Spending on digital marketing grew by 44 per cent last year in the United States and Britain to 52 billion dollars, a study has found. It estimated that global outlays on such tactics are approaching 100 billion dollars. In contrast to placing online ads through intermediaries, digital-marketing, or “martech”, it has appeal of enabling brands to target consumers directly via social media, search-engine-optimization or voice-activated-assistants, such as Amazon’s Alexa.
The growth in part reflects a desire to take functions in house following high-profile complaints by consumer giants Procter & Gamble and Unilever over fraud in online advertising. The issue of ‘brand safety’, which can be jeopardized when ads appear next to unsuitable online content, has also frustrated marketers and encouraged them to seek greater control over how they target audiences.
“Clearly marketers are seeking to build in-house strength and are set to spend more on martech to remain competitive,” said study author Damian Ryan, a partner at UK accountancy firm Moore Stephens. “Our research finds that this budget is coming from media spend and will have a resounding impact on the value of media-centric agencies,” he added.
He referred to traditional ad agencies that are struggling to adapt to the digital era. The Moore Stephens survey, conducted with advertising and media consultancy WARC, covered 800 companies in North America, the Asia-Pacific and Europe. It found that brands in Britain and North America spent 23 per cent of their budgets on martech, up from 16 per cent a year ago. 63 per cent of U.S. technology budgets were spent in-house, compared with 44 per cent last year. Tough European data protection rules that took effect in May.
There are also concerns over the data practices of search giant Google and social network Facebook. These are the two biggest online advertising platforms. The rules have led several players in the ad industry to merge or retrench. “We’re at the beginning of the shakeout,” Ryan told the media in an interview. (Reuters/NAN)