Here’s why advertisers are ‘feeling the pressure’ from digital transformation

Advertisers are feeling pressure from the rapid transformation of their businesses, exemplified by the rapid shift of marketing communications to online media in response to changing consumer behaviour, and the polarisation of growth to big platforms, big countries and big cities.

This is according to the latest ‘Advertising Expenditure Forecasts December 2017’ report by Zenith, the ROI agency.

At the end of November, Zenith conducted a survey about brand growth among key Zenith clients. On a scale from 0 to 100 – where 0 means everyone expects decline in 2018, 100 means everyone expects growth, and 50 means the average expectation is for no growth – the average response was 57, down from 67 this time last year.

Food and drink brands have been the least affected, with a score of 66 this year, down just a point from 67 last year.

Packaged goods, retail and telecom brands have all fallen to 50, expecting no growth, down from positive scores last year, as per the survey.

“We are seeing a battle played out in business, marketing and media between big players and small players,” said Vittorio Bonori, Zenith’s Global Brand President. “Growth is coming from big countries and big cities, and being captured by big platforms. Brands should focus on upstream strategy, data-informed UX planning and downstream automation”.

Digital ROI catches up

Overall, the Zenith report found that amid growing debate as to whether brands are overspending on digital media, the effectiveness of Internet advertising has now caught up with digital adspend.

Until 2015, brands struggled to make effective use of Internet advertising, and their spend was not matched by the resulting ‘brand experience’ (an accurate proxy of market share), the report adds.

However, by 2016 Internet advertising accounted for 34 per cent of global ad budgets but produced 35 per cent of brand experience, adds Zenith report that used its Touchpoints ROI Tracker tool to compare Internet adspend to internet brand experience over the past few years.

In 2014 advertisers spent 27 per cent of their budgets on Internet advertising, which produced only 21 per cent of brand experience.

By 2015, though, brands were using internet advertising more effectively: it accounted for 30 per cent of both budgets and paid brand experience, before tipping over in 2016, when brand experience exceeded budget share, the report notes, expecting Internet advertising’s share of global adspend to continue to rise, reaching 40 per cent in 2018 and 44 per cent in 2020.

LEAVE A COMMENT

No Comments

Leave a Comment

Your email address will not be published. Required fields are marked *