Brands continue to invest more money in traditional advertising than in the online advertising. Are the advertisers getting value for money? In this post we explore the decline in conventional advertising and what it means for Public Relations agencies.
Advertising on the small screen: but which small screen?
On New Year´s Eve 2016, those viewers who said goodbye to the old year watching Mediaset channels (Telecinco, Cuatro, Factoría de Ficción, Divinity and Energy) unwittingly experienced the honour of watching the most expensive advert of 2016. Just before the bells chimed, Ford´s advert “Merry Little Cars” was emitted and it is said that the brand paid a whopping great 7.250 euros per second (around 435.000 euros in total according to El Mundo). Until 2010, when Spanish national television stopped advertising, rates were even higher and the last announcement of the year on public television used to be auctioned to the highest bidder.
Looking at these figures, one might think that traditional advertising is in good health and brands are still lining up to advertise in traditional media: television, press, radio, etc. However, the reality is that since the widespread adoption of the Internet, offline advertising has experienced a continued decline compared to online. And everything indicates that this new channel for advertising, with its own language and interaction, will continue to compete with offline advertising for scarce budgets in the future. That is why we identified the crisis of conventional advertising as one of the trends to follow in 2017.
Should brands now rethink the way they reach their audiences? And what implications does this have for public relations practice?
Internet on the way to become the number 1 media
Just look at the data of the Study of Advertising Investment in Spain 2017 to verify that the advertising spend has been reducing in almost all the other channels while on the Internet it has not stopped growing.
Evolution of the advertising investment in Spain 2014-2016 (Source: Infoadex)
Internet advertising spending has increased from 899,20 million euros in 2011 to 1.407,80 in 2016 while advertising spending in daily press has decreased from 967 million euros in 2011 to 617,40 million euros in 2016. Advertising in Sunday newspaper supplements has declined even more, losing almost 50% of its value while radio and magazines have also declaimed though to a lesser extent. Television is still leading advertising spend in our country with 2.121,90 million euros in 2016 although in 2011 it exceeded 2.237,20 million euros.
In less than a decade the Internet has risen to second place, behind TV, for advertising investment in Spain. Although it is still a long way behind TV, online beats the other channels in the advertising market.
Will the Internet surpass TV as the main advertising medium in coming years?
Everything seems to indicate that the tendency is going that way. For example, in 2016 the growth of spending on TV ads was 5,5% while the growth in spending on Internet ads was 12,6%, more than double. We should also bear in mind that television, which retains the advantage of having an almost absolute penetration in Spanish households (88,50% comparing to 74,40% of the Internet), has benefited from the multiplication of channels and doesn´t hesitate to resort to controversial practices, such as the unique advertising guidelines to “force” its audience to view the ads they broadcast.
However, the Internet is benefiting from the phenomena such as an increasing fragmentation of audiences, generalization of mobile devices, unstoppable consumption of online videos and, as we sofa surfers know, the increasing popularity of video streaming platforms. These trends led the Netflix founder to state in during Mobile World Congress that television will disappear in 10 or 20 years.
Reed Hastings, Netflix co-founder, in the recent edition of the MWC 2017
Is this good news for PR agencies?
Many people still mistakenly believe that public relations is a “cheap” alternative to advertising which allows them to reach audiences without having to pay high advertising rates. (Although advertising is not so costly these days today you can advertise on TV for 400 euros). When actually, Public Relations is completely different from advertising, in PR agencies we don´t advertise, we communicate, which is something different.
In any case, the good news for public relations agencies is that a growing share of the investment that brands previously earmarked for advertising is now being redirected to public relations actions in the online world, from social media to content marketing to Influencer programmes.
So why are companies investing more and more in PR? Recent studies, such as this one by Nielsen, point out that the return on investment of a well-planned, segmented and implemented PR campaign, may be bigger than that of a conventional advertising campaign targeting a mass audience. Also mass audiences are increasingly more difficult to reach because the time when the whole family watched TV together has become part of the past.
Nowadays, we can´t talk about the “small screen”, but several “small screens” (mobile, tablet, computer, connected TV, etc.) in which each individual viewer (not a collective) choses what content to consume, when and how (and that includes advertising content). Additionally, the viewer actively participates in this consumption with comments, recommendations or social posting
This new two-way communication requires another way of focusing on the transmission of branded messages, which is diametrically opposite to the massive campaigns that have dominated advertising over the past decades. And PR agencies have the right tools to respond to the new demands of brands and consumers in this unstoppable shift in the advertising model.
Do you think that Internet will beat TV? Share your thoughts with us on social media!