While TV continues to play a dominant role for marketers in Canada, digital campaigns are increasing in prominence. Marketing budgets in 2016 are flat or down for many advertisers, but spending across the digital ecosystem is on the rise, and campaigns are being used in equal measure for brand-building and performance-based campaigns. The downside, however, is that many marketers aren’t adjusting their measurement efforts along the way. And that means they don’t have clarity about the true success of their campaigns.
Almost all marketers continue to spend on TV (94%), and the medium accounts for 42% of their available budgets. That said, however, a recent study by Nielsen and the Association of Canadian Advertisers (ACA) found that half of all marketing professionals in Canada plan to allocate less ad spend to TV advertising this year than they did last year. Digital advertising is becoming just as prevalent as TV, as marketers report incorporating more forms of digital advertising into their marketing plans than other forms of traditional media like print, radio and out of home, and digital’s share of spend in 2016 is likely to increase across video, search, display and native.
Plans for programmatic spending are generally flat, but one-third of advertisers say they plan to increase their programmatic budgets. In fact, almost half of digital advertisers (44%) say they’re already buying more than half of their advertising programmatically.
The more budget a marketer has, the bigger the focus is on brand building through advertising. Marketers with smaller budgets say they’re more focused on performance-driven campaigns—those designed to drive an action such as clicks, visits, leads or sales. Specifically, 69% of marketers with budgets of CAD 10 million or higher say they are focused on branding impact, compared with only 25% of those with budgets of less than CAD 5 million. Comparatively, marketers with smaller budgets prioritize spending on radio, digital display and search because of the lower cost per impression, immediate sales impact and measurable return on investment (ROI), while marketers with more money to spend still invest more heavily in video – on TV or online. In fact, they allocate 40% more of their budgets to TV ads, and 150% more of their budgets to digital video. On the flipside, marketers with less money to spend push 40% more of their budgets to digital search and 30% more to digital display.
While overall budgets are stagnating, even as the use of digital marketing grows, advertisers need to be smarter with how they allocate those budgets and how they maximize results using available measurement tools. In that regard, the majority of advertisers in Canada are using measurement tools to determine campaign effectiveness – who their campaigns are reaching, how advertising is influencing brand opinion and what impact those efforts have had on sales. More than 50% of advertisers claim to be measuring reach on every campaign. Today’s flexible CPM-based measurement tools allow all budgets to measure the impact of digital campaigns. The smaller the budget, the greater the imperative to make sure campaigns are effective, doing more with less.
Amid the range of relevant metrics available to marketers today, click-through rates are still the most prevalent way marketers derive ROI of digital media for performance-based campaigns. This is noteworthy because actual click-through rates are historically low and have been shown in Nielsen studies to have no correlation with sales. Direct sales measurement is a close second among marketers. For brand-focused campaigns, dwell time (the actual length of time a visitor spends on a page) is most widely used, followed by brand lift (e.g., a measurable increase in awareness, purchase intent or favorability), a metric that does show strong correlation with sales. But even for brand-focused campaigns, measurement of click-through rates is high.
Other survey-based evidence from Nielsen’s 2015 Global Trust in Advertising report suggests that online respondents in Canada have lower trust with digital ads, particularly display and mobile, and are less likely to take action with advertising on digital media versus traditional channels. For example, only 27% trust ads on mobile devices, and 29% trust online banner ads. Those who would take action on these ads are similarly low. Compare that with TV and newspaper ads, where majorities both trust and take action on the ads seen there.
Reaching the right target with a viewable ad is critical to having a measurable impact on brand lift in a branding campaign. And there is perhaps an even greater imperative for viewability and targeting accuracy in quick-hit performance-focused campaigns. If the consumer doesn’t see the ad in the first place, or a consumer unlikely to purchase the product sees it, then measuring click-through rates and sales impact – the two most commonly used metrics – leave the marketer missing critical pieces of information in evaluating the effectiveness of the ever-growing digital media ecosystem.
As marketers consider new mediums and strategies, they will need to make better use of metrics that can truly determine if they’re building viewable reach with potential consumers and gaining the trust and driving the action of their audiences in building brand equity and in delivering sales.
The Canadian Leading Markets survey is conducted jointly between the Association of Canadian Advertisers (ACA) and Nielsen. The survey was conducted online in both English and French between fourth-quarter 2015 and first-quarter 2016.