Large Tech Companies Drive Huge Boost in Digital Advertising

Mon Aug 21, 2017

Kathy Crosett

There was good and bad news in the most recent forecast issued by Brian Wieser, a senior research techanalyst for Pivotal Research Group. The good news is the ad market looks strong – as in a potential increase of between 4% and 5% in the U.S. this year. The bad news is that a small group of large tech-heavy companies are driving a good part of this growth.

In his widely reported forecast, Wieser notes that large CPG companies, especially those that are listed in the Ad Age 200, are not bumping up their ad spending in a huge way. The average increase for these companies in Q2 2017 was something like 1.4%. Compare that growth rate to what’s happening with the tech giants. Wieser scoped out the financial data for large public firms like Google, Amazon, and Expedia. Ad, sales and marketing spending for this group of companies is in the neighborhood of a 24% increase for Q2. It’s fair to say a good portion of this advertising is based in digital formats, and this activity is a contributing factor to the growth of the digital ad industry. We all know that these companies are operating in both sides of the ad market, as they also sell ad space on their websites and through mobile technology.

Before anyone gets too carried away and starts thinking there’s no limit to the digital ad market, Wieser offers a somber perspective. “Digital advertising growth must inevitably slow down.” Otherwise, it would “essentially equal all advertising.”

The changing market dynamics mean that national TV, radio and out-of-home will struggle to attract more ad money this year. Wieser is predicting a 1% drop in these formats in 2017. The outlook for print advertising is a double-digit decline. “This slowdown is linked to the tepid growth rates observed by so-called ‘traditional’ marketers.”

In the local market, your clients still need to connect with their customers and to build their client base. Steady selling on your part, transparency about where digital ads are appearing, and constant education to help marketers see that a mix of digital and traditional media works best, will all ensure that you finish 2017 in a strong position.

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About Kathy Crosett

Kathy is the Research Director for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel.

View all posts by Kathy Crosett
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