Advertising's Declining Share of Total Marketing Spend Reflects Procurement Influence

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Published: August 23, 2010 at 11:00 PM GMT
Last Updated: August 24, 2010 at 11:00 PM GMT

By Jack Myers

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.

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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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