Majority of Marketers' Budgets Spent on Direct Response28 May, 2014 By: Doug McPherson
NEW YORK – Marketers continue to pour more money into digital advertising and, more specifically, they’re choosing direct response over branding. In fact, direct response is drawing 60 percent of digital ad dollars across nine industries, says a new report from eMarketer.
Digital direct response and brand advertising grew both grew at more than 16 percent in 2013, but direct response grew faster and gained $4.74 billion against $2.79 billion for branding objectives, leading to an increase in ad spending market share from 58.4 percent to 59.1 percent, according to eMarketer’s report, “2014 Digital Ad Spending Benchmarks by Industry.”
eMarketer says it has tweaked its definitions of branding and direct response. Previously, the categories were defined by ad formats – display ads marked branding; paid search counted toward direct response. Now, eMarketer classifies them according to the advertiser's primary objective.
The report reflects ad spending nuances across nine industries: automotive, computing products and consumer electronics, consumer package goods (CPG) and consumer products, financial services, healthcare and pharmaceutical, media and entertainment, retail, telecom, and travel.
The travel industry – such as Priceline and Expedia – spends heavily in direct response, specifically search, allotting a larger share of its digital budget to performance advertising than any other industry: 74 percent.
By contrast, the CPG and consumer products industry – where only a tiny percentage of total ad buying is done via digital channels – spends 65 percent of its digital budget on branding.
By industry, the digital split is relatively consistent. Retail leads the pack, with 37 percent of its ad dollars going to mobile, but the remaining industries post similar ratios. In the coming years, eMarketer expects a larger divergence by industry, with certain sectors, such as retail and automotive, exploiting location-based ads.
Ezra Palmer, senior vice president and editorial director at eMarketer, told AdAge, “The growing digital space means that direct response behaviors can be completed far more easily.”
Facebook, Google and Twitter have recently introduced native ad formats and products that analysts say have paved the way for ad dollars to move into direct response tactics such as app-install campaigns. Location technologies, which aim to push consumers into stores using mobile ads, are also luring more marketing spending into direct response.
eMarketer also split its digital spending survey by channel. Mobile will claim 35.4 percent of digital spending with the remainder reserved for desktop. Advertisers are expected to spend $17.7 billion on mobile in 2014. In 2013, eMarketer reported total U.S. media ad spending of $171.3 billion.
The report says overall, U.S. advertisers will spend $50 billion on digital advertising in 2014 – the fifth consecutive year of growth since the recession in 2009.