3 Key Trends in Digital Ad Spending Marketers Need To Know
Paying attention to trends in digital ad spending is a great benchmark for companies who want to see where they are at in relationship to same-industry counterparts or to get an idea of where they may want to begin investing a bit more to keep up with the competition. Here is a link to the form that will provide you with your own copy of eMarketer’s report, titled Digital Ad Spending Benchmarks by Industry: The Complete EMarketer Series.
Don’t have time to read another darn report? No problem. We had the Kaufer DMC staff do it for you, and we’ve recapped the highlights below.
Read Highlights from eMarketer’s Report on Digital Ad Spending Benchmarks
Some of the biggest takeaways after reading the report include:
- Digital Marketing = Big Spending. 2014 marked the fifth year in a row of “torrid growth,” with industries spending more than $50 billion dollars on digital advertising. Not surprisingly, the retail industry retains its Number 1 position for largest digital add spender, and it retains that position by a respectable margin.
- Mobile Marketing is taking the lead. While mobile marketing hasn’t taken the lead in all industries, it is soon to trump other ad channels. That being said, mobile marketing is one of the trickiest animals to predict due to rapid behavioral changes by mobile users in each individual sector. What works for one industry doesn’t always work for another.
- Direct Response Marketing Reigns Over Branding. The eMarketer reports also analyzes digital ad spending in regards to an industry’s main objective: direct response or branding. At this stage of the game, Direct Response marketing takes the lead (59.1% compared with 40.9%, respectively) but this is still a fairly narrow margin, so we can see how vital branding is to industry advertising as a whole.
Digital Ad Spending by Industry
Here is a brief overview of digital ad spending by industry. How does your company’s ad spending fit in with current industry statistics?
Automotive. The post-2008 crash hit the automotive industry hard. The good news was that it gave it several years to place its focus on serious product research and development. As a result, the auto industry recorded significant profits in 2013 and, as such, 2104 was a year of digital ad acceleration, especially in the mobile department.
Computing Products and Electronic Gadgets. Rapid and dramatic changes on the tech frontier are giving US computing and consumer electronics manufacturers a run for their money. On one hand, US consumers are purchasing fewer single-function products (think TVs and laptops) but – on the flip side – they are simultaneously investing in smaller, web-enabled devices which helps to balance the bigger picture. Fierce competition in a crowded market means original equipment manufacturers are investing heavily in advertising and the B2B portion of spending is also increasing as IT departments shift their infrastructure into the cloud.
Consumer Products. This is one arena where TV spending still supersedes digital spending, although we will be seeing changes over the next five to ten years. One reason why this is so is that consumers are used to seeing mainstream products advertised onscreen – which means television versys gadget sources becomes a less relevant scenario. One difference between the consumer products industry and others is that they spend more on branding than on direct response according to their marketing budgets.
Financial Services. After retail, financial services are the second-largest digital marketing spenders. The financial services sector is playing a bit of catch-up, spending more on mobile advertising than ever before. Even Baby Boomers are gadget-oriented now, which means old-school marketing tactics can be let got to the wayside. The financial services industry has also switched many of their services, as well as advertising dollars, to the mobile platform.
Media and Entertainment. Here’s an interesting one; eMarketer predicts that, “digital advertising spending is expected to grow faster in the US media and entertainment industries than in other verticals…[due to] the heavy use of video and rich media ads, the two fastest-growing ad formats…” They are also heavy investors in mobile marketing. That’s a smart move considering their most traditional monetization bases are making way for newer technology. Their biggest challenge: reaching audiences that are “fragmenting across devices and bombarded with information.”
Pharmaceuticals and Healthcare. The impact of the Affordable Care Act, as well as a host of new drug roll-outs, is pushing healthcare and pharmaceutical companies to add more online and mobile ads into the mix. Fewer numbers of mass market prescription drugs are coming off patent while, simultaneously, “blockbuster” drugs that treat less-common diseases create the need for acutely targeted ad campaigns.
Retail. As mentioned in the above takeaways, the retail industry’s digital ad budgets blow others out of the water. That being said, 2015 marks the year when that growth will slow a bit as other sectors work to catch up. Since sales is the number one goal of retailers, it’s not a shock that their investment in direct response marketing is significantly higher than their branding budget, although this balance may shift in the future.
Telecom. Interesting trivia fact for you: the telecom industry is the fourth-largest spender on digital advertising but one of the bottom level spenders when it comes to digital add spending. One reason for this is telecom’s reliance on search. Since search is losing sway in lieu of video and rich media advertising, this statistic is bound to change over the next few years. Telecom’s main goal will need to be, “making a case for their relevance at a time when emerging technologies are pulling users away from traditional point-to-point services.”
Travel. Like the automotive sector, travel industries have had a rough row to hoe in these shaky economic times. Fortunately, the tides are changing – and so too are revenues for the travel sector. Thus, digital ad spending – with an emphasis on mobile ads – will increase sharply over the next few years, assuming the economy continues in an upward trend. Increasing user access to mobile booking and same-day or last-minute purchases has proven successful, which will further inspire the travel industry’s desire to invest in mobile platforms.
Where does your company or industry fit in to the digital ad spending puzzle? Post your thoughts in our comment box.
Written by David Kaufer
David Kaufer is Founding Partner and Chief Dynamic Office in Kaufer DMC. He’s also a huge Oregon Ducks & Microbrew nut, Dad of awesome 9-year-old twin boys, husband, and big Sustainability and Autism advocate.