Here’s Why B2B Brands Are Doubling Down on Digital Ad Spending
October 26, 2020
In it’s recently released report, US B2B Digital Advertising 2020, eMarketer estimates that B2B organizations in the United States will increase their digital ad spending by 22.6% compared to 2019. Given that the shift to digital ad spending has been going on for some time now, this won’t raise too many eyebrows. What’s somewhat surprising, though, is that this forecast comes at a time when the overall ad market in the United States is contracting due to COVID-19.
What’s Driving the Rise in B2B Digital Ad Spending?
As eMarketer Principal Analyst Jillian Ryan puts it, “When B2B marketers could no longer connect with buyers in person, digital ads had to work overtime and have been a primary touchpoint to get in front of target audiences.”
As a result, B2B marketers are leaning more heavily on search and social media ads. Again, that’s been going on for a while now. Where things have really picked up though is in the event space. With in-person events cancelled and at-home workers itching for connection, we’re seeing increases in virtual events like webinars, customer conventions, and live streams. (Related: 12 Ideas for Your Next Virtual Event on LinkedIn)
Some sectors are contributing to this rise in digital ad spending more than others. The biggest riser, up 41.2% year over year according to eMarketer, is the healthcare industry. Other sectors moving the needle include tech products and services, financial services, and telecom.
An organization’s general approach may also dictate whether they’re moving with or against this trend. Similar to digital ad spending, account-based marketing (ABM) adoption has been rising steadily over the years, and by most indications, ABM adoption will continue to rise. The loss of in-person events during the pandemic, coupled with a need to tighten targeting and messaging, has caused B2B marketers to more strongly consider ABM approaches that rely more heavily on reaching people with digital ads.
Finally, as overall budgets shrink, the need for B2B marketers to measure and report back ROI only intensifies. For this reason, marketers are more likely to invest in channels where they can properly measure marketing ROI and optimize for it.
How Should B2B Marketers React to this Rise in Digital Ad Spending?
It depends. Are you currently in survival mode? Or are you trying to capture market share? Is your non-digital ad spending performing? Or could a digital-heavy approach potentially allow you to take greater control of your budget and the return you expect from it?
Generally, unless your organization needs to pull back on advertising to make ends meet, the recommendation is to continue to invest in brand advertising. In his guide to advertising best practices during a recession, B2B Institute Research Fellow Peter Field advises marketers to “keep calm and carry on.”
As part of his research, Field looked into roughly 50 case studies concerning the 2008-9 recession period. While he provides caveats in terms of incomplete data and the comparability of that recession to our current one, his findings support continuing to invest in advertising – even for B2B organizations whose customers and prospects aren’t buying right now.
“Because the sales funnel in B2B purchasing is generally longer than in B2C, the arguments in favor of supporting long-term growth through brand building are likely to be even stronger in B2B than in B2C,” explains Field. “B2B brand associations created now are likely to bring the greatest sales benefit during the recovery period, precisely when the rewards are biggest. Brand advertising is not about profiting in recession, it is about capitalising on recovery.”
Supporting Field’s argument is Harvard Business Review’s exploration of how companies have historically succeeded with marketing during a downturn (written in 2009 but still relevant today). The article acknowledges that nearly all consumers “typically reevaluate their consumption priorities” during a downturn. And while marketing is typically viewed as a “good cost” with a direct correlation to revenue from key customers, the marketing budget tends to get cut a little more drastically than other operating expenses.
“In managing their marketing expenses, however, businesses must take care to distinguish between the necessary and the wasteful,” advise authors John Quelch and Katherine E. Jocz. “Building and maintaining strong brands – ones that customers recognize and trust – remains one of the best ways to reduce business risk.”
To learn how your organization can reduce risk and realize success by striking a healthier balance between long- and short-term objectives, check out Brand and Demand: The Key Principles of Marketing Growth.