Digital advertising is on the rise for New Zealand retailers, aided by e-commerce, but television is still king. Will retailers soon have to make a choice between the two?
Retail advertising figures released by global publisher of advertising spend Standard Media Index (SMI) show that digital advertising in New Zealand is growing rapidly, while traditional mediums are waning. The data puts the New Zealand retail industry’s spending on digital ads at almost $15 million, which represents a growth of 40 percent from 2013.
TV advertising still comes out on top for retailers, but a recent report from the Internet Advertising Bureau says three quarters of advertisers predict digital video will be as important as TV within five years.
Figures from SMI, a worldwide independent publisher of media agency ad spend, show that the New Zealand retail industry’s spending on digital ads hit almost $15 million in 2014.
This represents growth of 40 percent from 2013, and the figure has more than tripled in 4 years. Digital ad spend in 2011 was only $4.6 million.
While digital advertising continues to grow in strength, traditional print mediums, such as newspapers and magazines, are declining.
Newspapers have taken the biggest hit, dropping 17.4 percent from 2013, while magazines have suffered a smaller loss, dropping 6.9 percent.
TV ads are still the highest spend for retailers, to the tune of $77 million in 2014. That number has decreased 3 percent from the previous year.
Digital advertising’s popularity spans the globe. Retailers in the United States spend the most money on paid digital media out of any industry.
According to a report by marketing resource e-Marketer, US retailers spent $11 billion on digital ads in 2014. The number is predicted to reach $17 billion in 2018.
E-Marketer says retail’s growing investment in digital media is due to the rise of e-commerce and customers wholeheartedly embracing shopping online across multiple devices.
Ben Goodale, managing director of retail advertising agency .99 and direct marketing agency justONE, has worked with retailers such as Farmers, New World, Warehouse Stationery and Ziera shoes.
He says the popularity of e-commerce creates an advantage for retailers who use digital advertising, as ads can be a pathway to an online purchase or a way to satisfy shoppers who have researched online before buying in the bricks and mortar store.
However, it’s not only e-commerce retailers have to consider, he says, but also mobile commerce.
According to the e-Marketer report, the US retail industry’s digital ad spend was 37 percent for mobiles and 63 percent for desktops last year, showing how the digital ad landscape is changing.
On a local scale, mobile traffic growth data from Statcounter Global Stats suggests by 2017, Kiwis will be researching and buying on their mobile devices more often than on their desktops.
“Retailers who have labored to get to a basic e-commerce solution need to be pushing themselves to ensure they are mobile first, otherwise they are going to lose out on a massive amount of eyeballs,” Goodale says.
Graphic – Eddie Monotone
According to a 2014 Sapere Research Group report on the value of internet services to New Zealand businesses, aside from their business website, the main outlets retailers used to advertise online were Twitter, Facebook and Google’s AdWords.
Some of the benefits of digital advertising mentioned by interviewees were the ability to track online advertising, such as email and ad campaigns, as well as monitoring clicks and receiving information about the source of sales.
Goodale says their retail clients are growing more interested in the data surrounding shopper behaviour, which his team is working to accommodate.
“The big thing is going to be data-driven campaigns using big data to understand customers’ path to purchase, and passing them new relevant content along the way,” he says.
Some of the retailers the Sapere research group spoke to said that the popularity of digital advertising has made it increasingly harder to stand out from the crowd.
One interviewee said the AdWords she previously bought for her company had gotten too popular and too expensive for her to afford.
Despite digital’s growth, Goodale says it’s still in a “transition phase”, as retailers still rely heavily on traditional media.
He says TV and letterbox advertising are still the most popular choices for major retailers, as they have mass reach and drive home the urgency of their message to customers.
However, a report from the Internet Advertising Bureau states that 75 percent of advertisers expect digital video to be as important as TV within five years.
Goodale says he saw digital video pick up at the end of last year and it will grow much bigger in 2015.
“We’re going to see a massive rise here with players like Facebook and Twitter offering video,” he says. “Facebook statistics globally already indicate that the average viewing time on their video is eight seconds, which is pretty good.”
Digital advertising hasn’t surpassed the other mediums – yet. But Goodale reckons it’s only a matter of time.