The market for digital advertising is growing rapidly, as sellers seek to reach people where they spend most of their time.
A report conducted by IAB and PricewaterhouseCoopers found that mobile ad spending overtook non-mobile advertising during the second half of 2015, with total ad revenue surpassing $20 billion. Digital video ads have been particularly successful. eMarketer reported that spending on these ads in the U.S. will experience annual double-digit growth through 2020. By comparison, spending on traditional TV ads is only expected to grow by about 2 to 2.5 percent each year.
But is all this investment having the desired effect? At least one study conducted in Europe suggests that digital advertising may still leave much to be desired, especially for the consumer packaged goods industry.
Nielsen's Digital Ad Revenue service examined ads in France, Germany, Italy and the U.K., and found that 48 percent of them did not reach the intended audience in these countries, according to a report by CNBC. This is despite the fact that nearly $40 billion was spent in the European market in 2015.
The report added that the CPG sector fared particularly poorly, with only 42 percent of digital ad campaigns reaching the correct audience. In fact, CPG companies had a particularly difficult time bringing in younger audiences. While 54 percent of ads reached the targeted 35-to-64-year-olds, only 44 percent reached 18-to-34-year-olds.
For marketers, it is still fair to ask whether a lackluster digital advertising performance is superior to more traditional methods. Barney Farmer, Nielsen's marketing effectiveness director in the U.K. and Ireland, believes that this is still the case.
"[I]t's more precise than traditional media and performance is improving all the time, particularly on mobile whose superiority in reaching narrower audiences reinforces its status as the most highly personal ad medium," he told CNBC.
But if the CPG industry is going to take advantage of the narrow targeting abilities afforded by digital advertising – especially on mobile – companies must leverage their consumer data to create more effective product promotions. They need to collect data from multiple sources – such as shopper surveys, sales data and coupon programs – and dig deep into the information to identify those potential pockets of growth that have thus far been missed.
Interactive Edge offers a number of creative ways to get the most out of your data and meet the many challenges that your business will face when it comes to commercializing insights across your customer base. Check out the rest of our website to learn more about the services we offer to our clients.