Brands Getting Too Comfortable With Media Budgets On Google, Facebook

Marketers stuck in strategies of convenience are not doing enough to diversify their advertising dollars, and some may soon feel the pain.

They also are not doing enough to leverage first-party data. They consolidate their ad spend largely on Google and Facebook, mainly because it feels comfortable.

Will Margiloff, founder and CEO at IgnitionOne, told Goldman Sachs analysts in a hosted meeting that digital marketers want to diversify ad spend from the largest digital channels, but the change has not materialized in a meaningful way within performance ad spend among IgnitionOne marketing clients.

Ad spend in the third quarter of 2019 was largely flat compared with the prior quarter, but the cost per acquisition fell. While broader ad spend by IgnitionOne clients came in relatively flat quarter-over-quarter, CPAs fell “meaningfully” as marketers saw better conversion rates relative to click-through rates, which were also relatively stable during the same time period.

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Margiloff also noted that digital marketers have become “comfortable with returns that are below optimized levels by roughly 10-15%, overlooking incremental … opportunities given the ease of building effective marketing campaigns on these platforms and relatively high returns on spend.”

“Less than 10% of people who visit a website convert broadly on average, while 90%+ do not,” according to the report. “In addition, 50-60% of website visitors bounce within five seconds, making data-driven marketing and focusing on the base of visitors most-likely to convert crucial to improving performance.”

These days, marketers often gain enough traffic to their websites to generate real-time, actionable insights on their first-party data, whereas third-party data in most cases can be misleading and irrelevant, Margiloff told analysts.

Margiloff believes that over time -- particularly given the focus on digital privacy in a number of jurisdictions -- marketer use of third-party data will continue to decline.

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