Global spending on digital marketing has continued to rise, increasing by around 44% in the last year in Britain and the United States alone, reaching $52 billion in total. Extrapolating from this data, researchers estimate that the global spend on digital marketing now stands at $100 billion. Rather than being dependent upon online ads being placed through intermediary services, businesses can now utilize digital marketing technology in order to target specific groups or individuals with their marketing.
Moving In-House
The growing desire to handle digital marketing in-house has been driven in large part by the growing concerns surrounding fraud in online advertising. Both Procter & Gamble and Unilever have made high profile complaints in this area.
Another driving concern has been that of brand safety. When it is left up to third-parties or algorithms to place a brand’s adverts online, there is a risk that online ads will appear next to unsuitable online content that can undermine or damage their message. Many businesses are frustrated at the lack of control they have over the content that appears alongside their marketing, especially as many websites take an algorithmic approach and minimize the amount of human oversight.
Greater Control
Bringing digital marketing operations in-house affords businesses a far greater degree of control over how their brands are presented to their audience. However, even with this additional control, businesses are discovering that digital marketing technologies don’t come cheap. A significant investment is required to compete in the big leagues of digital marketing. While smaller businesses can afford to be more specific and particular about where they advertise, the biggest businesses can’t oversee all the finer details of a global marketing strategy.
A new study from the British accountancy firm Moore Stephens suggests that the majority of this increased spending is coming out of media budgets and will have an ongoing and noticeable impact on the value of media-centric marketing agencies, a group that has struggled to adapt to the digital era and bring their marketing techniques into the digital realm.
The study, which was undertaken with the support of advertising and media consultancy firm WARC, looked at the digital marketing habits of 800 businesses across North America, Europe, and the Asia-Pacific region. They found that brands based in Britain and North America spend almost a quarter (23%) of their budgets on digital marketing technologies, up from just 16% a year ago.
Why The Increase?
Part of the increased value of the spending can be attributed to the increasing sophistication of digital marketing techniques, which often come with a higher price tag. In the past, digital marketing campaigns revolved around relatively simple techniques and technologies, such as the use of newsletter templates and mass email marketing in order to send promotional materials to as many people as possible. These techniques relied on the numbers game, assuming that even if only a small portion of all of those sent a marketing communication responded to it, this would still represent a large number of people.
By contrast, today’s digital marketing techniques are based around the opposite idea, that marketing can be efficiently microtargeted so that it appears in front of an audience that is likely to be more receptive to it. Social media websites are a common platform for this kind of marketing. In fact, social media has become the most important and most fruitful marketing platform available to the modern business, and it is the ability to so precisely target marketing materials on the platforms that have led to this situation. Users on social media sites already organize themselves into groups according to their interests, location, ages, and other characteristics. It then becomes very easy to have adverts only display to users who fall into a particular target demographic.
Another factor in this shifting landscape is the introduction of GDPR in Europe. GDPR has put an end to some of the longest standing forms of digital marketing, in particular, mass email marketing, and means that businesses can no longer send communications to anyone who has not given their explicit consent to receive such communications. There have been concerns about how GDPR would impact the marketing and data practices of companies such as Google and Facebook. Together, these two entities represent the majority of digital marketing, so any concerns about their continued viability as marketing platforms will have an impact on the whole industry.
A number of digital marketing businesses have chosen to merge with one another and combine their resources in order to be able to better compete against the increasingly sophisticated tools available to the big two. Outside of Facebook and Google, other marketing firms simply don’t have access to the necessary resources, in terms of both data and computing power, to be able to replicate the methods used by these two.
Digital marketing has always been big business, but it is currently experiencing a surge in demand that few have predicted. Not only is more money being spent on digital marketing each year, but that money is also being spent acquiring increasingly sophisticated services and capabilities.