The budget balance – advertising versus research

Tom Harper and Michael Cluff

Over the years we have always been puzzled by companies' approach to setting budgets in these two areas – advertising (large) and market research (small). Our curiosity was piqued further by the September 2005 issue of ESOMAR's Research World (1), where some very interesting statistics were published. They list the top 50 market research countries along with adspend and per capita adspend. In 2004 the top 50 spent $385 billion on advertising. The largest four markets, the US, Germany, Japan and the UK, account for 58% of this spend and the US alone accounts for 38% of the total adspend. Along with adspend, ESOMAR has published the market research turnover of each country, with the US again topping the spend table. What is interesting is not so much the absolute amount but the per capita adspend and market research spend as a percentage of each country's adspend. Working from the ESOMAR figures, we can compare how countries allocated spending on advertising versus market research as a percentage of the advertising spend.