TORONTO – By 2016, the Internet will overtake television as the single largest destination for ad spending, capturing 26.1% of the total in four years versus 18% in 2011.
This according to a new report from the Canadian Marketing Association (CMA) prepared by the Conference Board of Canada which examines how the growth of digital media and the explosion in digital channels is challenging current marketing models and the very nature of marketing in Canada. It notes that social media, which did not exist 10 years ago, is now a significant consideration for many businesses’ marketing plans.
The report: Marketing’s Influence in Canada: In an Evolving Digital Economy, concludes that the combination of disruptive technological changes and slower economic growth means that although ad spending has experienced a healthy recovery from the effects of the recession, growth will be more subdued in the years to come.
“Among the industries that are the major sources of ad spending, growth will be strongest in Internet-related services, financial services, and entertainment. Technological changes and the fact that an aging population will drive above-average growth in consumer spending on services will both contribute to this trend. Conversely, public services, publishing, and food ad expenditures will experience below-average growth,” states the report.
Among the major media types, Internet, mobile, and out-of-home are expected to experience the strongest growth in ad spending. The CMA reports says these media types benefit most from the transition in consumer interest and time to digital media.
“In fact, the Internet is expected to overtake television to become the single largest destination for ad spending in Canada by the end of the forecast horizon. Meanwhile, ad spending in the daily newspapers, direct mail, and “other” mediums (primarily directories and community newspapers) will experience either little growth or outright declines over the forecast period.”
As a result the CMA contends that marketing will play a critical role in business decision-making over the next five years as new digital tools and techniques come to market that will change the way businesses communicate with consumers.
"The effective use of these techniques will be key to managing brands and winning customers in this evolving environment," noted CMA President and CEO John Gustavson.
The report found that business spent $29 billion on marketing-related activities in Canada (up from $21.3 billion in 2000), according to the report. Conference Board estimates also peg current marketing-related employment at nearly 1.1 million jobs in Canada or 6.3% of total employment in the country. And the prospects for the future are bright, with new opportunities in digital marketing (Internet, mobile, etc.) expected to be the main drivers of job growth and spending in marketing over the next five years.
"The key challenge for us as marketers is to fully embrace the opportunity that is unlocked by the digital transition – through a focus on engaging with consumers in a manner that builds relevance, engagement and trust," said Shauna Emerson-O'Neill, Vice-President, Strategy and Business Innovation, Aimia. "Demonstrating restraint by acting not on the entire universe of possibilities – but on what insights suggest will deliver genuine customer value – will be imperative to building lasting relationships and loyalty."
According to CMA, Canadian businesses will spend $17.3 billion on advertising alone in 2016, up from $14.4 billion in 2011. The Internet's share of the overall ad spend pie is expected to climb to 26% by 2016, compared with 18% in 2011. This shift, notes the study, will generate substantial growth in e-commerce over the next five years, spurred by the rapid adoption of smartphones and tablets.
"Beyond just shifting dollars from traditional to digital, marketers need to connect with their customers with the right content, at the right time," noted Mathieu Peloquin, Vice-President of Marketing at TC Media. "It's about taking advantage of the changing tools and new channels in the marketing mix, while mastering the art of having all relevant touch points working together to drive results."
What will make the formula successful will be even more convenient ways for consumers to interact with business and a bond of trust between business and consumers that the interactions are safe and secure.
"Digital marketing, at its core, relies on a bond of trust between consumers and companies," said Richard McLaughlin, Senior Vice-President of Global Products and Solutions at MasterCard Canada.
"Canadians will turn their backs on any company that violates this bond of trust because they are passionate defenders of their right to privacy. As more and more Canadians embrace electronic forms of commerce, offers, coupons and loyalty programs, consumers have to be given the choice to participate and to what level. Any abuse will, undoubtedly, result in higher levels of regulation and consumer rejection."
