In this edition, we share focal points from Digiday’s recently released report on how brands and retailers are spending a lot more on online marketing than agencies.

64% of marketers use programmatic site display ads

This year was meant to be the year of “curation” — at least for a subset of the ad industry. Some predicted 2023 would be the beginning of the end of the industry’s infatuation with cheap reach. It turned out it wasn’t. Then, on the tail of the wave of interest in generative AI and its implications, the furore over made-for-advertising (MFA) sites took off.

A panic ignited in June, triggered by a cross-industry revelation of the staggering sums channeled into these sites. MFA sites masquerade as prime real estate for online advertising — picture a web page overrun by towering banner ads and strategically positioned video ad players — and are crafted with the purpose of siphoning ad dollars from legitimate publishers.

“MFA sites are a great working example of a programmatic system being gamed,” Damon Reeve, CEO of U.K-based publisher alliance Ozone, said earlier this year. “Advertisers don’t like them, publishers don’t like them, and yet advertiser budgets still flow to them. And that’s because they are designed to perform according to the ad-tech metrics that advertisers value for their digital budgets.”

As Digiday+ Research recently reported as part of our CMO Strategies series, programmatic site display ads are the most popular display ad environment in which marketers buy ads. The majority of marketer respondents (64%) said their company currently buys programmatic site display ads. And clickthrough rates is the leading success metric marketers consider when assessing how well programmatically bought site display ads have performed, with slightly less than one-third of respondents (32%) selecting the metric as their main indicator of success.

However, buying display site ads programmatically brings with it brand safety concerns. Marketers don’t know on which sites their ads will appear, nor alongside which types of content. The prospect of generative AI adds more worries about major brands running ads on questionable MFA sites with low-quality AI-generated content.

Key findings:

• Programmatic site display ads are more likely to be designed to instigate clicks because marketers don’t always know where their ads will be placed, or adjacent to what types of content. A brand hopes to move a consumer away from a third-party site and onto its own platform, where brand safety is ensured and value is more easily communicated.
• Impressions and commerce and sales were almost evenly tied in second place as key success metrics for programmatic site display ads, with 24% and 26% of respondents selecting the metrics respectively. Programmatic site ads often take a brand education or awareness approach, making impressions a valuable secondary success metric.

Read more about display ad trends

Brands, retailers spend a lot more on online marketing than agencies

Online marketing spend dominates its offline counterpart — no surprise there. But what might come as a surprise is that marketers across the board actually increased their spend in the last year, and that brands and retailers spent a lot more on online marketing than agencies. This is according to a Digiday+ Research survey of 99 agency, brand and retailer professionals. 

Digiday’s survey found that 45% agency pros said their companies increased marketing spending somewhat or significantly in the last year, and 46% of brand and retailer pros said the same.

Looking more closely at the data, it’s important to note that much of the increase in marketing spend wasn’t necessarily significant. About a third of marketers (35% of agencies and 30% of brands and retailers) said their companies increased their marketing spending just somewhat.

When it came to allocating their increased marketing spending, pretty much all marketers put the emphasis on online marketing over offline marketing. However, brands and retailers spent a lot more on online marketing than agencies in the last year.

The largest percentage of brand and retailer respondents said their companies invested a large amount in online marketing in the last 12 months (43% of brands and retailers said this). And those who said their companies invested a medium amount in online marketing came in a close second at 39%.

Meanwhile, the largest percentage of agency respondents to Digiday’s survey said their companies invested just a small amount on online marketing in the last 12 months (40% said this). Those who said their companies invested a large amount in online marketing came in a distant second at just under a quarter (24%).

​​When considering agency vs. retailer and brand spending, retailers and brands are more likely to stick to the marketing channels they deem to be “safe” and also that exist where the customers are — which in today’s consumer environment means online.

Key findings:

• About half of all marketers expect to grow their marketing spend further in the coming year. Forty-nine percent of agency respondents said they expect marketing spending to increase the most in the next 12 months, and 46% of brand and retailer respondents said the same.
• The emphasis will continue to be on online marketing tactics over offline ones. Two-thirds of agency pros (66%) and more than three-quarters of brand and retailer pros (77%) said they expect their companies to invest in online marketing the most in the next year. 

Read more about marketers’ online spending

See research from all Digiday Media Brands:

Digiday+ Research

Glossy+ Research

Modern Retail+ Research

https://digiday.com/?p=516337