With growing consumer demand for faster and more convenient online shopping experiences in the world of eCommerce and the widespread adoption of technology and software – digital marketing is ripping up major headlines as the global industry is poised to be worth more than $786.2 billion by 2026 according to latest estimates.
As consumer habits have shifted from traditional means of marketing and ad campaigns such as television, billboards, magazines, and radio, digital marketers are rapidly adjusting their scope of practice, looking to bring businesses online through innovative strategies and drive meaningful Return on Investment (ROI).
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The rapid digitization of the world, from social interactions, communication methods, business transactions, and online shopping has placed stress on traditional means of advertising and marketing.
A survey conducted by Christine Moorman, a senior professor at the Fuqua School of Business found that Chief Marketing Officers (CMOs) have on an average increased marketing budget to more than 13% of the company revenue between 2020 and 2021. Some Business-to-Business (B2B) companies allocate 10%, while B2B service companies allocate 16% of total revenue towards marketing and digital advertising.
Current estimates give major interest for CMOs and digital marketing executives to step up their budget allocation, but at the same time leveraging digital tools to measure target audience metrics to ensure increased returns on their initial investment.
To shed more light on the current condition of the industry, CEO and founder of Vindicta Digital Marketing Agency, and entrepreneur James Blake gave insight into how the macroeconomics surrounding digital advertising is transcending the world of business into the next generation.
Big Budgets Are Crushing It
Small businesses and startups are realizing the opportunities of bigger marketing budgets too late, as rapid modernization and adoption of new tools and features are quickly driving up prices and service costs.
On average, one-third of small businesses tend to spend around $10,000 per year on marketing, with some more established small-medium enterprises willing to go above the $35,000 threshold.
Even for small businesses, spending more than 7%-8% of their gross revenue on marketing can be a tight sum of money that could easily be allocated towards set-up costs, wages, or purchasing stock.
“As a business owner myself, and speaking for those who are operating in unprecedented times, we need to realize that there’s been a major shift in consumer culture and overall behavior since the outbreak of the pandemic. Those businesses who were able to adapt towards a digital standpoint were not only able to survive, but tap into a whole new market of customers which they have never reached before,” said Blake.
Statistics show that in February 2020, the percentage companies were spending on online marketing efforts increased to more than 13.2%. By February 2021, that percentage was up to more than 16.2%, while traditional advertising spending climbed by 2.9%.
It’s of course not completely possible for small companies and startups to allocate a double-digit percentage of their revenues towards digital marketing within the first few months of opening, but Blake feels that these SMEs should consider the long-term return of their investment.
Digital Is The Way Forward
Even though many businesses are still trying to reposition themselves after a tumultuous two years of operations, Blake is a strong believer that looking forward, digitization in forms of marketing and advertising would be essential to their survival.
A report series published in early 2021 revealed the astonishing rise of the internet and social media users across the world. As of January 2021, 53.6% of the global population were social media users, while active internet users made up more than 59.5% of the total global population.
These figures are not only a positive outlook on how some developing areas are undergoing mass urbanization and digital ratification; it’s looking to show that companies of all sizes and industries are now able to penetrate both their surrounding and global consumer market.
James Blake’s company, Vindicta Digital was able to boast $62.7M in online revenues in 2020 alone since its inception in 2016. For Blake, this was not his only major milestone achievement, as he’s since gone on to become a recognized industry leader and has founded multiple other businesses throughout this time.
“Our success as a business, whether it’s in the tech or marketing industry lies within the people and their drive to innovate, and that’s what’s pushed us to help clients around the world to establish their online presence.”
Blake says further, “whether you’re a new business, or perhaps a startup that’s soon they reach the one year mark, online representation is without a doubt the future, and we can see this with our clients, and how digital marketing has helped them penetrate larger target audiences both within their direct vicinity and abroad.”
Correlations between the retail media sector, eCommerce platforms, and the overall advertising industry are now becoming a key indicator to businesses that while traditional and more standard models of marketing exist within their realm of practice, the future will mainly consist of digital endorsement.
Stock Markets Roaring With Opportunity
Yet, while companies are pursuing a more advanced route to ensure that digital marketing practices stand out among leading competitors, there’s a growing opportunity for investors and traders on the stock market concerning advertising stocks.
Alphabet Inc. (NASDAQ:GOOG) has contained a lionshare of the stock market in recent years, as the main hub for advertising and digital marketing practices. Google has trailed record number of sales, bringing in more than $50 billion within the first few months of 2021.
For something a bit more digestible, investors are also looking towards public companies such as Magnite, Inc. (NASDAQ:MGNI), reporting quarterly earnings of more than $82 million which saw share prices increase by 1.5% earlier this year.
Groupon, Inc. (NASDAQ:GRPN) is available in more than 500 cities across the world, and with global brand recognition, share prices have been trading quite humbly in recent years, with J.P. Morgan valuing assigning stock prices at $48 per share.
“There are billions being actively traded in advertising shares on the stock market, and it’s looking immensely lucrative as demand keeps increasing and product innovation takes shape,” according to Blake.
Share prices are not only suitable for intra-day or retail investors, but are popular additions to for the establishment of a diversified portfolio, and hedge fund managers are seeing less risk, with better investment opportunity.
Ad Markets Revenue At Its Pinnacle
The pace of the digital advertising market, not just in the United States, but globally is quickly reaching a pinnacle of increasing success.
Companies such as Google, Facebook, and Amazon are all trailblazers when it comes to dominating the global digital advertising industry. In August 2021, Walmart, after launching Walmart Connect saw its ad business grow by more than 95% compared to the year before, with active advertisers growing by 170% compared to August 2020.
But while the three power players, Google, Facebook, and Amazon still reign supreme, companies in retail, including Walmart have found digital advertising as a hidden potential.
Blake comments that “small stakeholders have the opportunity to reap in double, or even triple-digit returns with the use of digital advertising, it’s all about how well they execute their strategy or marketing plan. There’s so much hidden potential in the online world, and whether you run a bakery, a salon, or even an electric scooter company, getting the word out is vital to ensure you establish yourself among other market competitors.”
It may seem as if major corporations and medium-sized businesses that are better established have access to marketing tools to help drive sales and increase profits. But in reality, there’s a handful of online tools that have been made available to ensure an even playing field among businesses in the online world.
“If you do it yourself, it requires time, if you ask a professional, it will cost you money. You will need to sacrifice either or, and I think that’s where most business owners tend to lose the plot a bit,” the CEO said.
The Bottom Line
Digital marketing is now bigger than ever, and the advancements in technology and software have made it possible for companies, startups, and entrepreneurs to rise to the occasion and take advantage of the digital innovation that’s now pushing the advertising industry into a whole new era of modernization.
Companies are spending billions each year to get the right message across to the right group of consumers, and it’s helped them find themselves in their marketplace, and establish an online reputation that is set to last for years to come.
So whether we can imagine what the future of digital advertising will look like or not, it’s already predominantly clear that the money companies are pushing into online marketing is fueling a billion-dollar industry that’s helping to connect brands and people.
Updated on Apr 19, 2022, 4:06 pm