Annual Digital Ad Spend Wastage Hit Record $6 Billion In 2023

Brands threw away a record $6 billion digital advertising dollars in 2023, up more than 17 per cent on last year’s figures, Next & Co’s annual Digital Media Wastage report has revealed.

Lead image: Next&Co Founders Nick Grinberg and John Vlasakakis

Wasted digital advertising spend reached a whopping $6.149 billion in 2023 – the highest on record – representing nearly half (43 per cent) of the $14.1 billion invested in digital advertising nationally this year.

The figure is significantly up on last year’s overall ad spend wastage, which hit $5.46 billion, comprising 41 per cent of the overall $13.9 billion spent across the year.

The data, collated from Next&Co’s quarterly Digital Media Wastage reports, represents the billions of advertising dollars that failed to further digital advertising objectives in 2023 across a range of verticals, including real estate, retail, insurance, finance and FMCG.

This year, Next&Co audited more than 400 companies with digital ad budgets of between $500,000 to $21 million, including multinational (23 per cent), national (31 per cent), ASX-listed (24 per cent), and SME (22 per cent) companies.

Retail brands suffer biggest annual ad spend wastage for second consecutive year

The retail sector recorded the highest amount of wasted digital ad dollars for the second year in a row, notching up more than $155 million of wasted ad spend. The figure eclipses the $80.4 million wasted by retailers in 2022.

The professional services and finance sectors recorded the next highest digital ad spend wastage, at $120 million and $102 million respectively.

Google tops digital media channel waste list

Nearly half (49 per cent) of the digital ad dollars wasted in 2023 were spent on Google at $167 million, up significantly on the $109 million recorded in 2022. Another 41 per cent was wasted on Meta’s Facebook and Instagram platforms reaching $140 million – another rise on the $119 million wasted on the channels last year.

“In the face of a looming economic downturn, where spending is likely to decline across the board, advertisers will need to be strategic with their budgets to maximise returns,” said Next&Co Co-Founder, John Vlasakakis.

“The annual figures are startling, revealing that of every $10 spent on digital ad spend, $4 is wasted. This data shows that brands are still throwing away billions of critical advertising dollars by failing to understand best practice data use and running campaigns that don’t deliver a strong ROI.

“Many brands are relying too heavily on AI and automation to drive their spend, without understanding the platforms and how to best use the data they have.

“According to the IAB Australia Online Advertising Expenditure Report prepared by PwC we know online advertising grew 7.8 per cent to $3.732 billion in Australia in the September quarter compared to the same three months last year. Yet we are still seeing significant wastage.

“As we head into the new year, businesses need to undertake an independent assessment of how their ad spend is delivering and look to make changes – fast. Now is the time for brands to really hone their data sets and use data strategically to tap into previous customers and build new audiences.”

Next&Co’s auditing platform Prometheus has now been used by more than 500 companies across Australia. It has the ability to tell advertisers exactly how much, and where, ad spend is being wasted on their digital platforms.

Prometheus has in-built KPIs for advertisers, including leads, customer conversions, ROI, and reach, enabling brands to choose their targets across each metric. The auditing tool then determines the exact wastage of their total annual digital spend in dollars and where that wastage is occurring, campaign-by-campaign, and on a creative level.

It provides a score out of 100 on the overall performance of each metric and the exact dollar figure of ad spend wastage. The data is then individually audited for each type of advertising activity run within the tool and an individual score prepared for each.

Prometheus can also predict how many conversions advertisers could potentially achieve and make creative and CPA (cost per acquisition) improvement recommendations.

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