A new study by McKinsey & Company has confirmed advertising is a driver of economic growth. And while this is not anything that hasn’t been reported before (specifically the 2007 seminal report by Maximilien Nayaradou that found that ad spend was a driver of growth), what is of interest in this report is its specific research and reporting on the contribution of digital marketing towards GDP.
The report covers an analysis of G20 countries and found that, on average, 16 percent of growth in GDP over the past decade was due to advertising. The lowest country recorded five percent and the highest 25 percent. Looking specifically at digital media, 2002 saw digital media at only three percent of ad spend in the G20 countries but by 2010 it had increased to 17 percent - an average of nine percent over the period. Of this, roughly 50 percent was new investment and the other half a shift from traditional media.
Interestingly, this study also identified that digital ad spend was more effective if used in conjunction with traditional media by “enhancing the impact of print and broadcast ads, rather than replacing them.”
A significant conclusion was that the digital media turbocharged growth: "Although digital media represented, on average, nine percent of advertising expenditure over the past decade in our sample of countries, it was responsible for 29 percent of advertising’s effect on economic growth."
Effectiveness has always been at the heart of any good agency’s agenda, and this study does suggest that agencies are really starting to unlock the power of digital as an integral part of the marketing mix. Digital and how best to integrate it into the traditional agency model has plagued the industry from the day the first banner ad went up, but never more so than the last nine years, where the primary function of online has turned from a content repository to a communication channel.
With this shift has come a necessity (although many advertisers still fail to realise this to their detriment) to move from digital as another attention/disruption device to a unique platform where brands can once again engage with consumers in a contextual and meaningful way.
The real shift has been this: in today’s marketing environment, we cannot hope to reach all consumers all the time (not that we ever could), but consumers can reach our marketing all the time (thanks to digital). And that is what the digital revolution has done, turned the traditional marketing formulas on their head, from push to pull.
Campaigns that use digital to engage their consumers with content, comms, utilities and entertainment that provide real value contextual to the products or services they are promoting stand to attain the sort of effectiveness identified in the report. Where ‘phenomenal growth’ is being achieved is, I have no doubt, where digital is not merely parroting the above the line advertising, but enhancing it; giving brands, once again, the opportunity to spend quality time with their consumers.
Is digital alone the marketing channel of the future? Absolutely not. But as the report alludes, its effective use is likely to be pivotal in deciding what brands win or lose in the 21st century. How reassuring it is then, that agencies are finally working this out and using digital to its best advantage.
- Greg Whitham is the chair of the CAANZ Digital Leadership Group and head of Ogilvy Digital.