Digital Advertising Now Helping Itself To A Third Of The Budget

Digital Advertising Now Helping Itself To A Third Of The Budget

Digital advertising continues its takeover with a new report from media network GroupM saying it eclipses a third of the media budget. It’s up to 31 per cent of measured ad investment from 28 per cent in 2015. And is set to surpass $US160 billion this year.

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And programmatic trading of the ads constitute of third of that segment.

The report, Interaction 2016, looks at the continual influx of digital advertising, the issues surrounding it, user behaviour and technology.

Ad-blocking inevitably gets a fair chunk of the examination, given many countries have double digit percentages of users with ad-blocking software installed.

“The rise in consumer adoption of ad-blocking technology violates the inferred consumer contract with content owners which enables advertising investment to support content development,” said Adam Smith, futures director at GroupM and one half of the team behind the analysis.

“For this reason, and its potential to inhibit brands’ ability to reach their audiences, it merits close study and preventative measures.

“We have much farther to go in understanding the true impact of ad-blocking as estimates of lost inventory are scarce. We will be tracking closely the progress of initiatives like the IAB’s LEAN program in the U.S. which encourages publishers to develop light, encrypted, ad choices-supported, and non-invasive advertising strategies to reduce page latency and other nuisances that may encourage the adoption of blockers.”

Rob Nolan, the other half in the analysis duo and GroupM’s chief digital officer, added: “We are not now, nor have we ever been, in ‘steady state’ with digital advertising. The velocity of change makes for a dizzying environment for marketers, but we’ve identified what we believe to be enduring truths.

“Data and technology have changed advertising for the better, even in video. But ads stop working when they’re avoided and when the ecosystem allows fraud, or when strategies don’t follow the consumer to apps and commerce anywhere.

“Though there is more still to understand about ad avoidance trends, data does suggest the time is now to share in a profound sense of responsibility, transparency and vigilance to ensure the ongoing engagement of consumers with brand communications.”

The main points covered in the report are:

Integrity of Digital Supply: Impression and non-impression-based ad fraud remain concerns and risk varies by market. GroupM recommends working with trusted partners, use of pre-bid controls in unknown markets, development of specific contracts and reliance on verification tools and vendors.

Use of Apps: A majority of smartphone users have between 30 to 50 apps installed, and this rise of app usage is a challenge for advertisers. Emerging, more interactive, app-native ad formats hold promise.

E-commerce: Globally, e-commerce is expected to reach 1.81 trillion USD this year (eight percent of global retail), up from 1.57 trillion in 2015. E-commerce strategies enabling transactions anywhere and anytime are on the rise and will become the norm.

OTT TV: TV consumption is increasingly non-linear, particularly with younger audiences. However, correspondents reported comparatively minor shifts in investment due to a prevalent lack of understanding about non-traditional formats and lack of standardized audience measurement around digital video. Next year, we expect that live streaming of video on Facebook and other platforms will be a significant topic in Interaction.

Applying Data: Correspondents reported that the accessibility, the collection and the application of data from owned and third-party sources remains an imperative and a challenge for many clients.