The internet has made it possible for marketers to reach a global audience in real-time, at a lower cost than ever before.

Digital advertising involves using digital channels like search engines, social media, email, and websites to reach consumers directly.

This form of marketing is widely used by businesses to reach their target audience quickly and efficiently. So, it shouldn’t come as a surprise that digital ads are all set to surpass traditional ad spend.

Digital Advertising vs. Traditional Advertising Landscapes

Digital advertising is a more direct form of advertising than traditional advertising.

It allows businesses to reach their target audience in a more efficient and cost-effective way than traditional media.

Traditional ads use offline channels, including television, radio, newspapers, and magazine ads, among more.

Traditional media is effective at reaching the broadest audience because they have the widest reach, which is what makes it so expensive.

Digital advertising offers numerous benefits over traditional media for businesses:

Always accessible: Digital is accessible 24/7/365 from any computer or mobile device with internet access. It is almost everywhere you want it to be. No time restrictions, unlike broadcast or newspaper ads. If your user is active, they will see your ads.

Targeted: You can create a custom digital campaign for each customer segment by using unique data like email addresses, demography data, social media profiles, and more.

Cost-effective: Digital advertising is cheaper than many other forms of marketing because you pay for every click or impression you generate. Traditional advertising is more expensive because it communicates with everyone at the same time, unlike digital ads, which speak to one prospect at one time.

Digital Advertising Spend has Crossed $600+ Million in 2022, Projected to Grow More by 2026

Have you wondered how much do companies spend on advertising? According to Insider Intelligence, two-thirds of the global ad spends will be on digital channels. That’s more than a 15% increase when compared with the previous years.

In 2021, the digital ad spending worldwide was 521.02 billion U.S. dollars. This year, it is 602.25 billion U.S. dollars and is said to be growing at roughly 3% each year.

By 2027, mobile advertising will account for 72% of total ad spending on digital channels with search ads taking the helm. Safe to say, if you aren’t prepared for mobile, you aren’t in the same competition as your fellow businesses.

Distribution of Digital Advertising Spends across Channels

Advertising spend channels

As mentioned above, search ads will be the main format of digital ads in the U.S. They already enjoyed 40% of the total ad spend in 2021 and will continue to do so in the coming years.

The reason for this is that search ads are the most effective ads. Since they aren’t intrusive and are only displayed when the prospect is looking for them, they enjoy a high clickthrough rate and are deemed less invasive by users. In fact, 75% of users like search ads because they make it “easier to find the information they are searching for.”

In 2022, search ads account for $116.50 billion of the total ad spend in the United States. So, if you want to stay in the game and in front of your prospect’s screen, you need to be one of those 72% of businesses and start spending on advertising sooner than later.

Video advertising is the second-most invested format of digital advertisement this year with an $81.05 billion share in the total ad spend. This is because videos have a nearly 90% chance of converting viewers into leads or paying customers due to their engaging nature.

To much of everyone’s surprise at how much do companies spend on advertising, banner advertisements are the third-most invested digital ad format with a $61.01 billion share, followed by classified ads at the remaining $2.54 billion.

Businesses are also investing in social media advertisements in 2022. 31% of all digital ad spend is being invested in social media channels, such as Facebook, Instagram, Twitter, Pinterest, and more. But given their popularity and the amount of returns generated from search ads, brands seem to be inclining toward pay-per-click or PPC search ads than social media ads.

Why is Digital Advertising Spend Increasing?

Digital ads have a major leg up over traditional ads. They provide faster conversions and extreme segmentation opportunities, allowing you to maximize your ROI every time.

But that’s not all. Here’s why businesses are moving towards spending on advertising through digital ads.

The Sudden Emergence of a Global Pandemic

The one thing that the coronavirus lockdowns taught us is that we are not prepared for a global economic takedown.

Neither do we have sufficient resources nor the infrastructure to carry out our business from home. Yet, one thing that kept us going was the internet.

While people were forced to coop up in their homes, advertisers had no choice but to reach them in their homes. Television and newspapers are two of the biggest contributors to traditional ad spend but both of these channels experienced long-term downtime due to restrictions.

With television, newspapers, OOH, radio, and flyers out of the picture, the traditional ad industry was crippled. As a result, businesses began to invest in digital marketing and measuring their ad spending. It was cheap, targeted, and didn’t require anybody to break any social distancing rules.

Moreover, televisions, OOH, and newspapers are expensive channels to invest in. Most businesses have been facing a capital crunch ever since the pandemic hit us and investing in traditional media doesn’t seem like a sound business decision, especially considering how slow the conversion process is.

A Rise in Technological Advancements

The internet has allowed us to build a virtual infrastructure that has made doing business significantly easier. Businesses have countless platforms to engage with their customers and persuade them to take action.

Social media networking platforms, analytics and SEO tools, automation software, and AI-based programs are all making it easier than ever to run a business smoothly.

When combined with digital ads, these pieces of technology provide you with both the bird’s-eye view and the worm’s-eye view.

In other words, you can analyze your ad campaigns and spend from every angle possible to optimize them and get the most out of your investment.

Since that is one of the biggest restrictions in traditional advertising, the global attitude of businesses towards digital advertising spend is rapidly changing.

A Shift in Consumer Behavior

As consumers become smarter, digital is the only way to cater to their needs. They want things fast and at their fingertips.

And even if they step out to purchase goods, more than 70% of consumers would still look up a business’s website to do their research before buying something.

Having a digital presence is crucial. And online ads just make it a tad easier. People see your ads online, click on the CTA link, and make a purchase. The entire customer journey requires a single marketing funnel that’s located in one place.

Unlike digital, traditional ads don’t have the same convenience. For instance, a prospective consumer will have to see your ad on a billboard, take out their smartphone to do the research, and then either visit your physical store or go to your website to make the purchase.

These additional steps can make traditional ads seem less appealing to your target audience.

Increase in Online Businesses

It is true that local businesses will never run out of customers. There will always be competition among brands on the local level and having a local presence in the neighborhood will continue to be an integral part of growing businesses.

Having said that, there is a reason why having a global appeal is so vital in today’s landscape. The competition is taking place on digital platforms.

Countless brands are competing for their target audience’s attention on online channels because that’s where the customers are the most active. So, if your business is not participating online, it isn’t in the competition.

Since digital ads are the best way to provide your brand with that instant exposure, businesses are moving away from traditional ads and towards crafting an ad spend strategy.

The Convenience of Data Utilization

This is probably the best part about choosing digital ads over traditional ads. Not only can you store customer information but you can also utilize this information to create data points for future campaigns. And managing this data is a cakewalk, too.

You can sort your data by preferences, geography, age, income, gender, and much more to find the ideal customer for your business and directly target your advertisements at them.

Digital ads allow you to get up close and personal with your audience. They enable you to communicate with them individually using customization, so you can configure your campaign per each segment’s liking and get more conversions out of it.

The Takeaway

With this explosive growth comes some very real challenges for marketers: Targeting consumers more effectively and efficiently; measuring ROI; and integrating digital marketing with traditional marketing channels including sales, events, and customer support.

That’s when you need professionals to your rescue. Reach out to Signa Marketing to make managing your online presence a piece of cake.

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