Digital Advertising Takes a Hit

Digital Advertising Takes a Hit
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Since its infancy in the 1990s, the digital advertising industry has trumpeted the special power of digital ads. Unlike newspaper or television ads, online advertising can be aimed precisely at the very people a company wants to reach, so businesses won’t waste money by showing ads to those consumers outside predetermined parameters.

Then last year Procter & Gamble’s chief marketing officer, Marc Pritchard, declared that the company would pull back on ad targeting on Facebook. One of a number of recent announcements by Pritchard regarding P&G’s dissatisfaction with digital advertising, the news led some to question the value of digital advertising’s distinguishing characteristic: its capacity to target narrow segments of the population.

P&G’s reëvaluation of its approach is part of a trend that appears to be growing among advertisers, says Tom Riordan, special operations consultant at Adobe Advertising Cloud, a platform that helps advertisers manage ad strategy and measurement (see “The End of Internet Advertising as We Know It”).

The movement has yet to show up in the overall numbers, however, as digital ad spending continues to climb. Research firm eMarketer predicts that U.S. digital ad spending will experience double-digit growth from $83 billion this year, or about 40 percent of the overall projected $206 billion that will be spent on all advertising in 2017, to more than $129 billion in 2021. Typically, the more targeted the ads, the higher the prices.

The types of digital targeting that can boost ad prices vary widely. Targeting allows businesses not just to advertise a pair of shoes or an SUV someone just looked at online but to aim ads based on geographic, demographic, and psychographic data (see “Has Big Data Made Anonymity Impossible?”). Or audience targets can be narrowed based on data from a wide variety of providers, such as information about previous purchases or about the current weather in a consumer’s location.

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