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US ad agencies spend a greater share of budgets on branding campaigns than UK counterparts

Once just a sliver of all online dollars, US online ad spending on branding-based objectives now accounts for a significant—and growing—percentage of total online ad spending.

According to eMarketer, US online ad spending on branding-based objectives accounted for $12.4 billion in 2011, or 39% of total online ad spending. Branding-based online ad spending will continue to rise over the next few years, and by 2016, eMarketer predicts it will more than double to $26.66 billion—or 43% of all US online ad spending.

Findings from Maxifier show US agencies narrowing the gap in budget allocation for branding vs. direct-response objectives, as compared to their UK counterparts, which invested much more heavily in direct-response campaigns. US ad agencies’ budget allocation for online branding and direct-response campaigns were 43% and 54%, respectively, in Q4 2011, according to the publisher solutions provider. UK ad agencies reported just 31% of their clients’ ad budgets allocated to branding-based objectives, vs. 67% for direct response.

Despite growing investments in branding, US and UK ad agency clients still placed great importance on clickthrough rate for measuring display advertising success—for both direct-response and branding objectives. Given that UK ad agencies invested more in direct-response objectives, it’s not surprising that they emphasized direct-response success metrics such as cost per conversion and cost per lead. Though US clients also valued such metrics, measured brand engagement was more important than both cost per lead and clickthrough rate. Agencies in both countries placed equal importance on measured brand awareness.

Many in the industry are pushing to oust the click from the online branding measurement arsenal, yet the continued emphasis on clickthrough rate suggests it will stick around for a while. Though US ad agencies measure their efforts based on such a metric, they often benchmark publisher performance to the publisher’s ability to offer greater campaign efficiency, factoring in the benefits often found in more programmatic methods of buying ad inventory, like through an ad exchange.

About a third (32%) of US agencies rated audience targeting extremely important when measuring a website’s effectiveness at generating brand awareness. Price and conversion rate were also extremely important, at 27% and 26%, respectively.

These trends reflect brand marketers’ growing desire to reduce lost impressions and make sure ad dollars are not wasted, as they build branding awareness online through reach, frequency and scale. Though such factors are often important for direct-response marketers—particularly for those purchasing inventory from ad exchanges or demand-side platforms, it appears brand marketers, too, value these technological capabilities.

Premium publishers have been at odds with ad exchanges and other programmatic buying platforms since their inception, but as demand for more efficient methods of purchasing inventory continues to grow, publishers may need to look carefully at their own advertiser offerings.


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