Digital ad spend increases but questions remain

3:18 PM, 29 May 2017

The majority of the world's largest advertisers are committed to increased investment in online advertising in 2017-18, some by as much as 40%.

This comes despite increasing questions about its effectiveness and transparency, according to a study conducted by the World Federation of Advertisers and Ebiquity.

Study finds we're not convinced, yet we're spending more

"Our survey results show that advertisers are not convinced by current measurement standards", said Nick Manning, Chief Strategy Officer for Ebiquity. "Advertisers also want a better understanding of how online contributes to their business performance and how it delivers a meaningful return on investment".

ANZA CEO Lindsay Mouat argues that despite the apparent contradiction in the results, findings suggest we are at a tipping point, as an industry, for digital investment.

How much should you spend on digital advertising?

"When you see that a third of global advertisers are planning to reduce or hold their digital spend, it suggests that a growing number of advertisers are taking a breather", he said. "They want to better understand some of the underlying issues around the digital ecosystem and consider whether their businesses are generating effective ROI from that spend".

The study results are based on responses from more than 50 global advertisers, representing an annual advertising spend of more than $80 billion. Findings were released as part of WFA's Global Marketer Week in Toronto at the end of April.

What are we doing to address digital challenges?

Matt Green, Global Lead -- Media & Digital Marketing at the WFA, commented: "Although the general online advertising investment trend remains on an upward trajectory, this research shows that some advertisers are exercising increased caution".

While advertisers are not yet convinced about the effectiveness of digital advertising, 75% are willing to accept the challenges it presents. These challenges include the relevance of current measures.

The three 'priority' metrics for respondents were reported as:

  • reach (72%),
  • target audience exposure (66%),
  • and video completion rates (62%).

As such, the metrics in use tend to relate more to exposure than ad effectiveness.

Nevertheless, advertisers are making these investments despite strong concerns around their ability to track performance, with 62% of respondents reporting that they are 'dissatisfied' with the overall level of measurement standards in online advertising, and only 45% clearly seeing the value it adds.

What's more, 72% of those polled believe that advertisers have over-invested in the channel. Key concerns among advertisers remain viewability (90% of respondents see this as a 'major concern') and lack of transparency (76%).

Other findings revealed:

'Premium inventory' is found to be more effective than non-premium for 62% of respondents.

Online video will be the main beneficiary of any increased spend, with 89% of advertisers intending to invest more this year. The reason is that 79% of branding/awareness advertisers say that video delivers a 'high effect', significantly better performance than static display. Forty-six percent of respondents plan to cut back on static display in 2017, with more than half saying the format delivers a 'low effect'.

The main motivations behind investing in digital advertising are to drive incremental reach (a major role in the decision to invest for 79%) and to increase brand awareness (69%). Despite the increased targeting potential that programmatic can provide, 'precise targeting' is a major factor in the decision to invest in digital for just 55%.

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