MMMMMMaaaaaarrrrrrkkkkkkeeeeeettttttiiiiiinnnnnngggggg CCCCCCoooooommmmuuuuuunnnnnniiiiiiccccccaaaaaattttttiiiiiioooooonnnnnnssssss EEEEEExxxxxxppppppeeeeeennnnnnddddddiiiiiittttttuuuuuurrrrrreeeeee SSSSSSuuuuuurrrrrrvvvvvveeeeeeyyyyyy 222222000000000000888888 — SUMMARY REPORT — MAY 2009 IN ASSOCIATION WITH Association of Canadian Advertisers The Association of Canadian Advertisers (ACA), the only national association exclusively representing client marketers, is dedicated to helping members maximize the value of their investments in all forms of marketing communications. Members realize value through proprietary education, research and consulting services. The ACA safeguards the right to commercial free speech, and demands an advertising marketplace that is accountable for the value provided to the advertiser. For more information, visit www.ACAweb.ca. Strategic Marketing Counsel Strategic Marketing Counsel Inc. is a Canadian-owned, independent marketing consulting agency. The firm provides research, planning, and performance metrics sevices that assist advertisers with their top-line results. For more information, visit www.strategicmarketingcounsel.com. Toronto Star Toronto Star , founded in 1892, is read in print and online by 2.8 million readers every week. Toronto Star is a division of Star Media Group, which includes Toronto.com, Torstar Syndication Services, Shop TV, Eye Weekly , Sway Magazine and The Canadian Immigrant . Star Media Group also includes the jointly owned Metro free daily newspapers in Toronto, Ottawa, Vancouver, Calgary, Edmonton and Halifax, and the Chinese language newspaper Sing Tao . Star Media Group is a division of Toronto Star Newspapers Limited, which is a subsidiary of Torstar Corporation. For more information, visit www.thestar.com. MARKETING COMMUNICATIONS EXPENDITURE SURVEY Summary Report Background / Purpose 2 Data Collection 2 Important Notations 2 Sample Profile 3 Caveats 4 Summary of Findings 5 1/ Year over Year Change in MarCom Budget 5 2/ Impact of Economy on Marketer / Respondent’s Business 5 3/ MarCom Budget Allocation by MarCom Channel 6 4/ Choice of MarCom Channel Used by Respondents 7 5/ Number of MarCom Channels Used by Respondents 7 6/ Correlation of Number of MarCom Channels and Size of MarCom Budget 8 7/ Number of Respondents Allocating >30% of MarCom Budget by Channel 8 8/ Internet Activities 9 9/ Shift from Traditional Media to Internet Applications 9 10/ Confidence Ratings by MarCom Channel 10 © 2009 by the Association of Canadian Advertisers 95 St. Clair Avenue West, Suite 1103 Toronto, Ontario, Canada M4V 1N6 (416) 964-3805 / www.ACAweb.ca All rights reserved. No part of this publication may be used or reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the copyright holder. MARKETING COMMUNICATIONS EXPENDITURE SURVEY BACKGROUND / PURPOSE There has been a significant increase in the number of marketing communications (MarCom) channel choices that marketers face in today’s media environment. This has resulted in a change in allocation of media expenditures across the various channels. Why and how monies shift among these channels are of critical interest to the advertising and media communities. The objectives of this study were: • Using a single source, identify trends in MarCom expenditure and explore the reasons for them • Investigate use of digital media overall and probe for insights into types of usage • Determine trends within the digital arena • Acquire a more granular understanding of MarCom expenditure by company type and budget • Assess the influence of the economic environment on MarCom budgets and plans • Establish a benchmark for ongoing measurement and monitoring of advertising expenditure and the strategies driving the expenditure DATA COLLECTION Methodology Questionnaires were mailed to pre-screened respondents who agreed to participate Universe Chief Marketing Officers, or their equivalent, at major Canadian advertisers selected from trade association and other lists Response 54 respondents completed the survey Fieldwork Wave 1: Approximately 10% - August through September 2008 Wave 2: Remaining 90% - November through December 2008 IMPORTANT NOTATIONS Data analyses for this report were conducted by both the ACA and Strategic Marketing Counsel. The data that has been collected and analyzed does not represent a statistically significant sample base. This data cannot be projected to the total Canadian universe of marketers. The results must be interpreted with extreme caution and considered directional at best. See page 4 for fuller explanation of ‘caveats.’ This report provides factual information for 2007 and 2008, with projections for 2009. Given that much has changed since the beginning of this year, the 2009 projections may have also changed significantly and should be viewed as the best estimate at time of data collection. The following analysis is intended to provide a reference for marketers interested in assessing their decisions for MarCom budget allocation against a sample of industry marketers. If other analysis is required, please contact: Susan Charles Bob Reaume Vice President, Member Services Vice President, Research & Policy Association of Canadian Advertisers Association of Canadian Advertisers 416 964-1538 / [email protected] 416 964-0248 / [email protected] Summary Report 2 MARKETING COMMUNICATIONS EXPENDITURE SURVEY SAMPLE PROFILE Participating organizations represented a full range of products and services: Apparel/Accessories Automotive Beverage Alcohol Communications Confectionery Dairy Products Consumer Electronics Financial Services Government Household Products Information Technology Insurance Lottery/Gaming Office Equipment/Supplies Packaged Goods Pharmaceutical Quick Serve Restaurants Retail, Multi-market large (Local retail excluded) Travel Transportation Utilities For the purpose of this report, ‘current year’ is identified as 2008, ‘previous year’ as 2007 and ‘next year’ as 2009. Each respondent was asked to provide MarCom budgets for their current fiscal year, previous year and projections for next year. Almost half (48%) of participating companies start a new MarCom budget in January. Another 15% start in April, and 23% start in September, October or November. The budgets tend to cover 12-month periods (83%); 9% of participants plan for six-month periods; and 6% for three months or shorter intervals. The following chart shows the distribution of MarCom budget size among the 54 respondents. There is a broad representation of budget sizes within the context of this survey. NUMBER OF RESPONDENTS BY SIZE OF MARCOM BUDGET BASE=54 <$1M $1-5M $5-10M $10-20M $20-50M $50-100M >$100M 2007 2 9 9 11 11 10 2 2008 3 8 9 9 13 10 2 2009 3 9 8 9 13 10 2 Summary Report 3 MARKETING COMMUNICATIONS EXPENDITURE SURVEY CAVEATS The following should be taken into consideration when reviewing the data: 1. While response reflects a full range of industries, the following categories are more highly represented in the data: Financial Services, Quick Serve Restaurants, Packaged Goods. 2. The retail sector is significantly underrepresented in the sample. Their input would probably have influenced response regarding MarCom channels effective for local advertising. 3. The majority of response was staggered throughout November and December when the global economic crisis grew in scope on a daily basis. Business and consumer credit was more and more restricted. To varying degrees, response to this survey may reflect reaction to extraordinary MarCom conditions over and above the prevailing advertising trends. 4. These data relate to a small sample of advertisers. Although they do include some of the biggest advertisers in Canada, the data are not a prediction of total MarCom expenditure nor of overall trends related to MarCom budget allocation strategies. This information must be viewed with this understanding. The observations from this data are not projectable to the Canadian marketplace. 5. Slightly less than half of the respondent companies have calendar years for their MarCom planning periods. The terms ‘last year,’ ‘this year’ and ‘next year’ do not correspond exactly to 2007, 2008 and 2009 but are close approximations to the calendar years. Summary Report 4 MARKETING COMMUNICATIONS EXPENDITURE SURVEY SUMMARY OF FINDINGS 1/ Year over Year Change in MarCom Budget Overall, there appears to be only marginal softening in the overall change in size of MarCom budgets among respondents. In 2008 vs 2007, 67% (36 of 54 respondents) maintained the size of their MarCom budgets (within +/- 10% range). This increased to 74% as a projection for 2009 vs 2008. This shift was sourced from the number of respondents who projected a budget increase of greater than 10%. 11 respondents (20%) indicated an increase in 2008 vs 2007, and this was reduced to 13% projected for 2009 vs 2008. The number of respondents who decreased their budgets by greater than 10% was constant at 13% in 2008 vs 2007 and 2009 vs 2008. NUMBER OF RESPONDENTS BY % CHANGE IN MARCOM BUDGET BASE = 54 2009 VS 2008 (PROJECTION) 2008 VS 2007 (ACTUAL) >10% increase 7 (13%) 11 (20%) no change (+/- 10% range) 40 (74%) 36 (67%) > 10% decrease 7 (13%) 7 (13%) When viewed as a total expenditure, there is virtually no change over the 3 years of collective reported budgets. TOTAL MARCOM EXPENDITURE CLAIMED BY 54 RESPONDENTS PREVIOUS YEAR (2007) CURRENT YEAR (2008) NEXT YEAR