The following is a guest post by Bruce Biegel, Senior Managing Director at Winterberry Group and a former member of DMA’s Board of Directors. It most recently appeared alongside articles from dozens of thought leaders in DMA’s 2018 Statistical Fact Book.
A turbulent year for politics in the United States, with a constant barrage of news — real and possibly fake — in the end proved somewhat inconsequential to the marketing and advertising industries. Spending on promotional media continued to rise throughout 2017, though the pace of growth remained modest — just 2.9 percent over 2016. In all, marketers and advertisers invested $301.4 billion on efforts in 2017, up from the $292.8 billion spent the year before.
Most notable about US advertising and marketing spending in 2017 was the split between digital and traditional or offline approaches. The shift from offline to digital efforts accelerated in 2017, with offline (particularly newspaper and magazine advertising spending) decreasing faster than previously expected, and investment in digital approaches, particularly display advertising, growing more than expected.
- Measured media spending decreased by 3.1 percent from 2016, with newspaper advertising ($12.2 billion in spending, down 10.9 percent from a year ago) and magazine advertising spending ($12.7 billion and down 14.8 percent) taking the most substantial hits.
- Direct mail spending also dropped in 2017, down 4.3 percent to $42.8 billion since 2016, driven by a decrease of 5.6 billion pieces of mail over the course of the year.
- Yet digital media investments grew at 16.6 percent over 2016 levels, with the largest shares being captured by display advertising (including across mobile and social formats) and search. Spending on display surpassed that of search for the first time, capturing $41.3 billion in spending, up 18.7 percent since 2016. Search advertising captured $36.5 billion, up 14.8 percent from a year ago.
Brand marketers continued to invest in data assets to drive their targeted and insight-driven approaches in 2017, with marketing data and data services capturing $15.6 billion of outsourced spending, up 4.9 percent from a year earlier. Most of this growth was driven by increasing investment in digital data ($4.34 billion, up 25.4 percent from 2016) and email data ($1.52 billion, up 15.1 percent). Offline data spending, captured in CRM databases and primarily in support of direct mail programs, still accounted for $8.13 billion in 2017, a 4.4 percent decline influenced heavily by the drop in direct mail acquisition volumes.
As 2018 begins, marketers, advertisers, and the service and solutions providers that support them can expect to see these trends continue: a rapid shift toward digital engagements and a growing prioritization of using data in support of these efforts. In addition, in 2018, trends practitioners should keep an eye on:
PERSONALIZATION AND THE CUSTOMER JOURNEY: A significant majority of marketers are prioritizing building personalized experiences for their customers and prospects; location, digital behavior, and other data points are increasingly available for use in insight and persona development. Marketing solution providers will increasingly be asked for support in developing real-time, touch point-level customer journey maps and strategies to support these enhanced experiences.
IDENTITY AND RECOGNITION: With the proliferation of devices, identities, and profiles, marketers are eager to resolve for audience identity to serve the optimal message or content to an individual at any given time on any device. Spending on onboarding services and support for leveraging offline personas and identities in digital environments doubled in 2017, and use of these solutions will continue to grow. Marketers will require support in developing deeper audience insights, attributing engagement efforts, and leveraging ID graphs to enact these initiatives. Service providers will be required to help clean and authenticate audience data, and develop ID graphs for use in these applications.
NEW TECHNOLOGY: Marketing technology companies continued to proliferate in 2017, with Scott Brinker’s latest count totaling 5,381 businesses, up 39 percent from a year before. The latest innovations that marketers are keen to take advantage of are artificial intelligence (AI), machine learning (ML), and blockchain technology. Overall, 80 percent of marketers think AI will revolutionize insight development, though taking advantage of new solutions will require skilled talent, which is scarce today. Blockchain technology will likely be leveraged first for payment authentication and fraud detection but will likely not be used broadly by marketers in 2018.
GDPR: The General Data Protection Regulation (GDPR) is set to go into effect in Europe in May 2018 and will substantially expand consumers’ rights as to what information is collected about them and used by companies — and substantially regulate how companies collect, store, and use any information that can be used to identify individual customers or prospects. Companies based in Europe, as well as those that do business there, are likely to prioritize overhauls in their data collection and use processes, as well as revisit their service provider and partner contracts to ensure compliance prior to May, as a breach can result in both steep fines as well as a degradation in company reputation — and customer loyalty.
CONTINUED M&A: Deal frequency is likely to continue into 2018, with technology assets being highly coveted. Consolidation among marketing solutions and service providers is also likely to continue as businesses seek to accelerate growth and offer a broader capability set for clients.
With these trends and others driving efforts and focus, brands are expected to continue investing in marketing programs in 2018, with the pace of expected growth rising 4.8 percent to a total of $316.0 billion. Digital media investments are likely to rise by 15.2 percent to $101.0 billion, passing the notable $100 billion mark (display advertising will continue to lead the way, capturing $47.2 billion) and for the first time overtaking offline media spending (which is expected to be $97.8 billion).