08 Feb 2018 How do modern marketers spend their promotional money?
It doesn’t take a rocket scientist these days, poring over reams of data, to figure out where companies and businesses are focusing their media ad spending in Canada.
Digital advertising has completely overtaken traditional media channels.
“Over the past number of years, our traditional media buy has been cut significantly while our digital spend has more than doubled,” says Travis Eade, general manager of Woodridge Ford Lincoln in Calgary. “We know that fewer buyers are sampling traditional media and today’s customer is turning to digital for everything from vehicle information and specifications to availability, pricing and special offers.
“It’s important to be an active digital advertiser as more and more people do their shopping online.”
Woodridge Ford Lincoln is part of a growing number of businesses, companies, organizations and non-profits who have seen this light in recent years.
When you look at the numbers, they’re quite staggering. And, like in sports, statistics will always reveal the subtle, but important, details.
Let’s start with the overall picture by looking at total media ad spending in Canada, including digital (desktop/laptop, mobile and other internet-connected devices), directories, magazines, newspapers, radio and TV.
The total Canadian ad spend in 2017 was $13.44 billion, according to eMarketer, a market research company. And that total is projected to jump to $14.72 billion in 2020.
Now here’s where it gets interesting.
The digital sphere makes up $5.23 billion (mobile $3 billion) in that total pie of spending and it’s projected to rise to $6.41 billion (mobile $4.51 billion) by 2020. Digital’s total share of the market will rise from 38.9 per cent in 2017 to 43.6 per cent in 2020.
While digital ad spending continues to grow, television has stabilized and print has declined. Total media ad spending in television was $3.29 billion in 2017 and $2.49 billion for print. Television will see a slight rise to $3.42 billion in 2020 while print will decline to $2.36 billion.
The share of total media ad spending will drop from 24.5 per cent for television to 23.2 per cent and for print the decline will be from 18.5 per cent to 16 per cent in those three years.
There is no denying the reality and the trend. It is clear and moving solidly in the direction of digital ad spending.
David Finch, an associate professor in the Department of Entrepreneurship, Marketing and Social Innovation for the Bissett School of Business at Mount Royal University, says the trend is buoyed by the ability of the digital sphere to provide concrete numbers.
“There’s a quote from about 1910. I know that 50 per cent of my advertising works. I just don’t know which 50 per cent,” says Finch. “Brand and reputation is an intangible asset and the challenge is you’ve got to spend a tangible asset called people’s money on trying to create it. So you’ve got to look at mediums that allow you to measure the spending of actual real money whether you’re working on the agency side or whether you’re working on the client side.
“You have a fundamental responsibility to ensure that the money is spent in a most efficient way to achieve a goal for the organization regardless of whether it is for profit or not-for-profit.”
The challenge historically, going back 15 years, is that media ad spending was spent in a manner that was fundamentally detached from behaviour – meaning ads were bought in a newspaper and you hoped somebody saw it and acted on it by buying a product or a service. The problem has always been the difficulty in measuring the correlation between seeing an ad and buying the product advertised.
Finch says that in the digital realm people are paying for an incredibly targeted audience and people are paying for actual measured behaviour as opposed to “passive eyeballs”.
“So I pay for clicks and clicks are the first step to engagement and then I can follow that person through that digital engagement process and find out what they do, what they’re interested in.”
And as more and more people do their shopping online, digital advertisers can track the entire sales process – from initial action on an ad right through to the moment the person buys the product from their digital shopping cart. This allows advertisers to demonstrate the very real ROI on their ad spending.
Tangible. Measureable. Monetizeable. It’s what separates digital media ad spending from the rest.
“The trend towards digital is not changing, it’s getting more pronounced,” says Finch. “Any medium that allows you to have enormous amounts of data on the individual users – you’re starting to customize offerings, messaging, any form of engagement at the individual level – that’s the medium that wins. And digital is clearly the medium that allows that.
“The days of blasting ads to a million people are just inefficient and expensive.”