Industry Statistics Offer Interesting Trends
by Chad Rueffert


Advertising Age recently published its “Fact Pack 2004 Edition” in which it provides statistics on advertising trends in the previous year.  Though it’s a completely different world when dealing with a company like General Motors whose budget was $3.65 BILLION last year, there is a lot that can be learned by smaller marketers from analyzing the trends among major advertisers and media outlets.  I’ve outlined below five interesting facts and how I think they could effect your future marketing plans.

 

Direct Mail is the number one medium in terms of U.S. Ad spending at $46.07 billion.

 This is a trend I think will continue.  Direct mail expenditures increased by 3% over the previous year and I doubt the trend will change.  Conversely, newspaper expenditures (#2 at $44.03 billion) decreased, as did consumer magazines and business publications.  Radio, broadcast and cable TV all saw gains.  The reason direct mail will continue to increase is that it is effective.  Consumers have only one mailbox, and it is still easier to change the channel or turn the page of a magazine than it is to ignore junk mail.  This is a trend I believe the small business advertiser should keep in mind when creating a marketing plan.

 

Internet ad spending dropped by 13.5%.

 Internet ad spending didn’t even reach $5 billion last year and experienced a double-digit drop.  I believe that most of the megabrands will continue to use the Internet effectively, as will certain sections of consumer products and a variety of niche items that can’t be effectively marketed through other mass media.  But for the average, local small business, unless the costs of Internet advertising drop there are probably more cost effective ways to reach your audience.  Internet advertising was the next big thing and was supposed to surpass other media.  That was a prediction that just didn’t come true.

 

AARP The Magazine tops circulation numbers at over 20 million.

 The magazine for retired persons nearly had a 14.1% increase in circulation and is nearly double the number two spot held by Reader’s Digest (another magazine popular with older adults). For comparison, Time Magazine and People Magazine have circulations of around 4 million.  As an interesting side note, none of the Top 10 magazines in terms of circulation rank anywhere in the top 10 magazines ranked by total number of ad pages sold.  That could mean that people prefer to subscribe to magazines that feature fewer ads or that advertisers are placing ads based on format rather than circulation.  The important trend to consider here is the so-called “graying of America.”  If you haven’t figured that into your marketing strategy already you’d better start now.  Can there be a more telling statistic than the fact that AARP The Magazine has a circulation that exceeds Time, People, Newsweek, Cosmopolitan, Sports Illustrated & Playboy combined?

 

Superbowl spots reached the same number of viewers as a decade ago for 2.5 times the cost.

The Superbowl this year reached just under 90 million viewers and the average cost per 30 second spot was $2.25 million.  In contrast, ten years ago the Superbowl reached 90 million viewers but the average 30 second spot cost only $900,000.  So the cost per thousand went up 2.5 times and yet advertisers continue to purchase the spots.  Why?  Because advertising has become as much a form of entertainment as television programming itself.  The free publicity generated by advertising at the Superbowl and the attention to which viewers pay to the advertising makes the higher costs more acceptable.  The one thing you should take away from this trend is that television advertising is becoming more and more difficult for local businesses.  A national company willing to spend over $400,000 to advertise on Friends has the budget to create entertaining, memorable advertising that is far and above what the small business can produce on a budget.  It is going to get harder and harder for your ads to get noticed on television unless you have the budget to cast Donny Osmond and Ozzy Osbourne. 

 

Multicultural agencies saw growth in Hispanic and Asian-American Marketing but large drops in marketing to African-Americans.

 The top five agencies who specialize in marketing to Hispanics all saw significant growth in 2003.  Two of the top five agencies who specialize in marketing to Asian-Americans saw growth of 50% and 38%.  Three of the top five agencies who specialize in marketing to African-Americans saw major declines in revenues.  Major advertisers have long seen the benefit of tailoring the message and media to appeal to African-Americans.  But it is the Hispanic population that is growing in America, and that is where the ad dollars are trending.  Though Asian-Americans are not a large population in Colorado, Hispanics are, and that should be considered in your marketing strategies over the next decade.

 

So, what’s the conclusion I’ve come to after analyzing all of this data?  If you want to advertise effectively, you should be targeting Hispanic AARP members with direct mail and entertaining Superbowl ads.  It’s the secret to success!