With impending change in advertiser base comes shift in budget

23 May

business-computer-device-35550In the history book for advertising (if such a thing exists), 2018 is going to go down as the year that mobile ad spending surpassed TV ad spending. And that trend is only going to become more pronounced through the next four years, according to a projection from eMarketer. This year, mobile ad spending is forecasted to be approximately 34 percent of all ad spending, while TV will over at just over 31 percent. But by 2022, the shift is going to be even more dramatic, with mobile taking up nearly 48 percent and TV dropping to less than 25 percent.

These numbers should be eye-catching to marketers, publishers, and broadcasters alike. It’s like that famous Hemmingway quote, “How do you go bankrupt? Two ways. Gradually, then suddenly.” Not only has mobile infiltrated consumers’ lives, with a projected 72 percent smartphone market penetration by 2021, but it has also become dominant as an information and entertainment channel. Indeed, U.S. consumers spend an average of 5 hours per day on mobile devices (including tablets), though this other projection shows that TV is only slightly ahead of all internet usage. The point is—consumers are opting for their phones over their TVs (though none of these studies look at simultaneous usage).

But it’s not only a technological shift that’s driving these changes. It’s also a shift in brands’ business models. Dave Morgan, Media Post contributor and CEO of an adtech firm, has pointed out the enormous growth in direct-to-consumer brands such as the Dollar Shave Club, Hubble Contacts, and Chewy.com. Morgan argues that this business model is set to overtake the more traditional business models of sales and distribution as represented by traditional retail. And while these direct-to-consumer brands are indeed ad spenders, their focus is on education and conversion first and brand loyalty second. That is, this model requires a more direct response approach rather than a brand building approach the way you might find with some of the larger traditional retailers. Even companies like Walmart, the biggest retailer in the world but not the biggest advertiser, are finding ways to sell more directly to consumers.

The implications here are huge, particularly for media outlets. It’s not certain that these direct-to-consumer retailers will ever have the need to huge ad spends in traditional media. They’re often extremely digitally-focused, and while they probably won’t balk at traditional media spots, they want the ad buying experience to be more like digital.

Luckily, outlets are getting there by offering more digital TV ad units and measurement tools than ever before. But the question remains whether this business model will even require the same level of spend as traditional retail. It doesn’t seem likely, according to Morgan.

The good news for most advertisers, regardless of their business model, is that every advertiser now has access to the same tools. That means that it’s possible to reach your audiences no matter where they are, and the tools are so accurate that we can now plan exactly who, what, when and where an ad will be presented to your audience. Never before in the history of advertising have we been able to connect with audiences so efficiently. And ultimately, that’s a good thing for the industry.

If you’d like help fine-tuning your ad buy, we can help. Reach out to us to discuss how your ad buy can be more efficient and effective.

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