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Majority of global brands will increase digital ad spend by 20% in 2017

The majority of the world’s largest advertisers are committed to increased investment in online advertising in 2017-18, some by as much as 40 per cent. This comes despite increasing questions about its effectiveness and transparency, according to a study conducted by the World Federation of Advertisers and Ebiquity into the intentions and concerns of the world’s largest advertisers.

However, while two thirds plan to increase spend, some advertisers (12 per cent) say they expect to maintain the same levels of investment in 2018 and 21 per cent indicate they will reduce online spend. Performance-focused advertisers were most likely to boost spend, with 48 per cent predicting increases compared to just 18 per cent for brand advertisers.

The results are based on responses from more than 50 global advertisers, representing an annual advertising spend of more than USD 80 billion, and were released as part of the WFA’s Global Marketer Week in Toronto from 25-28 April.

Advertisers are making these investments despite strong concerns around their ability to track performance, with 62 per cent of respondents reporting that they are ‘dissatisfied’ with the overall level of measurement standards in online advertising, and only 45 per cent clearly seeing the value it adds.

Seventy-two per cent of those polled believe that advertisers have over-invested in the channel. Key concerns among advertisers remain viewability (90 per cent of respondents see this as a ‘major concern’) and lack of transparency (76 per cent).

Online video will be the main beneficiary of any increased spend, with 89 per cent of advertisers intending to invest more this year. The reason is that 79 per cent of branding/awareness advertisers say that video delivers a ‘high effect’, significantly better performance than static display. Forty-six percent of respondents plan to cut back on static display in 2017, with more than half saying the format delivers a ‘low effect’.

The survey also shows that advertisers are not yet convinced about the effectiveness of digital advertising, but 75 per cent are willing to accept the challenges it presents.

The main motivations behind investing in digital advertising are to drive incremental reach (a major role in the decision to invest for 79 per cent) and to increase brand awareness (69 per cent). Despite the increased targeting potential that programmatic can provide, ‘precise targeting’ is a major factor in the decision to invest in digital for just 55 per cent.

The three ‘priority’ metrics for respondents are reach (72 per cent), target audience exposure (66 per cent) and video completion rates (62 per cent). As such, the metrics in use tend to relate more to exposure rather than effectiveness.

‘Premium inventory’ is found to be more effective than non-premium for 62 per cent of respondents, the survey shows.

Matt Green, Global Lead – Media & Digital Marketing at the WFA, commented, “Although the general online advertising investment trend remains on an upward trajectory, this research shows that some advertisers are exercising increased caution regarding their online investment. Until recently, advertisers were comparatively reserved about their frustrations with the lack of robust measurement of effectiveness and the absence of independent verification. They’ve now lost their reticence and are demanding more openness and evidence.”

Nick Manning, Chief Strategy Officer for Ebiquity, said, “Online advertising is clearly here and here to stay – it’s the present and the future. But our survey results show that advertisers are not convinced by current measurement standards. Respondents demonstrate strong support for recent public calls by Marc Pritchard of Procter & Gamble and others for higher standards in independent measurement and verification in online advertising. Advertisers also want a better understanding of how online contributes to their business performance and how it delivers meaningful return on investment.”