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Why Direct Response Is Dominating 2014 Advertising

Since the first banner ad was served in 1994, marketers have been under pressure to prove value through data—otherwise known as return on ad spend. In 2013, Internet ad revenues hit $42.8 billion, surpassing broadcast television for the first time and displaying a 17% YOY increase. Today, advertisers who have historically been focused on generating brand awareness are expected to report with hard data that they not only reached their specific target audience, but they were able to effectively encourage that audience to take action. In Digital Ad Dollars Continue to Pour Into Direct Response, Ezra Palmer, Senior VP of eMarketer acknowledges this shift and one of the key forces behind it: “We’ve reversed our expectation of trends. That simply reflects the growth and recognition of Facebook as a mobile player.”

As digital advertising spend continues to skyrocket, direct response’s piece of the digital ad spend pie is also getting larger (especially when it comes to the travel industry). Direct response marketing is designed to elicit an immediate reaction from consumers, whether that’s a click, purchase, download or registration. Effective DR campaigns require a lot of upfront planning and follow-up — from identifying KPIs, setting up ad creative, landing pages and lead qualifications to monitoring metrics and taking action to optimize — because their success is based on hard numbers indicating a positive return on ad spend.

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According to eMarketer, direct response represented 58.4% of digital spending in 2013, at $24.9 billion, and has hit 59.1% in 2014. The availability of DR-friendly mobile advertising ad units like app install ads and the ability to measure how ad spend drives behavior (like purchases and installs) are two reasons why branding campaigns have taken a backseat. The push for location-based technology is another.

Last week, BI Intelligence estimated that approximately $4 trillion worth of merchandise will be abandoned in online shopping carts in 2014 (up from 72% in 2012, and 69% in 2011). On the bright side for eCommerce marketers, 63% was cited as potentially recoverable. With the highest overall digital media market penetration of any social network and highest engagement per visitor, Facebook presents a huge opportunity to recapture lost sales and encourage repeat visits/purchases. By collecting online shopping cart data through Website Custom Audiences – a way to serve ads in real time on Facebook based on website and in-app behavior – advertisers can target shoppers who have abandoned their carts and use strong Call to Action (CTA) buttons in copy (“Shop Now” and “Book Now”) to command an immediate response.

Based on Nielsen’s Mobile Path-to-Purchase research, 50-70% of consumers are likely to respond to ads if they are relevant to proximity and search intent. Whether a consumer is comparing deals for flights from Miami, visiting car dealership sites in LA, or browsing 5Ks in Boston, ads with creative that deliver high levels of local relevancy are more likely to hit the mark.

With a $17.7 billion spend on mobile predicted for 2014, the future looks bright for advertisers with analytical skill sets looking to innovate with media buying and data collection across multiple devices. As Stephanie Baghdassarian, research director at Gartner puts it: ”From 2015 to 2017, growth will be fueled by improved market conditions, such as provider consolidation, measurement standardization and new targeting technologies, along with a sustained interest in the mobile medium from advertisers.”
 

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