Major multinational advertisers are increasingly satisfied with the performance of their response activity, designed to drive consumers to take action or purchase but give much more mixed reviews on the effectiveness of their awareness messages.

The State of Advertising, launched on June 18 at the Cannes Advertising Festival with the help of The Economist Group, reveals that while 30% believe the effectiveness of performance has “increased dramatically” over the last five years, just 8% said the same for the top funnel.

Overall, a huge 72% of respondents said lower purchase funnel messages had improved on effectiveness over the last five years but only 43% said the same about ‘top funnel’ performance and 37% of those questioned said effectiveness had declined.

Despite this, most advertisers are continuing to focus their investment on awareness. Spend is focused on ‘top of the funnel’ activities for most respondents, with 55% saying most of their investment was going on activity designed to promote brand awareness. Thirty-one per cent were investing evenly between awareness and lower funnel performance with 7% investing mostly in performance messages and channels.

The results are based on an online survey of WFA members conducted in June 2019. More than 100 individuals responded from 70 companies across 15 categories, including consumer packaged goods, automotive, food, alcohol, tech and finance. Collectively, respondent companies spend roughly $115bn on media and marketing annually.

Our respondents reported that despite stagnant economic conditions in many markets ad investment is up for 43% of our respondents over the last 12 months. Fifteen per cent reported a significant rise and 28% said it was “somewhat more”.

Over a five-year period, 49% reported an increase with 27% saying there was significantly more investment and 22% somewhat more. No change was reported by 9% over the last five years.

Increased investment in advertising, however, wasn’t automatically improving performance, with those who felt ad effectiveness was in decline blaming clutter (63%), the increasing ease of ad avoidance (53%), declining reach (42%) and declining trust in advertising (39%).

To overcome these challenges, respondents were focusing investment in eCommerce, programmatic, POS and offline advertising. eCommerce was cited as top priority by 28% of respondents with a further 30% saying it was a high priority while programmatic – covering search, social and display – was named as a top priority by 26% and as a high priority by a significant 47% of respondents.

Future priorities included areas currently attracting a lot of attention – IOT, voice, VR, AR. The three-year timeline highlighted the ongoing importance of data and programmatic as well as the rising importance of influencer marketing. Fifty percent of respondents said data was an area that would increase significantly, with programmatic in second scoring 27% on the same measure and influencer marketing attracting support from 11%.

Conversely, big advertisers seem to reject the current hysteria around the scale of the move to in-housing. They cited only one area where they would in-house more than outsource, low-cost, fast creative executions. Other areas likely to be affected by in-housing included short-form content marketing and influencer marketing.

Agencies are likely to benefit from increased spending in areas such as traditional media buying where 45% expect to spend significantly more and 30% to spend somewhat more in the next 12 months. Other areas that are also likely to be less impacted by in-housing include big ticket creativity, traditional media planning, creative strategy and programmatic search, all of which had over 50% of respondents predicting they would spend more externally.

Finally, respondents also highlighted their vision for the next five years:

  • Ads need for reciprocity: Seventy-seven percent supported the statement “in the future advertising will need to involve a value exchange/reciprocity”.
  • DTC brands to inspire: The second most popular statement was “direct to consumer brands will inspire the big traditional advertisers to find new and better ways of connecting with their audiences”. Thirty-four per cent strongly agreed and 39% somewhat agreed.
  • Traditional ads are here to stay: Respondents largely disagreed with the premise that in five years’ time there will be no traditional advertising. Just 8% strongly agreed with the statement that: “looking ahead five years, I can imagine a world without traditional advertising formats”. Twenty-eight per cent strongly disagreed and thirty-four per cent somewhat disagreed.
  • Marketers obsessed with their own problems: Sixty-seven percent agreed that the industry had become too obsessed with its own problems to the detriment of putting the consumer first,
  • Brand purpose frequently lacks authenticity: Sixty-five per cent agreed with the statement that most examples of brand purpose fail to resonate with the consumer as they lack authenticity, with 19% strongly agreeing

“As an industry, we are often prone to overstating sweeping new trends so this is a useful bellwether of what a lot of the world’s top brands really think. There is great optimism in terms of the perceived effectiveness of some direct response inventory but brands increasingly face the problems of clutter, ad blocking, declining reach and trust in advertising. There is also a stark reminder that, for all the talk of in-housing, our agency partners will remain critical partners in achieving brands’ goals,” said Stephan Loerke, CEO of WFA.

“What we take away from this survey is that we need to balance short-term needs with long-term brand building. Of course, we need to continue to put the fires out. And we also need to reforest with an eye to the future. Advertising is transforming with increasingly sophisticated audiences, media and tech. We need to plant the right trees for a changing climate. We need to create firebreaks, irrigation systems and nurture our saplings for a lush and thriving industry,” said Mark Cripps, CMO at The Economist Group.