Digital increases share of ad budgets (again), but let’s not get too excited

A report from the IAB in the US rehashed the age-old debate as to whether digital marketing is replacing (or should replace) traditional marketing. It revealed the gap between the two mediums is narrowing, but marketers shouldn’t get too excited as it is still some way off dominating media budgets due to long-running issues around a lack of measurability.

Seb Joseph

The findings, pulled from a joint report from the Internet Advertising Bureau and PwC, found online ad spend rocketed 17 per cent to $42.8bn (£25.6bn) in 2013, surpassing the $40.1bn (£23.9bn) for broadcast – excluding network TV – revenue for the first time.

Despite the growth, total advertising revenues from TV still dwarf the digital take with US marketers ploughing $74.5bn (£44.5bn) into broadcast and network channels in the same period.

So basically digital is now bigger than TV for a section of the market that is not reflective of the overall advertising landscape. It reflects the trepidation many brands still view digital with as a result of not getting enough bang for their buck when it comes to using channels such as mobile and social.

A report from Nielsen brings this trend into sharp focus. It revealed ten of the top 15 FMCG companies in the UK including Coke, Kellogg’s and Unilever slashed their online budgets by 20 per cent or more in 2013.

That’s not to dismiss digital channels. All marketers see it as a double opportunity to 1) massively reduce media spend 2) create content that people want, rather than ads that brands have to pay to make sure people see.

These are the reasons the likes of Mondelez, Unilever and P&G are all hastily undergoing organisational change. Each brand has spoken about the importance of digital to their marketing plans but along with the rest of the industry, they are struggling to measure campaign effectiveness across several channels.

It is an issue that dates back to when I first joined New Media Age five years ago. Back then a lack of understanding around how people consumed content meant many marketers were quick to jump on figures like the IABs report as proof emerging channels such as smartphones and social media were delivering better returns. While campaign measurement has become more sophisticated in the years since, it is not yet at the level to convince the majority marketers to commit more of their budgets to online advertising.

Yes, ad spend on digital will eventually overtake TV. It won’t be anytime soon and when it does the lines between online and TV will have become so blurred it will be hard to untangle if nothing is done now to ensure we measure accordingly.

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