Advertising reaches new high

A report by Team Saatchi shows renewed optimism in advertising. Budgets are up and the medium is moving into pole position.

More than half of advertisers worldwide are planning to increase their communications budgets this year, while just a tenth are planning to cut them, according to a survey on communications by ad agency Team Saatchi.

The survey, called Flux, questioned over 1,000 top managers in 1,500 companies in 21 countries across Europe, North America, Asia and the Pacific. The optimistic view on this year’s ad budgets compares with a more downbeat analysis in previous years. The report says that advertisers are now trying to catch up on lost time. In Britain, over 60 per cent of companies responded positively to the proposition that their advertising budgets would increase this year.

Team Saatchi chief executive Michael Parker, who helped compile the report, says: “Most of the countries are coming out of a recession, and there is a degree of optimism that was not present in previous surveys. In 1995, they were certainly not as optimistic.”

The report also says that advertising is regaining its position at the top of the media hierarchy, even though direct marketing has become more accepted by marketers as it confirms its status and proves its worth. The report concludes that direct marketing will not replace advertising in the near future, even though below-the-line activities represent greater spending than advertising. But advertising has moved from being the prime method of mass marketing, and is now specifically targeting more diverse groups.

Relationship marketing has become more important for advertisers and over 80 per cent agree that “from now on, a company’s success will depend on mastering relationship marketing”. Only two per cent disagree strongly with this statement. Compared with the 1995 survey, companies are doing much more to get to know their customers better, to set up means of generating their loyalty and tracking them down. In 1995, only 25.5 per cent of companies declared that they knew their customers with any accuracy. In the present survey, over 70 per cent of respondents said their companies had extensive customer databases.

The report says that advertising is moving away from factual advertising and cold comparative demonstrations based on “microscopic” differences. The trend is particularly strong in the US, where massive investment has been made into the ways of demonstrating product differences. Instead, the research reveals that infomercials are seen as a more successful method of breaking out of this trend and of setting a more user-friendly and attractive stage for microscopic-product benefits. Over half the respondents agreed with the statement: “The infomercial is going to become an accepted means of expression for companies.” But the report says the infomercial is not an answer in itself and is simply one more means of communicating in me-too product markets where promises and positioning overlap. This applies more to continental Europe and the US than to the UK, where infomercials are a less important advertising medium.

Rather, the report says, a large majority recognise that the most effective way to differentiate is through “emotionally-based” messages. Over 40 per cent of managers questioned agreed that “the link which truly unites a company with its public is an emotional one”.

The report also highlights some of the cultural differences between attitudes to advertising in different countries and cultures. It comments: “Who are the aficionados of emotional advertising? Strangely enough, not who we might think. There is a definite watershed be-tween the Latin side and the Anglo- Saxon-Asian side. The hot-blooded countries are more restrained in their advertising expression and more factual; the ‘cold’ Anglo Saxons are freer in their use of humour, surprise, provocation and strong emotion.”

The survey shows that international campaigns are increasingly based on global brand advertising. Advertisers are looking for large-scale savings by managing their brands globally, and they overwhelmingly believe that centralised control of communications is essential. Within this, regional and local freedom of execution is becoming more widely accepted in terms of setting the tone of the advertising, selection of media and stage setting of products and services.

One strong trend that emerges in the report is the move to put internal communications at the heart of marketing strategy. The survey shows that internal communications is an integral part of corporate life and is key to companies’ goal of enhancing customer satisfaction. Only ten per cent of respondents disagreed that good employee communications show up on a company’s bottom line.

The report says: “Companies have reappropriated internal communications and are using them as a management tool. It has become their business. Thus, only 4.5 per cent of managers entrust all their internal communications to an external agency.”

The use of external communications as a method of communicating with staff has diminished in the UK and US, with only half of companies using this method. The survey says: “Generally, re-engineering is taking place in terms of internal communications and the Intranet is making a spectacular breakthrough. Internal communications are increasingly accepted as key to corporate health.”

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