Great piece Omar. Online advertising is growing because it's not only pulling spend away from 'traditional' advertising. It's competing for spend with shopper and channel marketing, commercial real estate, particularly for retail (there is some great academic research out there quantifying the amount of value in the commercial property sector that has transferred from rent growth to online advertising), in the case of Chinese businesses operating beneath the de minimus price point - its spent in lieu of setting up local subsidiaries in their markets (like the UK) and ultimately domestic industrial jobs due these adverts being a lubricant for globalisation.
Thanks! And yes you make an important point that something else new (historically new) has happened: the growth figures we are now seeing are being quietly inflated by things which didn’t used to be counted as adspend.
First, to your point, retail media. A chunk of what’s now counted as adspend is trade marketing money that used to sit in a different budget, so not new money, but reclassified money migrating onto Amazon’s platforms and getting counted as advertising growth.
As for China… yes Temu and Shein have become the biggest spenders on Meta and Google. That spend is less about selling things to people and more about exploiting a tax loophole i.e. cheap parcels from China flying under the radar of import duties. You wonder why the UK has not followed the US in ending this loophole, but now we’re really going off topic!
In short: the ruler isn’t just measuring the wrong thing. It’s also picking up signals it was never designed to read!
Agree this is a very good article. But I feel it is building on sentiment which has long been voiced by many people. The question must now be why do marketers seem so blind to this (beyond the fact that ROI can be ‘proven’ so easily with digital media). They’re not stupid. They know the arguments. Why won’t they act!!?
Hi Andrew - I completely agree! But it’s about incentives. What keeps them in work, let alone be seen to do a ‘good job’. I was amazed when covering a major report in 2020 on huge amounts of programmatic ad money going missing (let alone effectiveness)- the general response was there is systemic FOFO (fear of finding out). Who wants to tell the CFO “sorry but look how much money we’ve been wasting!” Corporations need to make sure marketers are incentivised to act, otherwise marketers will rationally act in their interest.
Thanks for the reply. You’re right but you shouldn’t be. I wrote several reports on this when I was at Ipsos as far back as 2016 warning of the threats from programmatic including the fact that almost nobody counted as being exposed to an ad was likely to have seen it while the whole ecosystem was rife with fraud and the threat of unsafe brand environments. Nobody reads the reports, so the madness will continue I suppose until something hits the fan. Good luck with fighting the good fight!
Great piece Omar. Online advertising is growing because it's not only pulling spend away from 'traditional' advertising. It's competing for spend with shopper and channel marketing, commercial real estate, particularly for retail (there is some great academic research out there quantifying the amount of value in the commercial property sector that has transferred from rent growth to online advertising), in the case of Chinese businesses operating beneath the de minimus price point - its spent in lieu of setting up local subsidiaries in their markets (like the UK) and ultimately domestic industrial jobs due these adverts being a lubricant for globalisation.
Thanks! And yes you make an important point that something else new (historically new) has happened: the growth figures we are now seeing are being quietly inflated by things which didn’t used to be counted as adspend.
First, to your point, retail media. A chunk of what’s now counted as adspend is trade marketing money that used to sit in a different budget, so not new money, but reclassified money migrating onto Amazon’s platforms and getting counted as advertising growth.
As for China… yes Temu and Shein have become the biggest spenders on Meta and Google. That spend is less about selling things to people and more about exploiting a tax loophole i.e. cheap parcels from China flying under the radar of import duties. You wonder why the UK has not followed the US in ending this loophole, but now we’re really going off topic!
In short: the ruler isn’t just measuring the wrong thing. It’s also picking up signals it was never designed to read!
Thanks so much for reading.
Agree this is a very good article. But I feel it is building on sentiment which has long been voiced by many people. The question must now be why do marketers seem so blind to this (beyond the fact that ROI can be ‘proven’ so easily with digital media). They’re not stupid. They know the arguments. Why won’t they act!!?
Hi Andrew - I completely agree! But it’s about incentives. What keeps them in work, let alone be seen to do a ‘good job’. I was amazed when covering a major report in 2020 on huge amounts of programmatic ad money going missing (let alone effectiveness)- the general response was there is systemic FOFO (fear of finding out). Who wants to tell the CFO “sorry but look how much money we’ve been wasting!” Corporations need to make sure marketers are incentivised to act, otherwise marketers will rationally act in their interest.
Thanks for the reply. You’re right but you shouldn’t be. I wrote several reports on this when I was at Ipsos as far back as 2016 warning of the threats from programmatic including the fact that almost nobody counted as being exposed to an ad was likely to have seen it while the whole ecosystem was rife with fraud and the threat of unsafe brand environments. Nobody reads the reports, so the madness will continue I suppose until something hits the fan. Good luck with fighting the good fight!