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Abu Dhabi, UAETuesday 11 December 2018

Rise in digital marketing pushes global spending close to $100bn 

Major brands in the UK and US last year increased spending on the segment by 44%, a study finds

Proliferation of mobile phones has enabled a new class of payment services to reach populations that were previously excluded, the IMF says. Jeff Topping / The National
Proliferation of mobile phones has enabled a new class of payment services to reach populations that were previously excluded, the IMF says. Jeff Topping / The National

Major brands in the United Kingdom and the United States last year increased spending on digital marketing by 44 per cent to $52 billion (Dh191bn), raising the size of the segment - martech - to around $100bn, according to a new study.

The British and European brands are spending about 23 per cent of their budgets on martech, up from 16 per cent 12 months ago, global accountancy Moore Stephens and advertising consultancy WARC said in their joint annual Martech Report.

The study surveyed more than 800 UK, North American, Asia-Pacific and European brands and agencies. Brands in Europe, excluding the UK, are most optimistic of the market outlook and nearly 63 per cent of them said they expect to increase their martech budget next year.

Looking at the global market, those who said their budget will increase, expect to see an average rise of 13 per cent. Around one in five expect increases of more than 25 per cent in their martech budgets by 2019, according to the report.

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“Investment in martech has reached a tipping point over the last 12 months. Established marketers in disrupted industries, such as insurance and financial services, realise they need to invest if they are to future-proof themselves, and view martech as a key area of investment,” said Damian Ryan, partner at Moore Stephens. "Just look at Nationwide Building Society’s recent announcement of £1bn investment in technology. Staying relevant is key, but taking on the new breed of competitors – such as Revolut [a digital banking alternative company] is creating a big rethink.”

Instead of placing ads through intermediaries and third parties, martech allows brands to target their client base directly through search engines and social media, which undermines the relevance of agencies that have done the job for brands in the past.

“Clearly marketers are seeking to build in-house strength and are set to spend more on martech to remain competitive," he said. "Our research finds that this budget is coming from media spend and will have a resounding impact on the value of media-centric agencies."

Interestingly, brands in the UK and North America are particularly keen to spend on in-house technology development.

On a global scale, email remains the most likely avenue for martech in terms of specific technologies behind the market expansion, used by 79 per cent of marketers. It was closely followed by social media, with 77 per cent. A further 18 per cent expect to use social media platforms in the next 12 months, the report said.