CHICAGO, Sept. 14, 2016 /PRNewswire/ -- A recent second quarter survey of advertising agencies conducted by STRATA, a Comcast Platform Services company, found that agency budgets and hiring remain flat as they see looming headwinds. Agencies report that almost half (49%) of clients are making "considerable" or "minor" budget cuts, while 31% of budgets will remain flat. A quarter of agencies say business will decrease in the second half of the year, the highest percentage seen in the survey since 1Q13. Reflecting budget concerns, only 33% of agencies report they are hiring new staff, a 21% decrease from last quarter, while 56% will keep staff levels steady. However, the percentage of agencies anticipating the need to reduce staff rose by 84% compared to the prior quarter, a 131% increase when compared to 2Q15.
Concerns over client spend spiked by 82% as compared to the same time last year, as 20% of agencies listed it as their biggest challenge this quarter. The leading concern for a majority of agencies (26%) was attracting clients, followed by media mix (21%).
Despite trepidations over the advertising economy, social media ad spend has increased, while the gap widened between Twitter's utilization against its peers. The percentage of agencies spending less than 5% of their budgets on social media dropped to the lowest amount in the history of the STRATA survey to 27% of agencies. In total, 69% of agencies are devoting between 6-25% of their budgets on paid social.
Twitter remains in fourth place in the survey for the second straight quarter, as 49% of agencies are using the platform in their ad campaign, a 13% drop from last quarter. Instagram fell 10%, but has the interest of 57% of agencies to remain in third place, following YouTube (78%) and Facebook (97%).
"It is somewhat surprising to see this level of pessimism among ad agencies as we head into the heart of the presidential election and holiday shopping season," said Judd Rubin, STRATA vice president of revenue. "A bright spot is the continued growth of social media ad spend, which may be partly due to both continued strides in that space and the fact that agencies are looking for more affordable ways to spend their clients' budgets."
Programmatic ad buying is capturing a larger share of ad spend as 12% of agencies plan on executing 40-60% of their buying programmatically, a 90% increase from a year ago. Another 28% of agencies intend to carry out between 10-20% of business programmatically.
Video advertising continues to lead agency focus, as more feel confident in its ROI. The survey found 68% of agencies are using video (both traditional and streaming) as their primary tool. Seventy-seven percent of agencies are focused on online/streaming video, the largest amount in survey history. Digital video now also leads the digital category, surpassing social as the leading area of focus within the digital category with 70% of agencies utilizing digital video, up 25% from a year ago, compared to 67% for social.
For their ROI, 59% feel fairly confident they are getting a good value for their money with their recent online video ad purchases, a 21% increase over the previous quarter. Thirty-four percent of agencies said they trust programmatic buying to properly or accurately execute their online/streaming video orders, up 41% from last quarter.
The solutions that STRATA provides empowers clients to buy and sell all media types including cable, broadcast, newspaper, radio, outdoor and digital advertising mediums. On average, over $50 Billion in advertising dollars flow through STRATA systems per year. As the system of choice for over 1,200 agencies in the United States, STRATA provides media technology that enables organizations to lead rather than react to industry developments. By transforming the way advertisements are placed and tracked, STRATA adds a new level of transparency to campaigns that is necessary in the ever-evolving media world. STRATA is a Comcast Platform Services company. For more information, visit www.gotostrata.com.
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