Despite the pandemic, research shows that digital advertising spend is rebounding faster than previously forecast in 2021. According to a GroupM report, spending is expected to jump 19%, pushed by a 26% surge in digital ads. We understand digital advertising is a key part of the marketing mix that is critical to winning new consumers, especially when they dedicate nearly half of their media hours to digital channels, but how effective is display advertising in winning the hearts and minds of your consumers? Is it a wasted resource? And if so, what should you be investing in instead? Join Wordsmith to find out.
With worldwide advertising revenue estimated to jump 19% to $749 billion in 2021, eMarketer predicts that total digital ad spending will reach $455.30 billion this year. A shocking 55.2% of the budget will go to display advertising, with another 40.2% going to search. Many believe that the accelerated rise of display ads is due to the significant customer shift towards social media usage and streaming digital videos, but with the average conversion rate of Google ads across all industries standing at just 3.48% for search and 0.72% for display, it begs the question why are businesses so keen to invest in search and display adverts?
Research from HubSpot found that 91% of people believe ads are more intrusive now compared to two or three years ago, with 79% believing they’re being tracked by retargeted ads. And we can’t really blame them for feeling this way. Our brains are intrinsically hardwired to put up anti-marketing defences when we feel like we’re getting the “hard sell”. We’re reaching a catch-22 in advertising. Most of us universally dislike display ads, however we’re caught in a vicious circle of brands continuing to bombard consumers across platforms like Facebook, Twitter, Netflix and Instagram with display adverts while consumers are counteracting this by continuing to sign up for ad blockers, add-free entertainment and subscription services – so how do we move forward?
The truth is, we as humans, don’t like to feel like our behaviour is being tracked and analysed. We view it as an invasion of privacy and an infringement of our personal space. A recent study from two neurologists at the University of Caltech discovered that the amygdala, known as “the seat of emotion”, is not only involved in processing emotions but also in regulating social distance. When the brain feels that social distance has been breached, it triggers the amygdala to make us feel uncomfortable and suspicious. So, it’s not out of the realms of possibility that the more time we as consumers spend online, the more the concept of personal space moves from the physical into the digital sphere, trigging the amygdala to feel wary of intrusive ads that breach our online presence.
Marc Pritchard, Chief Brand Officer at Procter & Gamble, one of the largest advertising brands in the world, explains, “Ads are often irrelevant and sometimes just silly, ridiculous or stupid. We tried to change the advertising ecosystem by doing more ads, and all that did was create more noise.” He continued, “There are dangerous days ahead for advertisers. With shifts in viewing habits and commercial impressions, the highest-attention media are in free fall across the world. The problem is universal, and if the viewing behaviour of younger audiences is a harbinger, things are not going to get better.” So, if consumers don’t like them, then why do marketers continue to invest? The answer: because conversion rates are measurable.
Bursting the bubble on precision
While traditional advertising channels such as television, radio, billboards and sponsorships could only be measured with sales, display advertising promised marketers something that had eluded them since the dawn of advertising: precision. And with this precision, it stands to reason that data-driven marketers should be able to optimise their way to hypergrowth. But of course, as we all know, winning customers’ hearts and minds is never a linear process that can be simply replicated if you follow a certain formula.
It’s surprising that while most brands spend a lot of time and money segmenting and personalising their ads to earn clicks, they often ignore the conversion point — a crucial step that means all the difference between a wasted or valuable ad spend. And sadly for most marketers, display ad conversion rates and performance metrics are all smoke and mirrors, as many brands forget that big numbers of ads and clicks do not automatically translate into more business activity and sales.
Statistics show that a whopping 50-60% of ad clicks are accidental. There is also mounting evidence to suggest that the vast majority of impressions and clicks that brands receive are from bot activity. Campaign performance reports may show that your Click-Through-Rates (CTR) are hitting the 5-10% range, but many vendors do not account for the bot clicks when presenting their results. This means you could be lulled into a false sense of security of seeing high CTR rates and better engagement, when in reality, most of your clicks are from bots. So, before you shift more of your advertising budget towards display advertising, you need to ensure the validity of your campaign reports and the numbers your vendors are producing.
The pandemic also shone a very big spotlight on the fact that we don’t need display ads in order to convert consumers. With many pausing their digital ad spending during the height of COVID-19, some of the biggest names in the business saw no change when it came to their bottom line. For example, when P&G turned off US$200 million of their digital ad spending, they saw no negative impacts on business outcomes. When the consumer banking company, Chase, reduced their programmatic reach from 400,000 sites to showing ads on 5,000 sites (a 99% decrease) it did not affect their KPIs. And when Uber turned off US$120 million of their digital ad spending that was meant to encourage an increase in more app installs, they saw no change to their anticipated rate of app installs. If anything, this proves that when brands stop spending on digital ads… nothing happens.
If reducing your spending on digital advertising had no change on your business outcomes during the pandemic, this means you can be more selective about which digital display ads you choose to turn back on (if any). Many marketers are reducing the number of websites and mobile apps that display their ads, keeping to a strict include-list of trusted sites and apps that are proven to have higher CTRs. This prevents fake and fraudulent sites and mobile apps from sapping their digital ad budgets, while also allowing marketers to redistribute their budget to other areas that have the potential to generate bigger returns on investment (ROI). Yes, we’re talking about content marketing.
Invest in creating compelling content instead
Why not use the money that you’re saving on display ads to create content your audience actually loves seeing? In this economy, adding customer lifetime value should be every marketer’s North Star guiding every investment decision - it’s time to stop selling, and start serving. So many marketers make the mistake of putting a premium on precision or direct-response advertising because of their immediate link to sales, but this is not the answer for growth. Few brands can continue increasing their revenues by targeting people they already know, forgoing awareness-building with new potential consumers, which is why creating content that resonates with established audiences and new consumers is the best investment you can make right now.
Whether you’re aiming for short-term performance, long-term brand awareness, or both, your content is always subject to the laws of attention and emotion. Nielsen Catalina Solutions studied 500 marketing campaigns and determined that the creative element was responsible for 47% of sales impact. Meaning that an advertiser can do their best to ensure the best audience targeting, ad visibility and fraud protection, but it’s all worthless if the creative content itself doesn’t attract attention and provoke emotion.
Sorin Patilinet, Global Consumer Marketing Insights Director at Mars, Inc., comments, “We look at it as a ladder. The first need is attention because we know that attention is declining. Once you have received that attention, you can then start eliciting emotions.” She continues, “We’ve proven that by building emotions, you can encode your distinctive assets into the consumer’s brain much, much better. And then [those assets] can be recalled. So, the ultimate goal is not emotion. The ultimate goal is memory encoding. But that happens faster through emotions than through rational messages.”
As copywriters, we believe brands should invest a big chunk of their pie on emotion-sparking content. And we’re not biased in our thinking. No one can deny that return on investment jumps tenfold when marketing budgets are spent on creating quality content.
Compelling content not only heightens brand awareness, increases organic search traffic to your website and boosts social media engagement, but it also effectively closes gaps in the conversion funnel by achieving better conversion rates than other marketing efforts while generating worthwhile leads. By creating consistently valuable content you’ll build trust with your key audiences, and over time, become a thought leader in your industry. And once that relationship is established between you and your consumers, it will be easier for them to make their purchasing decision and keep them coming back for more, which is as we all know, the ultimate conversion. So, next time you’re thinking of investing in display advertising, why not invest in writers that create spell-binding content instead – because that’s where the real magic in conversions happen.