from bought to owned channels and a quarter of marketers spend between 20% and 30% of their budget building their own media channels, Baxter admitted that he did not have a definitive answer.
He said one potential solution would be to regularly survey CMOs and simply ask whether they were spending more in owned that last quarter.
“Is using qualitative assessment better, a regular dipstick of that confidence? I don't know. But brands are spending a larger amount on owned platforms because they can then spend less to propagate it. Therefore you will only see SMI spend data on a trend basis reducing. If that is the only measure we use, paid is only going one way and that creates a dark narrative when the reality is the market has never been more buoyant.”
He claimed UM's staff time was now almost a 50:50 split on paid versus “working with clients on things that don't fall into traditional media”.
That meant being paid in terms of hours rather than purely commission.
“That's where the commissions model becomes nonsensical. Industry has to migrate to a model that recognises that otherwise there is a disincentive to give agnostic advice [in terms of paid and owned]. It's the new neutrality debate.”
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