Ollie Wood, Rachel Magee, Rob Marshall, Nathan O'Connor and Nick Cristal discuss the latest Ad Spend report which was released last week.
Last week the Internet Advertising Bureau (IAB), in conjunction with PricewaterhouseCoopers, launched the 2016 AdSpend report. This annual and comprehensive report focuses on each digital media channel’s spend, conversion statistics and ROI. The data is comprised of a number of sources including; shared media owner survey data, advertiser survey data, publically available information and estimated data, with the latter making up 19% of the total figures produced. Whilst this approach is never going to be 100% accurate, it’s pretty close and this data enables an invaluable report which provides the industry with a macro view of channels and vertical advertiser behaviour. If you look between the insightful stats within the report, you can start to see both the challenges facing the industry and furthermore, where the opportunities lie.
At Maxus, we have a dedicated team of 70+ performance marketing specialists – encompassing the key areas of direct response digital media (primarily search, social, affiliates and programmatic display), so we thought we’d cast their adept eyes over the report to build further context around what the industry stats say and we believe they mean for Maxus and our clients.
Rachel Magee – Performance Director – discusses the key implications of the impact paid search is having on the digital media landscape;
“Whilst it has probably felt to most of us that we have been discussing ‘the year of mobile’ for the past 5+ years, the statistics presented in the ad spend report each year do make this difficult to argue with.
Whilst the percentage of spend going into paid search YoY remains unchanged (vs other digital channels), it’s the proportion of that spend going into mobile where we are seeing real shifts; Mobile Search is making up 39% of an almost £5bn category, up from 30% in 2015. Given that that IAB are predicating the biggest increase in search spend YoY, forecasted at 17.8% for 2017, the importance of mobile search is only set to remain high for our clients.
Recent Google updates have been made with a ‘mobile first’ mind-set; removal of the right-hand side ads, as well as the increase from three to four ads above the SERPs, further proving the publishers will be favouring mobile formats over that of desktop ones. This trend will only continue given the increasing spend going through the channel and thus it is key that advertisers continue to prioritise and, most importantly, adapt their search activity to ensure its futureproofed.”
Nathan O’Connor – Performance Director – has scoured through the social media trends and discusses with us what this means for 2017;
“As expected Social spend has increased significantly since 2015 with the diversification & monetisation of a range of existing and new Social Platforms over the last two years resulting in 17% of all digital media served in a social environment in 2017. Unsurprisingly the vast majority of social spend sits in mobile which will continue to grow as new publishers epitomise the adage ‘Innovation over Imitation’ and develop new means of allowing the public to communicate whereas the established social media giants will look to diversify into new areas of mobile to increase revenue.
Looking at Video there is a significant increase across Social in-feed spends, this aligns with the changes across the industry as advertisers move away from placements where they have less control over the type of content they appear next to and focus on areas where users are spending the majority of their time, in-feed. As spends increase and platforms look to develop their video offering the amount of in-feed investment will continue to increase in spite of new placement and format choices as new offering based around Live limit the control advertisers will have. Control over content and advertiser’s ability to verify results will dominate social over the coming 12 months, the issues that have arisen across a range of publishers recently will only increase the pressure on Social publishers to allow third party tracking and verification across all platforms.”
Nick Cristal – Head of Platforms Investment – has looked into the ever-changing landscape of acquisition led media in the affiliates and lead generation space;
“For the eighth year running the affiliate and lead generation channels has grown year on year across media spend and sales. I think if I were to summarise what all the fancy statistics reported on are suggesting, I would say ‘The channel has grown up’. For the third year running the channel has represented circa 10% of the UK digital marketing budgets and is responsible for 1% of the UK GDP. This is no mean feat and one which represents a real cross roads for the affiliate industry in general.
With the landscape dominated by the finance sector (32% of all affiliate marketing is run through this sector), it is apt that the CMA are closely monitoring the comparison sites as to how to best represent the interests of consumers whilst balancing competition at its forefront. (you can read more about this here). For me, this represents a shift in the level of importance the channel has upon the digital landscape and therefore the level of responsibility websites have to represent fair products whilst innovating as digital mediums within their own right too. As we move through 2017 I expect these statistics to grow and the maturity and responsibility of the channel equally must move along within the same measures. Further EU regulations of the GDPR will put further credence of responsibility upon affiliates and the channel will continue to ‘Grow up’ not just in growth but the sophistication of how they run as businesses in their own right.”
Rob Marshall – Head of Programmatic – reflects on the continued growth of programmatic within Video and Display across both desktop and mobile devices;
“2016 saw another jump in the percentage of media that was traded programmatically. 72% of online video and display media was delivered programmatically, up from 63% in 2015. This growth sees the continued drive towards automation and data driven buying techniques for advertisers. Spend is only set to increase, predictions suggest programmatic will account for 80 – 90% of media spend by 2019.
As spend increases we are seeing a maturing of the marketplace. This is reflected in the growth of programmatic direct, a method of delivery that offers buyers more control over the environment where their inventory will be shown.
Programmatic is becoming an increasingly integral part of every advertiser’s marketing strategy, with this we are seeing increased scrutiny and greater integration, as well as greater understanding at more senior levels. The programmatic industry continues to face criticism around issues of brand safety, ad-fraud and viewability however with increased understanding and consolidation we expect a huge focus on companies solving these issues this year. As this method of buying starts to move into more traditional channels, spend is only set to grow; it is set to be the primary method of delivering all media for both brand and performance campaigns offering effective, targeted media”.
What does this mean for our industry?
Overall, the stand out insight from this year’s report is the extent of growth which, at 17% YoY, is the highest growth rate in the last 9 years. For anyone working in digital media – this is no real surprise though and we are all but used to it – year on year growth has been the standard since the dawn of digital media.
The more prevalent message to glean from the report insights though, is that we are finding with this growth, comes an ever increasing responsibility to ensure that this investment is going in to the right media channels, through suitable media owners and is seen, actually seen, by the most appropriate consumer and in the right context and place – a considerable and pertinent point, relevant to all digital media channels. This is a responsibility that we at Maxus take very seriously and we continue to work collaboratively with our clients, media owners and suppliers alike, to ensure that this ever growing investment in digital is completely sound, safe and justified primarily, but also that it is yielding the desired outcomes and results for our clients and their brands.