Research firm Forrester estimates that American businesses will spend $120 billion on digital marketing by 2021. You can’t plan to spend nothing.
Nearly half of marketing budgets will go to the following line items:
- paid search
- display advertising
- social media advertising
- online video advertising
- email marketing
In 2016, spending on email, social, display ads, mobile and search came to about 35% of advertising spending, so the change is striking.
But businesses are expected to invest in more than just advertising. The 2016 figure included content marketing and SEO as well as ads. Forrester sees marketing budgets stretching to include data and customer experience (including content marketing), while Nielsen’s latest report shows that 82% of marketing experts surveyed planned to invest more in analytics going forward.
Nielsen’s report found that search marketing and social media were the expected growth areas, with legacy media expected to drop. TV is the winner among traditional marketing channels.
However, Nielsen’s respondents were not confident about ROI. Only 26% are sure that they can tell whether their digital marketing pays off — but only 23% were confident that they could tell whether traditional marketing paid off.
What does this mean for you?
It’s not that long since we heard a claim that a website is just an expensive business card. It was just last week when we heard that many businesses don’t care about the results of their online marketing –they just want a digital brochure.
If this is your mindset, you’re way out of touch. Your competitors are likely to be investing in digital marketing and keeping track of their results. If they’re not doing so now, it’s probably part of their plan for the near future. They’re investing in SEO, content marketing, social media, and email marketing as well as digital ads.
They’re also beginning to pay attention to the data their websites provide. Nielsen famously found that fewer than half of TV ad campaigns break even. Traditional advertising is tough to track, so marketers who rely on print or TV have to make a leap of faith.
Digital marketing provides plenty of data, much of it available for free. Forrester says marketers are beginning to realize that they need insights from that data, not just the raw information. They also want to see clearer omnichannel connections. This is where the investment comes in.
If you’re still imagining that digital marketing is basically free, or that it’s not very important, you’ll fall behind.
Planning next year’s marketing budget
Recent research says that the average marketing spend for American businesses is about 7% of revenues. More than half of that spending is now going to digital marketing in the form of ads. Chief Marketing Officers say they’ll increase their digital investment in SEO and analytics, reducing spending on traditional media.
Do you need to keep up with the Joneses? Maybe not. But you do need to keep up with your competitors. Consumers look for goods and services online. Putting your marketing budget into phone books and newspapers is wasteful. Thinking that the internet means you don’t need a marketing budget is inaccurate.