Facing a seismic shift in ad spending toward online media, senior marketing and media executives at Deloitte's recent media and telecom conference in London debated the value of digital advertising.
Following what many viewed as high-profile advertising missteps from internet giants Facebook Inc. and Alphabet Inc., brands and investors are more closely scrutinizing levels of transparency, brand safety and fraud associated with online ads. In fact, one of the world's largest advertisers, Procter & Gamble Co., scaled back on online advertising in 2017, trimming its digital budget by up to $140 million. The cutback's minimal impact on P&G's results has further prompted questions about the real value of digital advertising.
"There is a gulf in perception between senior agency leaders and clients about what [mediums] are effective and what media they are putting their money into," Lindsey Clay, CEO of Thinkbox Ltd., a marketing body for commercial television in the U.K., said at the Deloitte event, referencing a recent report by Ebiquity for Radiocentre that suggested brands had routinely underinvested in traditional media.
The study also claimed that out of all the advertising mediums, TV scored the highest for its ability to target people, increase campaign return on investment, trigger a positive emotional response, improve brand awareness and maximize campaign reach.
Yet, according to research firm MAGNA, advertisers spent more on digital media than linear TV globally last year. Digital ad spending reached $209 billion globally, up 17%, capturing a 41% share of the market in 2017, while linear TV brought in $178 billion, or 35% of the market, according to MAGNA.
Carolyn McCall, CEO of U.K. commercial broadcaster ITV PLC, noted that TV was "central" to brand trust, growth and profits, adding that it provided more "immediate" reach and scale than any other medium. Citing Ebiquity, she said that for every £1 spent, TV generates over £4 of profit compared to just over £2 for online video and less than £1 for online display.
A former CEO of British budget airline easyJet, McCall said that a repositioning of the brand’s media spend in 2010, which included a 78% hike in TV spending, played a crucial role in increasing traffic to easyJet’s website and increasing bookings.
WPP PLC's CEO Martin Sorrell, however, downplayed concerns about the media agency’s push toward digital advertising. He argued that agencies need to adapt their business models to function in a fast-evolving digital landscape. Noting that approximately one quarter of WPP's business is centered around digital and "trying to build better data mousetraps," Sorrell maintained there is a strong relationship between digital innovation, branding and total shareholder return.
"Every statistical piece of work that we've done over the last 12 years clearly shows that those companies that invest in innovation and those companies that invest in brand win."
