Traditional Ad Supremacy Wanes, Marketers Give Greater Attention To Digital Ad Spend

by , Dec 12, 2013, 4:51 PM
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While traditional marketing is expected to keep its edge in 2014, new research shows that digital marketing efforts are right on its heels.
 
To be precise, traditional advertising still wins the biggest piece of the budget pie (20%), but its dominance is waning, according to new findings from Forrester. Close behind is consumer response -- or direct marketing -- at 15%, followed by digital marketing at 12%.
 
Despite increased digital investments, marketers are still not satisfied with how much they have to spend on digital, indicating to Forrester that digital investment has not yet peaked.
 
Unlike those business-to-consumer marketers surveyed two years ago, many now expect budgets to increase at a moderate rate in 2014. Nationwide, 52% of marketers plan to increase digital advertising spend in 2014 -- in channels such as display, search, social, and mobile.
 
Meanwhile, 63% of marketing leaders agree they will decrease spend on traditional advertising to fund digital efforts.
 
Given the chance, marketers would double down on digital -- 46% said they would invest incremental funding in digital if given an additional 5% of funds to do so. All told, 41% of marketers expect their budgets to increase in 2014, while 37% will maintain budget status quo, Forrester reports. Only 20% say they expect to see a reduction.
 
This healthy increase is fueled by “satisfying revenue results,” according to Tracy Stokes, Forrester analyst and report lead. In fact, 77% of respondents met or exceeded their revenue goals in the prior year.
 
The increases reported by Forrester are consistent with industry ad spending forecasts, including that of Zenith Optimedia, which expects a 4.5% increase in total domestic advertising spend in 2014 -- reaching $174.3 billion, compared with $161.24 billion in 2012.
 
Yet the challenge for many marketers will be stretching those budgets across a highly fragmented set of channels and needs. Indeed, 73% of marketers agree that their budgets continue to fragment across different channels of media and marketing options.
 
As a result of squeezed budgets, marketing leaders will fail to fund innovation and will underinvest in less-sexy back-end support, such as IT and analytics. Marketers will choose channels that yield measurable results and a degree of accountability.
 
Notably, in the past fiscal year, 40% of consumer-focused companies spent 5% or less of revenue on marketing, but more than a third invested more than 10%.
 
Tellingly, companies that exceeded their revenue goals in 2013 were more likely to invest a greater percentage of their revenue in marketing: 13 out of 28 marketers whose companies exceeded their revenue goals invested more than 10% of revenue in marketing.

3 comments on "Traditional Ad Supremacy Wanes, Marketers Give Greater Attention To Digital Ad Spend".

  1. Mark Mclaughlin from McLaughlin Strategy
    commented on: December 13, 2013 at 11:31 a.m.
    Surveys/articles like this are confusing because marketers don't really think about advertising budgets in terms of "traditional advertising," "consumer response" and "digital" - that is an awkward set of choices for a seasoned marketing executive to respond to. Marketers spend money on advertising for four reasons. Brand building, promotions, one-to-one DR and customer loyalty. Within each of these strategies, "digital" is a vast set of tactical opportunities that can create value (or not). Marketers move money around within those four buckets in an effort to maximize the degree to which an investment in advertising will improve the overall productivity of the enterprise. So, for example, direct mail budgets might be migrating towards digital display advertising that uses re-targeting analytics. Or, TV budgets for brand campaigns might be moving towards digital because digital video is growing and improving rapidly. But, these trends are not really captured by asking about "traditional" versus "digital" questions in a survey. I can't connect the "insights" in this article back to anything that really goes on in the marketing department of a major corporation.
  2. Daniel Fell from ND&P
    commented on: December 13, 2013 at 12:42 p.m.
    Mark makes an excellent point. Everything we do for clients has a digital component nowadays - so it's rarely one vs. the other. I did appreciate the insight about underinvesting in analytics. There is a tremendous amount of hype around big data and measurement but we don't see big shifts in dollars or people going into leveraging either.
  3. Kevin Horne from Lairig Marketing
    commented on: December 13, 2013 at 12:46 p.m.
    2008 called and wants its article back

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