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Media agencies brace for budget shift

News, 30 January 2017
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NEW YORK: Over the next five years, media agencies will be hit as marketers shift their budgets out of paid media and into improving the customer experience, an industry analyst has predicted.

The US Digital Marketing Forecast 2016 to 2021, from research firm Forrester, expects that total digital spending will reach $118bn by 2021, and that investment in paid search, display advertising, social media advertising, online video advertising and email marketing will account for 46% of all advertising.

But, report author Shar VanBoskirk noted, "marketers are more mature now with capable measurement practices" and are eschewing their earlier "spend on anything to see what works" approach.

Further, "many are dialing back pure digital advertising investment, prioritizing instead non-working investments in data, technology and customer experience".

That shift towards CX – which can include everything from store layouts to shopper personalization – has potentially significant implications for media agencies.

"The days of buying volume are going to reach a point of obsolescence," VanBoskirk declared.

"Media-buying agencies are going to be on the decline," she told AdExchanger. "I don't see how they can sustain without significant reinvention."

She pointed as well to changing media habits – as consumers are now effectively 'always on', the frequency-based strategies often deployed by agencies are no longer appropriate.

"That made sense when you had an hour in the morning and an hour in the evening to reach me," she said. "But [high frequency] pushes past the point of relevance and makes me mad, not happy, about your brand."

VanBoskirk also suggested that programmatic buying would in future incorporate a human element, as marketers look to avoid the sort of mistakes that can see the right ads shown to the right person but in completely the wrong context

Data sourced from Forrester, AdExchanger; additional content by Warc staff

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