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Digital Ad Spend Is About to Surpass TV

March 17, 2016 at 9:58 AM by Caroline Watts

featuredImage_03172016_v1aDigital ad spend is set to surpass TV for the first time next year. According to eMarketer, digital spend will reach $77 billion in 2017, while TV will only hit $72 billion. What are the driving forces behind this change and what does this trend mean?

The Rise of Digital

Digital advertising is proving to be incredibly impactful, especially in some industries. A January RetailMeNot study found that digital marketing yields better returns for retailers than offline advertising. Digital ads that encouraged consumers to download mobile coupons were a major driver of this high ROI, and retailers are taking notice. One eMarketer estimate indicated that 44% of US retailers will use mobile coupons for marketing in 2016, a 10% increase from 2015. 

Changes in consumption habits are also fueling the shift to digital. As consumers spend more and more time on mobile devices and in front of desktops, brands are following. UnderArmour, for example, has recently switched its TV/digital budget allocation from 70/30 to 50/50. "We know consumption is more splintered than ever," said Adrienne Lofton, senior vice president of brand marketing. "In days past you could just run TV and really cover the bases for the consumer, [but today] the reality is that the consumer is consuming around 3,000 messages a day...It could be TV, but often it's social and digital — consumers are just in a constant state of consumption."

TV Isn't Going Anywhere Just Yet

“We still expect positive growth for TV ad spend, driven by political advertising and the summer Olympics. However, we see more ad dollars flowing to digital as a way of optimizing spending in what may be a challenging economic year.” - eMarketer senior forecasting analyst Martín Utreras.

Despite all the talk of cord-cutting, TV is and will continue to be an important medium for many different types of advertisers at particular stages of the funnel. UnderArmour, for example, still looks to TV for top-of-the-funnel awareness campaigns. A MarketShare study completed last summer concluded that TV is still the most effective advertising medium, particularly for generating brand awareness. "TV is the giant megaphone," said Isaac Weber, VP of strategy at MarketShare. "When you want to get a message out, that's still really the most powerful means to do it."

For most marketers, digital vs. TV isn't an either/or question, but rather a question of allocation.

The Importance of Cross-Platform Campaigns 

A study just released by the Advertising Research Foundation study found that advertising campaigns encompassing multiple platforms are significantly more effective than advertising campaigns on a single platform. TV and digital campaigns are signficantly more powerful when run in tandem. Adding a second medium to a single-platform campaign increased ROI by an average of 19%. Adding more TV ads or more digital ads has no effect once a consumer hits a saturation point, which can happen relatively quickly, especially online, where consumers often feel inundated by advertising. 

One particularly interesting segment of the study found that consumers who saw a Facebook ad followed by a TV ad scored the highest on measurements of long-term ad recall, a counter to the common theory that TV is always the most effective first look.

Brands that want to make an impact on consumers need to make sure they're reaching customers wherever they are, using multiple platforms together to create a holistic strategy that works for their audience.

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