It is no secret that digital activities have increasingly become more important for companies on their advertising budgets and this importance is now being reflected in overall statistics.
First, what are the different components of digital and traditional advertising?
We can list several ways of digital advertising, but the three most important are Display Advertising, Search Engines and Social Media.
The display advertising refers to the spots that marketers can purchase on websites or networks. An example is purchasing space on a website news through web banners, pop ups or floating ads.
Due to the emergence of million new websites, the online ad space has become a less expensive option allowing brands to continue disseminating their messages in many areas. Companies can purchase pay per clicks ads for up to 1 penny. For marketers with tight budgets, online advertising fits in well.
Digital campaigns are great but if consumers aren’t able to find your website or brand when they are researching for their next purchase, they really serve no purpose. This is precisely why search engine is increasingly becoming more important.
Search Engine marketing services help brands improve their popularity and visibility online with good real estate on sites like Google and Bing. The bright side of this kind of platform is to get in touch with the consumers when they are interested and researching for something that may result a sale or a lead.
Marketers are often investing the majority of the budget on Google, since it’s the major search engine with around 80% of market share according to a research run in the end of 2014 by SurveyMonkey (Yahoo had 8% and Bing, 6%).
According to the 2015 CMO survey, there is an advertising budget trend increase in this category, since 64.0% of businesses indicated that they plan to invest more in Search Engines in the next years.
Of course, you can’t talk about digital advertising without mentioning Social Media. Facebook and Twitter clearly lead the charge in this sector but platforms like Instagram, Youtube, and Snapchat are quickly catching up as they are increasing their user base.
Instagram for example has reached over 400 million users and last year has started selling advertising in their platform. Pinterest recently used the same strategy of selling promoted posts (Pins in their case). In 2015, Snapchat released their advertising services asking to shell out a minimum of $750,000 a day to advertise on its social platform.
According to the CMO Survey from last year, 70.0% of businesses expect to increase their social media management investment, showing a strong growth trend in this king advertising budget.
In the last report on February 2016, Social media spending is expected to increase to a 20.9% share of marketing budgets in the next five years, compared to what it was in 2009, 5.6%. However, says the research, only 3.4% of marketing leaders report that social media contributes very highly to firm performance; 40 % report a contribution below the average.
Other types of digital Marketing are e-mail marketing, affiliate marketing, online classified advertising and content advertising.
Traditional advertising refers to advertisements on television, radio, newspapers, magazines, billboard, and outdoor properties. Although budgets proportionally continue to decrease when compared to digital, the number of eye balls that traditional advertising reaches is very valuable.
What are the advertising budget figures?
For 2015, the total number of advertising budget was estimated at a healthy $187 billion in United States. While the number remains consistent with previous years, the percentages of traditional advertising expenses (i.e. television) vs. digital (i.e. social media) continues to experience some change.
According to a Strategy Analytics report published earlier this year, digital advertising spend accounts for almost 30% of the total advertising budget, which places it behind television by around $30 billion, but risen by 13% year over year.
Even though Google has been still the leader on spend in the digital budget, the drivers behind the increase of totals are led by social media sites like Facebook and Twitter, with 31% estimated growth in 2015 of total digital budget.
The report highlights that this trend is not likely to change anytime soon. By 2018, television’s share of total advertising budget will fall to around 40% and digital will rise to about 35% meaning the split will be almost equivalent, which is an amazing statistic considering how important commercials and television spend has been historically in United States.
The major victim in digital spend will most likely be print advertising, as print budgets continue to decrease.
According to Strategy Analytics, print expenditures continue to decline for the third consecutive year. IBISWorld’s states that print advertising budget has declined an estimated of 1.3% yearly from 2012 to 2015 and is estimated to decrease at a similar annualized rate of 1.2% until 2018.
Newspaper advertising is currently the most popular form of print advertising (8.6% of total ad spend in 2015) and magazine comes in at a close second (7.5% of total ad spend in 2015) . However, newspapers and magazines are increasingly prioritizing their websites to attract online advertisement revenues.
The issue that arises when discussing traditional budgets is the fact that return on investment is more difficult to measure meanwhile digital investments are extremely easy to measure. Besides that, people are often looking for Social Media websites to consume live and on time news, instead of reading printed newspapers on the next day.
In addition, millennials are the next big consumer market and the rate they rely on digital and mobile for purchase decision making is staggering. While digital advertising continues to eat up television percentages of the overall marketing budget its forecast is still stable, due to the amount of people traditional media can reach.
Like mentioned before, print sector is currently in the main danger. Due to the rise of digital and consistency of traditional advertising, it is still very important for agencies and in-house marketers to practice integrated advertising and marketing, meaning a mix of all types of advertising to communicate brand’s message. As we have alluded to, each type of advertising has their own pros and cons and it is important that your advertising budget are versatile.
Article by Walter Godinez