Digital Marketing Investment Shifts Focus

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Marketers have begun trading volume-based advertising strategies for ones that promote high-quality brand experiences across the entire customer life cycle, Forrester Research concluded in a recent report.

There are three reasons for this change in approach, according to the study. First, attribution models have become more advanced and now allow for more accurate planning, helping marketers optimize budgets based on the value of different media at different stages of a customer’s journey. This is in stark contrast to previous approaches that made budgeting recommendations based on the last ad the consumer viewed before making a purchase.

Second, there is a shift in emphasis from communications to experiences, as businesses’ ability to deliver on their brand promises becomes more important to consumers.

Third, marketers have seen the positive correlation between becoming more insights-driven and financial gain.

Forrester forecasts that digital media spending will increase to $118 billion by 2021, up from its original projection of $103 billion by 2019. The firm’s report also identified four key areas of spend: paid search advertising, display advertising, online video, and email marketing.

Paid search advertising will exhibit an 8 percent compound annual growth rate and “still owns the dominant share of the overall digital marketing pie,” says Shar VanBoskirk, vice president and principal analyst serving marketing professionals at Forrester. “The limelight of Google ads is fading as serendipitous discovery options—like Facebook and Pinterest, which present users with answers without them overtly asking—erode traditional intent-based search buys.”

Display advertising will undergo a 13 percent compound annual growth rate and includes standard text, static image, and rich media ads as well as ads on social networks, according to VanBoskirk, who says that “the shift away from volume-based strategies will actually increase the spend on all display advertising.”

Online video will see an 18 percent compound annual growth rate and “deserves its stand-alone status in this year’s forecast,” VanBoskirk says. “Advertisers have grown their online video spend 114 percent since 2014, and our research found that 72 percent of media buyers will spare TV budget for more online video.”

Email marketing will grow at an 8 percent compound annual rate. “Email investment is shifting away from promotion deployment toward methods to create quality communications,” VanBoskirk says, adding that email marketers will spend on “customer segmentation, message creation, and contextual delivery, as well as integrating with other marketing programs.”

The report also identifies a number of external factors driving digital growth. Chief among them will be the fact that Millennials will begin settling into a high-spending life stage as they establish their careers, homes, and families, according to the report. Millennials now outnumber Baby Boomers and collectively spend $600 billion per year, most of which originates with online and mobile research.

Customized, cross-device brand experiences are essential when engaging with these customers, according to the study. Furthermore, digital growth extends beyond this generation, with North American consumers in general spending nearly 190 minutes per day consuming Internet content, a number that is set to grow with increased access to audio and video streaming.

The report also suggests that mobile adoption will continue to grow, with 32 million more people using smartphones by 2020, justifying the digital investment in contextual targeting. 

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