Guest comment by Myles Peacock
Despite the economy slowing down, digital marketing industry spend shows no signs of abating. Annual marketing spend is set to reach $4.7 trillion by 2025, with more than $1 trillion due to be spent on digital platforms and tools.
With over a quarter of digital spend going to waste every year – equivalent to more than $20 billion – there is equal opportunity and responsibility for finance leaders to take a bigger role in reducing the heavy flow of money going straight down the drain.
But instead of cutting budgets only for weeds to regrow, what if finance leaders could help reduce waste while actually helping set the foundation for growing revenue?
There’s no doubt that marketing and advertising, especially in the digital space, is a key channel for business growth. But reaching new audiences potentially means having to pay large sums of money to brands and platforms, sometimes for little measurable return – going against everything a finance leader stands for.
Of course investing in marketing and advertising is important, but the current levels of wasted spend are simply unsustainable. Complicated tech platforms, an ineffectiveness to understand data, and duplicated efforts are causing havoc – all of which were listed as possible causes of AdTech giant MediaMath’s collapse earlier this year.
Ad platforms in particular are a big cause for concern. With so many different providers, money is spent in silos, scattered across different geographies, platforms, and brands
The gluttony of software, platforms, and other tools on offer today makes the marketing departments seen in Mad Men look like ancient history. This growing tech stack was supposed to provide marketers with the ability to quickly discern successful campaigns, yet the complete opposite has taken effect.
In an attempt to keep up with the pace of change, businesses have poured significant amounts of money into new technologies – with mixed results. Instead of providing more clarity, marketers have struggled to make sense of the different and often disconnected data streams they’re being presented with.
As a result, adverts and marketing campaigns are becoming less successful and more confusing and certainly not improving the total customer experience. Ads appearing on clickbait websites are a growing problem. These websites typically feature low-quality content and intrusive ads, and only serve to maximise ad revenue for the site owner rather than advertisers – yet 15% of ad spend is still spent there.
However, with marketing spend data existing mostly at an aggregate level, unable to provide granular detail or even proper receipts, it’s extremely difficult to determine where unnecessary spend can be reduced.
Without the proper guidance and connections between platforms, content, and audiences, investments will continue to go to waste. In order to start presenting better value for money, marketers need assistance from a set of colleagues who have the necessary capabilities.
The average marketer uses six different tech platforms – from content and planning to ad buying and measurement – not all of which integrate well
Whether it’s office operating costs or energy bills, the finance officer must oversee all aspects of spend within the business. So, although a daunting task, surely there’s no one better placed to put in new measures that can reduce wasted marketing spend?
Their first step is to solve the fragmentation issue. The average marketer uses six different tech platforms – from content and planning to ad buying and measurement – not all of which integrate well.
Ad platforms in particular are a big cause for concern. With so many different providers, money is spent in silos, scattered across different geographies, platforms, and brands. Both marketers and finance leaders are almost completely in the dark when it comes to money spent.
Rather than adding more tools and bits of software to connect these, finance leaders should instead focus on streamlining tech stacks. Not only can operating costs be reduced, but marketers also gain the ability to view and analyse all of their data streams in one place.
According to a Forrester and Investis Digital report, a more connected tech stack can reduce ad waste by 47%. More importantly for finance leaders, 59% of marketers said they’d experienced an increase in company revenue when their platforms were in sync.
The other side is better governance, as putting in place measures that can reduce the risk of waste and better hold marketers to account would also help reduce the levels of waste.
Marketers are not at fault for trying to keep up with fast-moving trends, but doing so has helped create a mess that has rapidly got out of hand
For example, holding marketing departments responsible for their own financial budgets and targets, as well as demanding regular visibility into advertising effectiveness, can change the way money is spent. Decisions instead will be based on getting better value for money, rather than strategies that are based on estimations and best guesses.
Data-driven decision-making is a key part of reducing wasted spend, and the monitoring of marketing and ad spend also needs to be a more regular process. Whereas some will only see performance reports every quarter, stitching platforms and data together means they can view each campaign whenever they wish and make decisions based on almost real-time information.
These changes require a fine balancing act between reigning in spend and still being able to drive growth. But if marketing and finance leaders can find the perfect middle ground, the results will soon speak for themselves.
Unlikely heroes: How we can help
During economic downturns, businesses can ill afford to see their investments going to waste. But addressing the issues created by the transformational changes of digital advertising is no easy task, while cost-cutting measures will only stunt growth.
Marketers are not at fault for trying to keep up with fast-moving trends, but doing so has helped create a mess that has rapidly got out of hand. Rather than sweeping it under the carpet, finance leaders can help clean up waste and bring systems together for the benefit of marketers, the wider business, and their audiences.
By bringing technology, data, and people together, they can become the unlikely heroes marketers are in desperate need of.
Myles Peacock, CEO at Investis Digital (iDX)