Digital marketing spend to hit $120B by 2021 (but only on things that work)

John Koetsier

EMEA Partner Summit

Digital marketing spend will reach $120B in the U.S. alone within four years, says Forrester. But there’s a catch to this healthy 11% annual growth rate.

CMOs are savvy now, and they’re only spending on things that work.

“This is not the experimental ‘spend on anything to see what works’ investment that we saw between 2008-2012,” says Forrester analyst Shar VanBoskirk. “Marketers are more mature now with capable measurement practices. This means they will spend judiciously on just what works for their goals.  And many are dialing back pure digital advertising investment, prioritizing instead non-working investments in data, technology and customer experience.”

Are you seeing what you need in your mobile analytics solutions?This is a big deal.

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But it’s far beyond us. What it means is that now marketers know what levers move which metrics. And — more than metrics — what digital marketing and advertising spend will result in revenue.

Increasingly …  that even extends to how much revenue.

In other words, the digital marketing black box is opening up. The wizard’s curtain has been torn in half. And marketers no longer have to operate on hope, faith, and, if they’re lucky, a wing and a prayer.

The result, according to Forrester?

“Working budgets will give ground to non-working ones,” says VanVoskirk.

A “working budget” is a detailed projection of how much money you’ll spend in given areas. Working budgets make sense from a planning perspective, but don’t make sense when you can measure impact in near real time and use recent relevant data to predict future returns with a high degree of accuracy. If your video ads are returning 400% ROI, for example, but your display investments are returning negative ROI, smart digital marketers will have both the capability and the technology to refocus, re-route investments, and adjust in hours or days, not weeks or months.

And if you learn that one digital marketing investment is virtually a guaranteed money-maker, why turn off the spigot and limit your upside, just for the sake of sticking to a budget?

Forrester also highlighted where the big growth in digital marketing is coming from:

  • Online video will jump 18% year-over-year until 2021
  • Display will jump 13% year-over-year

Part of the reason?

Digital natives are coming of age. Millennials will be 18-35 years old this year, and they’ll start establishing careers, buying houses, and building families. They spend $600 billion each year, says Forrester, and that number is only going to rise. And they shop online, they buy via mobile, and own 5.5 connected devices, on average.

Which means: if you want to meet your customer where she’s at … go mobile, either in apps, or the mobile web.

The key point in Forrester’s new report?

“Over the next five years, marketers will invest in quality over quantity.”

John Koetsier

Before acting as a mobile economist for TUNE, John built the VB Insight research team at VentureBeat and managed teams creating software for partners like Intel and Disney. In addition, he led technical teams, built social sites and mobile apps, and consulted on mobile, social, and IoT. In 2014, he was named to Folio's top 100 of the media industry's "most innovative entrepreneurs and market shaker-uppers." John lives in British Columbia, Canada with his family, where he coaches baseball and hockey, though not at the same time.

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