“Advertising is dying. Advertising is dead. Advertising doesn’t work.”
A common theme. A common rant. It’s fine to think that advertising doesn’t work. It’s fine to question it, in a world of spam, terrible infomercials, 30 second spots that are horrific, or by the amount of paper that gets popped on to our doorsteps to buy stuff on a daily basis. It is true that not every piece of advertising is a piece of art (in fact, the opposite). Still, the data does not lie.
Advertising growth is about to hit a record high.
“The U.S. advertising market is expected to grow at its fastest rate since 2010 – nearly 6%. Upgrading its earlier forecast, London-based advertising researcher Warc says U.S. ad spend will rise 5.8% to a record high of $178 billion – double the amount projected for the overall U.S. economy. A previous December forecast had estimated the U.S. ad market climbing 4.9% for 2016.”
What are the factors at play here?
To put this number into perspective, the United States is the world’s largest national economy in nominal terms, and second largest according to purchasing power parity. It represents over 20% of nominal global GDP and 17% of gross world product. The United States’ GDP was estimated to be just under $18 trillion as of Q2 2015. In short, $178 billion is a huge part of the economy, not to mention how much advertising dollars plays into actual purchases. Meaning, imagine what the GDP would look like if the advertising dollars were not there, plus its ability to drive actual sales. The numbers would be horrific. In short: advertising has a significant role in our economy (whether you like ads or not). Many might take exception to making the correlation between advertising spend and its efficacy. That’s a fair debate, but I would argue that at this scale, it has to work. If it did not provide factual business results, it would not be growing at scale. It would remain stagnant or it would be shrinking as the years wane on. That being said, the growth could be fear-based. There may be a business sentiment that tough times are around the corner, so spending now and grabbing market share is the right strategy to ensure a tougher future. Others might argue, that if trouble is around the corner, a business might hold back or reduce ad spend to save those chestnuts through the tougher winter. The other two (and very important factors) that are driving this year’s growth were the Olympics and the Presidential campaign.
And, how is digital advertising doing?
From the article: “U.S. digital media spending will grow at over double the rate of TV – 13.7%. Overall, Warc says digital media will achieve near the same dollar value of the TV ad market this year – and rising above TV next year.” These are the moments that I could only have dreamt about twenty years ago. In 1999, I would sit, stare and wonder at my computer screen if these little banners and search-triggered ads would ever amount into anything. TV was so dominant. And, here we are. If you think about the advertising landscape, it’s hard not to be amazed at the many ways advertising has changed in such a short while. From email and search to display and native, it’s amazing. The analytics, optimization and general marketing tech landscape is almost impossible to track. A new generation of startups, the evolution of traditional firms and the invention of new jobs, responsibilities and opportunities. Young people are eager to enter into this industry.
Advertising is alive and well and… growing…