SPENDING STUDY

A Look at How Corporate America Invests in Branded Content

2012

Executive Summary

For the first time, we asked about the degree to which content built for one channel is being repurposed for other channels. About three quarters of brands built content for print and repurposed that content for social media and the brand’s parent website. This underscores the integrated nature of content marketing today, where content ideation requires a multi-channel consideration.

Some 56% of brands now outsource content marketing. Of those who do, the average annual spend outsourcing is $987,417, an increase of 46.6% over the prior period. Including even those who don’t outsource, the average annual spend across all brands is $371,364, an increase of 35.9% over the prior period. All of these factors are all-time highs.

In year 13 of this study, the most notable outcome is that content marketing has grown. Not only in terms of the average spend—this has been happening fairly consistently for years. It is now unquestionable that content marketing is a multi-channel and highly integrated endeavor, the complexities of which have motivated brands to outsource at record levels.

Not surprisingly, the multi-channel nature of content marketing is driving growth in overall average annual spend. This year the average brand invested $1,725,736, a 5.1% increase over the prior period. Print was still the largest spend component at 42.0% of the whole, though spending across the main channels of print, electronic and other is increasingly evenly distributed.

Overall Spending

AVERAGE SPENDING BY COMPANY Summary

The total spend on branded content per company rose slightly compared to the previous two year average in 2012, to a total of $1,725,736 (up from $1,640,107).

While publication budgets continue to be chiseled away (although not to the point of disappearing), the total spent on electronic and other forms of content marketing reached new highs.

$775,000

$800,130 $804,829

$1,021,091

$880,985

$693,730 $706,916

$504,790

$464,306$490,927

$445,946 $375,672 $406,555

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

2012 2011/10 2009/08 2007/06 2005/04 2003/02 2001/00

Other

Electronic

Publications

SPENDING AS PART OF THE MEDIA MIX Summary

In 2012, branded content got a much bigger slice of a smaller marketing pie. Of the average overall marketing, advertising and communications budget, 39% of the funds were dedicated to branded content – a significant increase from the 27% observed on average in 2010-2011.

The overall marketing spend for 2012 of $4,424,964 looks in line with historical averages, with the spike seen in the last two years appearing as something of an outlier.

The relative stability of branded content spend in the face of an overall marketing budget decline proves the staying power of the practice of content marketing.

$1,725,736 $1,640,107

$1,253,570 $1,021,091$880,985 $693,730

$2,699,228

$4,396,126

$3,025,087$3,022,219

$2,808,824

$2,359,747

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

2012 2011/10 2009/08 2007/06 2005/04 2003/02

Overall Marketing

Branded Content

PROJECTED CHANGE IN BUDGET SIZE Summary

38% of respondents felt that their branded content budgets would be increasing in the coming year, the most bullish figure since 2006/2007. The number of respondents expecting a budget decrease was at the lowest level of the decade.

When broken down by type of branded content, respondents were most bullish on electronic (43% increase/5% decrease) and other forms of branded content (46% increase/1% decrease).

On the print side, the story was far different, with 29% of respondents expecting a budget increase, and 20% expecting a budget decrease. But this still marked an improvement in the print outlook compared to recent years.

38%31% 30%

40%44%

33%38%

10%15% 17%

13%13%

16%14%

52% 55% 54%48%

43%52% 49%

0%

25%

50%

75%

100%

2012 2011/10 2009/08 2007/06 2005/04 2003/02 2001/00

Stay Same

Decrease

Increase

52% 53%45%

36% 38% 41% 38%

31% 29%35%

43% 41%42% 44%

17%16% 18% 22% 21% 18% 18%

3%

0%

25%

50%

75%

100%

2012 2011/10 2009/08 2007/06 2005/04 2003/02 2001/00

Personnel

Production

Distribution

Programming

7%

HOW BUDGET FUNDS ARE SPENT Summary

Personnel continued to be the primary use of budget funds, comprising 52% of spend, down slightly from 2010/2011. Spending on production and distribution ticked up by 2 percentage points over the prior period.

The average spend for print forms was $341,000 on personnel (44%), $286,750 on production (37%) and $147,250 on distribution (19%).

The average spend for electronic forms was $287,731 on personnel (57%), $131,246 on production (26% -- which includes “programming”), and $85,814 on distribution (17%).

The average spend for other forms was $258,649 on personnel (58%), $129,324 on production (29%) and $57,973 on distribution (13%).

56%

50%

42%46%

51%

46%

0%

25%

50%

75%

2012 2011/10 2009/08 2007/06 2005/04 2003/02

OUTSOURCING BRANDED CONTENT Summary

The use of the services of external agencies (custom publishers, PR/social media firms, design firms, ad agencies, interactive agencies, and others) to handle some aspect of branded content initiatives grew in 2012, with 56% of companies reporting that they outsourced some portion of at least one type of branded content creation in 2012.

As in past years, outsourcing was more prevalent among print forms (55%) of branded content, than it was among electronic (23%) or other (20%) forms.

Taken as a whole, of all branded content initiatives that were endeavored in 2012 – by both the companies that reported outsourcing along with those who did not – 35% involved external agencies.

$371,364

$237,885$208,061

$140,782 $126,652$104,060

$987,417

$673,486

$553,800

$308,719

$256,616$221,336

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

2012 2011/10 2009/08 2007/06 2005/04 2003/02

All CompaniesJust Those Outsourcing

OUTSOURCING SPEND Summary

For all companies (counting both those who did and did not outsource), the average total branded content outsourcing spend was $371,364, a record.

Looking exclusively at the

companies that did outsource, the average spend on outsourcing spend was (obviously) even higher -- $987,417.

OUTSOURCING SPEND BY TYPE Summary

For those companies outsourcing some aspect of their branded content initiatives, the most commonly used types of outsourcing agencies are publishing firms and design firms, which are each used by 32% of respondents.

Perhaps surprisingly, publishing firms remain a heavily used resource even outside their traditional playground of print. 35% of respondents reported using a publishing firm for the creation of electronic content – that’s more than the 29% who use publishing firms for their print content!

27% of respondents outsource other content to publishing firms as well.

32% 31%27%

36% 34%39%

26% 26%32%

32% 37% 46%34% 36%

36%

49%

58%52%

19%7%

6%5%

24%19% 20%

10% 12%7%

10%

14%18%

6% 6% 5% 6% 4%10%

15%7% 7%

0%

20%

40%

60%

80%

100%

2012 2011 2010 2009 2008 2007 2006 2005 2004

Interactive Agency

PR/Marketing Firm

Ad Agency

Design Firm

Publishing Firm

SHIFT IN SPENDING Summary

In a positive sign for the content marketing industry, 79% of marketers are now reporting that their companies are shifting into branded content at either a moderate or aggressive pace, up 1% from last year.

21% 22%32%

63% 62%

61%

16% 16%7%

0%

20%

40%

60%

80%

100%

2012 2011 2010

Aggressively

Moderately

No shift

Qualitative Questions

REASONS FOR USING BRANDED CONTENT Summary

This chart shows respondents’ primary (“P”) and secondary (“S”) reasons for using branded content from 2009 – 2012.

Educating customers is the clear primary motivating factor for marketers, but the playing field is leveling off. 43% of respondents listed educating customers as their primary motivation this year, down from 49% in 2011.

Customer retention and brand loyalty are very strong secondary reasons among our survey’s participants.

25% 26% 23% 25%31% 35% 35%

28%

6% 5%4% 3%

10%

13%6%

13%

19%14%

12% 10%

23%

27%

26% 23%

43% 49%54% 54%

30%

20%27%

24%

7% 6% 7% 8% 6% 5% 6%12%

0%

20%

40%

60%

80%

100%

2012P 2011P 2010P 2009P 2012S 2011S 2010S 2009S

Other

Educate customers

Brand loyalty

To up-sell customers

Customer retention

PRIMARY SECONDARY

EFFECTIVENESS OF BRANDED CONTENT

66% 64% 64% 65%

34% 36% 36% 35%

0%

20%

40%

60%

80%

100%

Advertising in amagazine

Advertising ontelevision

Direct mail Public relations

Branded content is more effective

Branded content is less effective

Summary

Branded content initiatives are considered by marketers as more effective than other leading forms of advertising and marketing, and have been in every year we’ve asked this question.

The results for 2012 are more or less in line with the results of 2011, with small declines in effectiveness rating vs. magazine advertising, direct mail and public relations, and a small gain vs. TV advertising.

REPURPOSING OF CONTENT

71%75%

37%

74%

46%

31%

66%

74%

15%

0%

20%

40%

60%

80%

100%

Social Media Parent Website Direct mail

Print

Electronic

Other

Summary

For the first time this year, we asked survey respondents about the degree to which content created for one channel is repurposed into others.

Unsurprisingly, this is a very common practice within the world of content marketing, with social media being the primary recipient of content created for various marketing channels. Between 66% - 74% of content created for print, electronic and other marketing ends up being used in social media efforts.

Sponsors

The Custom Content Council (CCC) is the lead trade organization representing custom publishers in North America. The research herein was conducted by the monthly subscription newsletter ContentWise (www.becontentwise.com), which is the leading media providing news, information and research on the branded content industry.

Methodology

The research was conducted via online and emailed methods targeting a random sample of companies across all industries. More than five thousand invitations were distributed and approximately 177 surveys were completed and returned, producing a +/- 6% degree of accuracy at a 90% confidence level.

Among the responding organizations were: Graybar, Manpower, State Farm Insurance, Towers Watson, Goodwill Industries, Sunkist, ValueOptions and many more.

More Information

For more information on custom publishing go to www.customcontentcouncil.com or call the CCC in New York by dialing 212-989-4631. To subscribe to ContentWise call 602-427-0325 or visit the web site noted above.