The antidote to wasteful ad spend – where marketers go wrong

Research indicates that something in the region of $80 billion in digital marketing spend is wasted each year. There are, however, strategies that can help stop the rot, writes JJ Eastwood.

JJ Eastwood 150 BWAll marketers squander a portion of their ad spend. In fact, the average marketer is quite realistic about their profligacy. Last year, for instance, a Rakuten Marketing survey of more than 1000 marketers revealed they estimate 26% of their spend is squandered.

The most pessimistic of this marketing cohort, about 2.9%, figure that more than 80% of their spend goes up in smoke. With eMarketer estimating that 2019 will see global digital ad spend hit a dizzying $316 billion, then we can reason that around $82 billion of it will be wasted. As for why it’s happening, well, most marketers cite the pursuit of audience reach as the main reason for their advertisements not cutting through.

Related: Global online ad spend exceeds forecasts, faster growth expected towards 2021 »
ad spend share represented by slice of cake

The historical focus on the reach of a marketing campaign can certainly have some undesirable side effects in the current digital environment. Of greater importance is an awareness of where your advertising actually lives. Closely tracking where it is shown is a key step in reducing the wastage of your advertising dollar. As is having a clear insight into how the channels it is hosted on perform.

There are certainly ways to do this, and marketers – under increasing pressure to justify every dollar outlaid – are understandably looking to channels that offer clear-cut results. Channels that might have previously flown under the radar.

Take affiliate marketing, for example, which has the ability to provide the kind of sound returns marketers crave. Operating on the basis that an advertiser only pays when a cash register rings and a sale is made, it offers a more sure-fire way for marketers to outlay their spend. It’s omnipresent too, and familiar to us all in one way or another, even if the term ‘affiliate’ has you scratching your head.

Essentially, if you’ve earned loyalty points via an online purchase (think the Qantas Online Mall), you’ve used an affiliate link. If you follow a fashion blogger and have been inspired to click through and purchase off the back of their recommendation, you’ve used an affiliate link.

It’s a simple model, but its efficacy owes much to recent technological advances. Up until recent years, affiliate marketing was constrained by its reliance on manual business processes, placing limitations on its ability to achieve scale, and to improve personalisation and contextualisation.

The machine learning boom of the last five years has changed the game. We are now seeing laser focused data automation, personalised offers and granular segmentation in the affiliate commercial model. It’s transforming the relationship between advertisers, publishers and consumers. And, with even clearer measurement of spend and results, it is combating the issue of wastage directly.

For marketers doubting the effectiveness of their advertising dollars, it’s important to know you’re not alone, and there are steps you can take to better account for your spend. A good place to start is with an internal assessment of your advertising spend. And with the technology of the digital age at our disposal, tying your marketing directly to sales outcomes and eliminating wastage makes a lot of sense.

By utilising channels that offer clear-cut results such as affiliate marketing, marketers are empowered to make performance-based decisions for budgeting and mitigate wasteful practices. After all, the fewer dollars you contribute to the $82 billion of wasted marketing, the better your business will perform.

JJ Eastwood is APAC managing director at Rakuten Marketing

 

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Image credit:sergio souza