There's Been a Huge Drop in Digital Ad Spend -- But Why?

Digital ad spend is on the decline, and more brands are spending cash on new marketing methods, according to the latest research. So how will marketers allocate their budgets in 2018? As revenue from digital marketing takes a tumble, expect more companies to invest in experiential. Here's why.

What's Going On?

Last year, Procter & Gamble, one of the world's largest brands, cut its digital ad spend by more than $200 million. That's not chump change. In recent years, there has been a shift from digital ads to new techniques as consumers have become wary of online marketing. As a result, Procter & Gamble has reduced the amount of money it spends on digital by 20-50 percent.

"The consumer products giant says that its push for more transparency over the past year revealed such spending had been largely wasteful and that eliminating it helped the company reach more consumers in more effective ways," says the Wall Street Journal.

It's not just Procter & Gamble, either. Last year, Unilever slashed ad spend in a bid to reduce overheads and advertising costs by the year 2020. "The company did not disclose how much it believed it would save by cutting the number of ads it produces and trimming its agency roster," says Marketing Interactive. "It is estimated that Unilever spends more than US$7 billion on advertising worldwide each year."

It's All About Trust

One of the reasons for the dramatic decline in online ad spend is that customers have lost trust in digital marketing methods. Research shows that 30 percent of consumers disliked digital ads. Why? Slow page-load times, pop-ups and irrelevant content are to blame. As a result, customers are actively avoiding ads. Nearly one-half of all consumers over 60 use ad-blocking programs -- and this group used ad-blockers the least!

In a separate study, only 56 percent of people who understand how websites collect data say they are comfortable with seeing ads based on their past browsing behavior. This number drops among people who don't understand HTTP cookies.

"What do people do when they no longer trust an industry? They take their business elsewhere or do it themselves," says advertising and marketing expert Bob Hoffman in a recent newsletter. "Which is exactly what P&G is doing."

The Shift Toward Experiential Marketing

While digital ad revenue drops, more brands are spending cash on experiential marketing. Research shows that, in the future, marketers could allocate up to 50 percent of their budgets to brand activations and experiences, behavior that highlights the huge shift in overall marketing spend.

The 2017 Freeman Global Brand Experience Study also discovered that 90 percent of marketers think brand experiences boost customer engagement and face-to-face interaction, while 59 percent of global CMOs consider brand experiences as a way to forge ongoing relationships with existing customers. It seems, then, that experiential will dominate marketing over the next few years. If you haven't invested in this type of marketing, you should start soon -- you could generate a huge return on your investment.

The world's largest companies are spending less money on digital ads and more on experiential marketing, according to brand-new research. As customers crave unique experiences over traditional marketing messages, experiential provides you with more bang for your buck.