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“Ad investment is shifting heavily into internet formats”: Insights from WARC’s Global Advertising Trends report

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Publishers take note: ad investment is steadily shifting to digital formats across most product categories, according to a new WARC report.

However, marketers are frustrated as millions of ad dollars are wasted each year due to various issues, including their inability to accurately measure performance, ad frauds and consumer distrust. 

James McDonald, Managing Editor of WARC Data, says, “It is vital that ad investment works harder in the media mix to obtain optimal reach and effectiveness.”

In a multichannel world, it has become harder than ever to track campaign performance, measure ROI, or to even trust third-party data. Additionally, the problem is compounded by an environment of ad blocking, fraud, and consumer distrust, and is hazed by walled gardens, programmatic stacks and opaque practice. 

James McDonald, Managing Editor, WARC Data

WARC published a new report, “Global Advertising Trends – Benchmarking ad investment by product category.” It sheds light on how different sectors value advertising media, and how this has changed over time. The data presented in the report would help media strategists and planners take more effective ad investment decisions. 

It notes that “the pivot to online advertising is particularly stark within financial services and retail, with both sectors having invested heavily in developing digital platforms to serve their customers in recent years.”

On the other hand, TV accounts for 70% of ad investment in the soft drinks sector, and close to two-thirds in the food sector. According to the report, these sectors are far less likely to have been disrupted by e-commerce, so the need for high levels of digital ad spend to facilitate a path to purchase is reduced. 

Here are the key findings:

Internet formats account for close to half of financial services’ global ad spend

Financial services have made a dramatic shift to digital advertising over the last five years. The total global ad spend in 2018 increased by 13% year-on-year to reach 43.2B. Close to half of this investment (19.7B) was directed towards internet formats – a 24.4% increase year-over-year. 

The rest went to TV ($12.9B), radio ($3.7B) and others ($7B). Investments across all these categories increased year-over-year, but growth rates stayed in single digits. 

Ad spend in financial services

“Online advertising has become far more valuable”

Spend in the retail sector was flat at $62.3B last year. Internet formats accounted for $21.5B which was a 9.1% increase year-on-year. The $1.8B in extra internet spend was offset by a decline in spend for all other media except out of home (+12.7%) and cinema (+4.9%). TV accounted for $20.3B (-0.6%), print $9.6B (-15.5%) and others $10.9B (+0.8%). 

Ad investment among the retail sector has tracked downwards in recent years, recording a compound annual growth rate of -1.8% since 2013. However, online advertising has become far more valuable to the sector during this time.

Global Advertising Trends – Benchmarking ad investment by product category, WARC

The lion’s share of ad spend ($15.1B) in the soft drinks sector went to TV ($10.5B). Overall growth was only 1.1% year-on-year. In comparison, online formats attracted $1.9B, representing 28.3% growth. The report states that investment in other media – chiefly internet – has eroded TV’s share of sector spend by 4.4% over the five years to 2018.

Ad spend in retail

$2B, print magazines’ share of ad spend in toiletries and cosmetics sector

Toiletries and cosmetics advertising saw an overall decline of 3.6% in 2018 with total investment being $25.7B. The report notes, “at a top line level, ad investment within toiletries and cosmetics sector has dipped 4.1% each year since 2013 on a compound basis.

“This is largely due to how this spend has been allocated historically: in 2013, TV accounted for two-thirds of ad spend while print drew a further fifth. Both of these media have recorded declining spend over the period, with internet (+10.7%) and out of home (+4.7%) gaining most in share but from a low base – depressing total investment growth in recent years.”

Print accounts for 11.4% of sector spend, with magazines alone worth over $2B, but it’s in decline (-12% year-on-year).

TV continues to draw the majority ($16.5B) of the investment ($25.3B) in the food sector, with global ad spend having increased by 1.4% year-on-year in 2018. 

Print ($2.8B) accounts for a greater share of ad spend in the food sector compared to the global scenario. But investment in newspapers (-2.6%) and magazines (-2.1%) have continued to decline in the last five years. Internet however, recorded a 7.9% growth in 2018 with 3.7B in total investment. 

“A number of channels working in synergy”

The above findings have been drawn from an analysis of the newly relaunched WARC Data product. It provides a new industry-standard measure of net advertising investment data across 19 product categories in 23 markets, including the United States, United Kingdom and China.

James McDonald Managing Editor, WARC Data, cites Advertising Research Foundation data, according to which two platforms used in tandem can lift ROI by 19%. Further, growth accelerates as additional platforms are added, and can reach up to 35% higher ROI with five platforms. 

McDonald comments, “The most effective media mix will always be one that is calibrated to meet specific marketing objectives, and the best results are often seen when a number of channels are working in synergy.”

Click below to download the full report from WARC: Global Advertising Trends – Benchmarking ad investment by product category