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LATEST MAGAZINE - Profiles - September 24, 2018

Study Shows Worldwide Digital Marketing Spending Nears $100 billion

According to a study, spending on digital marketing rose 44% last year in the United States and Great Britain, reaching $ 52 billion.

Unlike placing online advertisements through intermediaries, digital marketing, or “martech”, allows brands to directly target consumers via social media, search engine optimization.

Part of the reason for this growth is the desire to take functions in-house because of high-profile complaints from consumer giants Procter & Gamble and Unilever regarding online advertising fraud.

The issue of “brand security”, which can be jeopardized when ads appear alongside inappropriate online content, has also frustrated marketers and encouraged them to seek greater control over their target audiences.

“Clearly marketers are seeking to build in-house strength and are set to spend more on martech to remain competitive,” said study author Damian Ryan, a partner at UK accountancy firm Moore Stephens.

“Our research finds that this budget is coming from media spend and will have a resounding impact on the value of media-centric agencies,” he added, referring to traditional ad agencies that are struggling to adapt to the digital era.

The Moore Stephens survey, conducted with WARC, an advertising and media consulting firm, covered 800 companies in North America, Asia-Pacific and Europe

It found that brands in Britain and North America spent 23% of their budgets on martech, up from 16% a year ago. And 63% of technology budgets in the US were spent internally, up from 44% last year.

The stringent European data protection rules that came into effect in May, as well as concerns over the data practices of Google and Facebook, the two largest online advertising platforms, have led to a number of advertising sectors to merge or retrench.

“We’re at the beginning of the shakeout,” Ryan said.

The emergence of platform companies offering a one-stop shop to marketers is another trend to watch, he said, highlighting the acquisition by Adobe Systems in May of the Magento e-commerce company for 1.7 billion of dollars.

Adobe has entered into a new agreement to purchase business-to-business marketing software company Marketo for $ 4.75 billion.

“Fundamentally, brands don’t like to trust agencies with data. The clear trend shows that brands are seeking to take control over marketing technology,” said Ryan.

“Against that, we can see that, at the upper end where brands are spending more, they are still working with agencies.”

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