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Marketers Moving Toward Digital Ads

18 Dec, 2013 By: Doug McPherson

CAMBRIDGE, Mass. – Traditional marketing is looking over its shoulder as digital marketing gains serious ground, new research shows.

Traditional advertising is still in the lead with 20 percent of the budget pie, but it’s waning, says Forrester Research. Direct response is second at 15 percent and digital marketing is at 12 percent.

But Forrester believes digital hasn’t peaked yet because marketers are still not satisfied with how much they have to spend on digital.

Business-to-consumer marketers expect budgets to increase at a moderate rate in 2014, with more than half planning to increase digital advertising spend in 2014 in display, search, social and mobile. This is at the expense of traditional advertising: 63 percent say they’ll decrease spending on traditional advertising.

Nearly half said they’d invest incremental funding in digital if given an additional 5 percent of funds to do so. All told, 41 percent of marketers expect their budgets to increase in 2014, while 37 percent will maintain budget status quo, Forrester reports. Only 20 percent say they expect to see a reduction.

Tracy Stokes, Forrester analyst, says the increase is fueled by “satisfying revenue results.” More than three-quarters of respondents met or exceeded their revenue goals in the prior year.

Gavin O’Malley, a writer for MediaPost, says the increases reported by Forrester are consistent with industry ad spending forecasts, including that of Zenith Optimedia, which expects a 4.5-percent increase in total domestic advertising spend in 2014 – reaching $174.3 billion. “The challenge for many marketers will be stretching those budgets across a highly fragmented set of channels and needs,” O’Malley writes.

Other Forrester findings:

  • 73 percent of marketers agree that their budgets continue to fragment across different channels of media and marketing options.
  • As a result of squeezed budgets, marketing leaders will fail to fund innovation and will underinvest in less-sexy back-end support, such as IT and analytics. Marketers will choose channels that yield measurable results and a degree of accountability.
  • In the past fiscal year, 40 percent of consumer-focused companies spent 5 percent or less of revenue on marketing, but more than a third invested more than 10 percent.
  • Companies that exceeded their revenue goals in 2013 were more likely to invest a greater percentage of their revenue in marketing: 13 of 28 marketers whose companies exceeded their revenue goals invested more than 10 percent of revenue in marketing.

About the Author: Doug McPherson

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