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Survey Says: Ad Agency Business is Up

CHICAGO: Business is picking up at ad agencies, a good sign for their medium of choice. That would be TV--for now, according to a survey by Strata, a media buying-and-selling software maker owned by Comcast. Strata surveyed 60 ad agencies by phone and via the Internet from January to April.

Nearly half--47 percent--reported an increase in business during the first quarter of 2010 compared to last year. One-quarter of agencies reported growth in 1Q09. The survey also indicated that 25 percent of agencies plan to hire staff this year, up 100 percent from last year. One-third anticipated strong growth late in the year, with 16 percent of agency clients increasing advertising budgets.

“To us, our survey further signals the end of the recession,” said John Shelton, president and CEO of Strata. “This isn’t just positive news for the advertising industry; it’s a broader, more positive sign of a recovering economy.”

Additionally, TV came out on top as the preferred choice of medium--for the time being. Nearly 42 percent of agencies surveyed said their corporate clients “are more focused on TV than any other medium.” The result represents a 27 percent decline from a year ago. Anecdotally because of the Internet: 68 percent said their clients were “more focused on digital than they were a year ago.”

“To advertisers, TV still matters,” Shelton said. “But just as radio gave way to television, we can see that TV is slowly giving way to digital. The good news for TV stations and networks--for now--is that they remain the dominant medium. Our survey taps into the perception that digital has its limitations in reach and effectiveness and must still be used with traditional media like TV. But the trend is clear.”

Forty percent of those surveyed felt the tipping point for the spend on digital to overtake that of traditional media is five years away. Print is likely to suffer the most. Not one agency intends to increase print buys, Strata said.

Other key findings:
-- 88 percent of ad firms said they most likely would use Facebook in client campaigns, followed by Twitter with 57 percent and YouTube at 40 percent.
-- 63 percent handle Search/SEM/PPC placements in-house.
-- 5 percent intend to cut staff this year.
-- 32 percent said clients focus on spot radio would be less than it was a year ago.
-- 68 percent said their digital spend would to toward online display followed by social media and PPC/Search/SEM/SEO.
-- Deborah D. McAdams