The Advertising Barometer: Advertisers are holding back – no growth yet in sight

The Association of Finnish Advertisers surveyed its member companies’ marketing communications plans for 2016. The rising expectations and improved demand prospects of the previous fall proved to be short-lived, and the curve of our market barometer once again turned downward, showing negative growth. Marketing euros are now being invested in online advertising, own media as well as social media. The outlook for television advertising has also improved. Of marketing services providers, advertising and media agencies again fared best.

The Advertising Barometer mirrors the market situation in Finnish advertising. Out of all respondents, 29% intended to increase their marketing communications inputs in 2016, while 33% were going to decrease them. 38% of respondents looked to retain the previous year’s level. As a result, a barometer reading of -4 emerged, indicating the difference between those who increase their inputs and those who decrease them. The figure in the previous fall was still slightly in the positive, +3.

– What we need is a considerable increase in marketing investments to boost sales in this economy, says Ritva Hanski-Pitkäkoski, CEO of The Association of Finnish Advertisers.

Compared by media channel, advertising euros are still being most vigorously invested in online advertising. This was also the first time the barometer inquired about paid social media advertising. Its barometer reading turned out to be an astounding 69. Television advertising continued its upward trend, scoring a reading of 28, up remarkably from 5 in the previous survey. Positive readings were also recorded for outdoor advertising (24), cinema advertising (13), and radio advertising (9). The outlook for print media continues to be hazy.
Advertisers are looking to invest more and more in other than paid media. In particular, they will increase the use of their own and social media. The most popular of these are online services offered through companies’ own websites (barometer reading of 80) and company blogs (63). Advertisers’ social media presence shows no signs of abating either: YouTube (reading 82), Instagram (80), Pinterest (65), and Snapchat (70). Periscope was not yet included in the barometer inquiry.

– Advertisers are complementing the most popular social media platforms with new social media channels, says Ritva Hanski-Pitkäkoski.

When we look at the demand for the services of marketing services providers, the previous hegemony of digital agencies seems to be evening out (barometer reading of 19). There may well be an increase in the demand for the services of advertising and media agencies (readings 8 and 19 respectively).

The respondents evaluated the demand prospects for their companies as favorable. 60 percent of the respondents anticipated an increase in demand in 2016, compared with 7 percent expecting a downturn. Thus, the reading was 53. Six months earlier, the corresponding figure was just 40.

The Association of Finnish Advertisers conducted this survey in November-December 2015. The respondents represent 95 member companies of the association, with a combined annual advertising budget of appr. EUR 230 million. Of the respondents, 25% represented industry, 36% trade, and 29% services, while 10% were diversified and other companies. The results are adjusted according to the annual advertising budget of each respondent’s company. The readings shown in the barometer indicate the difference between those who increase their inputs and those who decrease them. For instance, if 40 percent of the respondents said they were going to advertise more, 50 percent were retaining the previous year’s level, and 10 percent were cutting their advertising costs, the barometer reading would be 30.

Barometer reading is not an indicator of change in terms of euros, but an estimate of the trends future marketing communications investments will follow.

The results of the barometer represent the views of our member company respondents on the market outlook at the time the survey was conducted. Media companies are not members of The Association of Finnish Advertisers. Due to this reason, recruitment advertising, classified advertising, and media companies’ own advertising are excluded from the study.