How today’s advertising trends can help you allocate your digital ad spend wiselyBy Lawrence Dy
- The dynamic digital advertising industry faces constant change with new platforms and fierce competition among brands.
- Effective budget allocation, adapting to market dynamics, and optimized campaigns drive successful digital ad spend management.
- US digital ad spend experiences slower growth but remains dominant, while Canada sees sustained growth, surpassing traditional spend.
- Prioritize emerging channels, diversify digital spending, optimize for dominance, and use data-driven decision-making for effective ad spend management.
Digital advertising is an industry that's subject to extremely frequent change. New social and search platforms come and go all the time, leaving marketers to wonder where and how to effectively allocate digital ad spend. To make matters worse, streams of new brands in nearly every industry turn an already competitive marketplace into a full-on battleground for exposure and conversions.
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Table of Contents
- Why is it important to manage your digital ad spend?
- How is digital ad spend calculated?
- Ad spend trends in Canada
- Tips and best practices for reducing your digital ad spend
- Tips and best practices for managing your digital ad spend
- Frequently asked questions
Why is it important to manage your digital ad spend?
You're a digital marketer, not an accountant, right? Well, when it comes to your client's advertising budget, it doesn't matter. If you want to succeed (and see your client succeed), you need to manage their budget effectively. This is where strategy comes in—combining optimized budget allocation with advertising campaigns that are adapted to market dynamics is the best way to drive results for your client.
Managing a client's digital ad spend is crucial for a digital marketing strategist for several reasons:
Optimizing Return on Investment (ROI):
Effective management of digital ad spend ensures that the client's advertising budget is allocated strategically to maximize ROI. By analyzing campaign performance, identifying high-performing channels, optimizing targeting parameters, and adjusting budget allocation accordingly, a digital marketing strategist can help their clients achieve the best possible results from their ad spend.
Budget efficiency and cost control:
Identify and eliminate wasteful spending by monitoring your digital ad spend closely. Keeping tabs on where your clients' money is going and what's actually giving them a good ROI is the key to optimizing your budget allocation. Watch for underperforming campaigns and channels and regularly reallocate funds to those that deliver better results.
Campaign performance monitoring:
Watching your ad spend helps you closely monitor other important campaign metrics, such as impressions, click-through rates, conversions, and return on ad spend (ROAS).
Adapting to market dynamics:
Every digital marketer knows that their job description can change overnight. Everything from advertising trends and consumer behaviors to platform algorithms often evolves, and that means adapting to constant change.
Prioritizing digital ad spend strategy can keep you in the know about changes in the market. Making adjustments promptly as these changes arise can help you keep your client relevant and competitive in their industry.
Transparency and accountability:
When your client hands their advertising budget over to you, it's expected that you'll provide them with a higher ROI than they'd be able to achieve on their own. Managing their digital ad spend strategically provides them with the transparency and accountability they're looking for.
Maintain clear and consistent records that detail their budget allocation and campaign results. Always be ready to prepare accurate reports at the client's request. This level of transparency builds trust between you and your client and gives them confidence in your expertise.
How is digital ad spend calculated?
Digital ad spend trends in the US
According to recent reports, digital ad spend in the US is expected to continue growing, but at a slower rate than in previous years:
- Slower growth, but continuous expansion: Digital ad spending in the US is experiencing its slowest growth rate in over a decade, with a modest 7.8% increase projected for 2023. Even so, the future remains bright with estimations ranging from $271.2 billion in 2023 to $376.5 billion in 2027.
- Embrace new channels: Digital advertising is witnessing a shift in investment toward emerging channels, leaving behind previously popular options. To stay on top of their game, marketers need to explore these untapped opportunities.
- Shifting spending patterns: Within the digital ad realm, spending patterns are undergoing significant changes, with social channels dominating a substantial 61% of US digital ad spending in Q3 2022. Digital advertising strategists should take note of this shift and allocate resources strategically to maximize impact and engagement on social media platforms.
- Digital remains the dominant force: The digital landscape continues to reign supreme, with digital ad spending expected to account for a substantial 71.8% of total US media ad spend in 2022. It is imperative for digital advertisers to prioritize their online presence and leverage digital channels effectively to reach their target audience.
- Rising per-person spending: Projections indicate a continuous increase in per-person digital ad spending, with estimates ranging from $942.60 in 2024 to $1,081 in 2026. This underscores the importance of optimizing campaigns to deliver personalized and impactful messaging that resonates with individual consumers.
While digital ad spending in the US is facing slower growth rates, it's still expected to increase in the coming years. That includes a shift towards new channels and continued dominance in the media ad spend market.
Key takeaways from digital ad spend trends in the US
When managing your client's budgets as a digital marketing strategist, it's important to consider the following tips and strategies based on the above digital ad spend trends:
- Prioritize new channels: Allocate a portion of the budget to explore and invest in emerging digital advertising channels that are gaining traction. Stay updated on the latest trends and consumer behavior to identify platforms where your target audience is increasingly present.
- Diversify spending within digital: As spending on digital ads continues to evolve, consider diversifying the allocation of your client's budget within the digital advertising category. While social channels currently dominate spending, explore other avenues such as video advertising, influencer marketing, content distribution platforms, or programmatic advertising to leverage the evolving landscape and reach a wider audience.
- Optimize for digital dominance: With digital ad spending projected to account for a significant portion of media ad spend, ensure that your client's budget is strategically allocated to capitalize on the reach and targeting capabilities of digital platforms. Focus on data-driven approaches, audience segmentation, and performance tracking to optimize the effectiveness of their digital ad campaigns.
- Plan for rising per-person spending: Recognize that per-person spending on digital ads is expected to increase. Keep this in mind when budgeting and strategizing, ensuring that your client's budget aligns with the projected growth to effectively reach their target audience and maintain a competitive edge.
- Monitor the overall growth rate: While digital ad spending is facing slower growth, it’s still anticipated to increase over the coming years. Stay updated on the industry forecasts, analyze market trends, and adjust your client's budgets accordingly to make informed decisions and maximize their return on investment.
Ad spend trends in Canada
- Sustained growth: The Canadian digital advertising landscape continues to thrive, with projected ad spending exceeding CA$10 billion ($7 billion) in 2022 and poised to reach CA$13.14 billion ($9.80 billion) by the end of 2024. This sustained growth indicates how important digital channels have become in attracting attention from consumers.
- Digital taking the lead: For the first time in Canada's advertising landscape, digital ad spend has now surpassed traditional ad spend. It currently represents 68.3% of the nation's entire ad sector, which goes to show the significance of digital platforms in reaching consumers.
- A shift in the landscape: The pandemic has changed the way Canadians approach marketing. Digital ad spend now occupies a substantial 56% of the overall media landscape, reflecting the changing consumer behaviors and preferences in the digital era. Social advertising has seen an increase, as well. It now represents 27% of all digital ad spend in Canada, creating unique opportunities for targeted engagement.
- Expanding digital buyers: The number of digital buyers in Canada is on the rise, with an estimated 24.2 million expected in 2022. Marketers and brands alike need to tweak their strategies to ensure they're using the right tools and targeting the right audiences.
This data clearly indicates the growing need for digital advertising strategists in Canada who can help brands reach a broader digital audience by leveraging new digital channels and adapt to shifts in spending and consumer behaviors.
Key takeaways from digital ad spend trends in Canada
Based on the Canadian digital ad spend trends, here are some tips and best practices for digital advertising strategists to consider:
- Embrace digital-first strategies: With digital ad spending surpassing traditional ad spending, digital advertising strategists must prioritize digital channels in their marketing efforts. Build a good online presence for your client by creating profiles on multiple platforms and exploring various ad formats that engage their target audience.
- Stay ahead of emerging trends: Keep a close eye on digital marketing news and pay attention when new channels, platforms, and technologies are released. Don't forget to watch for changing trends when it comes to consumer behaviors and adapt your strategies accordingly.
- Optimize for mobile: Given the significant growth in digital ad spending on small screens and the increasing number of digital buyers, ensure that your advertising strategies are mobile-friendly. Design creative elements that engage the target audience, and build landing pages and user experiences for mobile devices that keep your client's content accessible.
- Leverage social media: With social ad spending accounting for a considerable portion of digital ad spend in Canada, it's essential to develop a strong presence and effective strategies for social media platforms. Understand what makes your client's target audience click and tailor your messaging for each platform. Use social media advertising features to target specific users and increase engagement.
- Implement data-driven decision-making: Leverage analytics and measurement tools to better understand how your campaigns are performing and how audiences are reacting to them. Use this data to make changes to your advertising whenever it makes sense. Continuously test and experiment with different approaches to identify what works best for your specific audience and objectives.
- Prioritize localization: Consider the diverse Canadian market and tailor your advertising strategies to specific regions or localities. Create messages that resonate with local audiences through imagery and copy.
Tips and best practices for reducing your digital ad spend
Ad spend optimization is about more than just spending money in the smartest way possible—it's also about saving money wherever you can. If you're able to run effective campaigns without maxing out the budget, your clients will thank you.
Here are a few ways you can reduce digital ad spend:
- Target specific audiences: Aim too broadly with your marketing efforts, and you might end up with ad waste. Narrow your targeting down to the people who are most likely to be interested in what your client is selling. This helps you spend less and convert more.
- Optimize ad spend: Create goals that are measurable and attainable. Review metrics available to you on social and advertising platforms and use them to gauge the success of your campaigns. If you're not seeing a good ROI, make adjustments to your digital ad spend.
- Audit your ads: Regularly review and assess your ads to ensure their effectiveness and alignment with your brand or product. Consider whether everyone on your target list is the best fit for your business or if you can narrow down your targeting even further.
- Implement demand-based advertising: The best leads are the ones who've already engaged with your client's brand. If a user has shown interest in their products or services, target them.
- Minimize media waste: Take steps to reduce media waste and maximize ROI. This includes improving your targeting, checking for accurate ad placements, and adjusting your digital marketing plan wherever and whenever necessary.
Tips and best practices for managing your digital ad spend
Follow these tips and best practices to start effectively managing your digital ad spend, as well as allocating your budget wisely and achieving better results with your advertising campaigns:
- Identify your key objectives: Clearly define your goals and objectives for your digital advertising campaigns.
- Use the 70-20-10 rule: The 70-20-10 rule is a guideline for allocating your digital advertising budget. It suggests that 70% of your budget should go towards proven and successful strategies, 20% towards experimenting with new tactics, and 10% towards innovative and risky approaches.
- Demand-based advertising: Implement demand-based advertising, which focuses on targeting users who have shown interest or intent in your products or services. This approach can help optimize your ad spend by reaching a more receptive audience.
- Content development: Invest in creating high-quality and engaging content for your digital ads. Compelling content can attract and retain the attention of your target audience, increasing the effectiveness of your ads and potentially reducing your ad spend.
- Narrow your social media: Instead of targeting a broad audience on social media platforms, narrow down your targeting to reach the people most likely to be interested in your business. This can help you spend less and achieve a higher conversion rate.
- Improve audience targeting: Refine your audience targeting by using data and analytics tools to identify the most relevant and valuable audience segments for your ads. This will ensure that your ad spend is focused on reaching the right people.
- Streamline processes: Optimize your ad campaign management processes to eliminate inefficiencies and reduce costs. Automate repetitive tasks, use project management tools, and streamline workflows to make your ad spending more effective.
- Use data to inform strategy: Leverage data and analytics to inform your digital advertising strategy. Check the performance of your campaigns often to identify trends and make data-driven decisions that can optimize your digital ad spend.
Frequently asked questions
How big is the digital ad spend market?
The digital ad spend market is expected to grow significantly in the coming years, with global spending expected to reach around $1.25 trillion by 2030, and a CAGR of 9.22% from 2022 to 2030. These numbers indicate that while the digital ad spend market is huge, it still has enormous growth potential.
Which industry spends the most on digital advertising?
According to the sources, the retail industry spends the most on digital advertising. In 2021, the retail sector spent $30.91 billion on digital ads on mobile devices, which was a significant 35.6% increase from 2020—the retail industry also had the biggest mobile ads market share, with 23.8% (Oberlo). Additionally, the Retail sector will account for 13.6% share of ad spend in the US in 2022, the biggest portion for any sector (Marketing Charts).