Most Digital Ads Are Still About Direct Response, Not Branding
A New eMarketer Report Shows That the Tactic Draws 60% of Digital Ad Dollars Across Industries
More ad dollars continue to pour into digital, and most of those dollars continue to go to direct response, not branding.
Digital ad spending in the U.S. will cross $50 billion this year, according to a new report from eMarketer out Tuesday morning. While both spending categories -- branding and direct response -- are expanding, the latter is growing at a faster clip, commanding 59.1% of the digital total in 2014.
In 2013, direct response represented 58.4% of digital spending, at $24.9 billion. Digital publishers have made huge efforts to gain brand dollars over the past decade, including growing investments in content and lavish upfront presentations to woo Madison Avenue. But the sales are being tipped by a surge in spending on mobile, where app install ads and other direct response units dominate.
"We've reversed our expectation of trends," said Ezra Palmer, senior-VP and editorial director, eMarketer. "That simply reflects the growth and recognition of Facebook as a mobile player."
The social media giant, along with Google and Twitter, recently introduced in-app native ad formats and products, paving the way for a slew of ad dollars to move into direct response efforts, like app-install campaigns.
With its report, eMarketer also tweaked its definitions of the categories to reflect, the analytics firm said, the "blurring lines" between the two. Previously, the categories were defined by ad formats -- display ads marked branding; paid search counted toward direct response. Now, eMarketer classifies them according to the advertiser's primary objective. Mr. Palmer called it a "softer definition."
"More than anything," he added, "the growing digital space means that direct response behaviors can be completed far more easily."
In response to Facebook's mobile-ad growth, leaner competitors are trying to position themselves as channels for branding dollars; on May 7th, Millennial Media, the first publicly traded mobile ad network, announced it was re-orienting its business toward branding after a bruising quarter.
Ad dollars, however, aren't following. Part of this are the inherent limitations of the devices -- the small screens don't lend themselves to desirable, lasting branding messaging. Location technologies, which aim to push consumers into stores using mobile ads, are also luring more marketing spending into direct response.
For the first time, eMarketer split its digital spending survey by channel. Mobile will claim 35.4% of digital spending, per the report, with the remainder reserved for desktop.
By industry, the digital split is relatively consistent. Retail leads the pack, with 37% of its ad dollars going to mobile, but the remaining industries post similar ratios. In the coming years, Mr. Palmer expects a larger divergence by industry, with certain sectors, such as retail and automotive, exploiting location-based ads.
Overall, advertisers are expected to spend $17.7 billion on mobile in 2014. In 2013, eMarketer reported total U.S. media ad spending of $171.3 billion.