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Will big brand budgets see SMBs priced out of digital?

Will big brand budgets see SMBs priced out of digital?

It's being called the golden age for digital marketing, with the introduction of digital marketing channels enabling small and medium sized businesses to truly compete with the big brands in the same arena. The ability for smaller businesses to quickly adapt and react to market changes has empowered them to dominate the digital landscape, and has resulted in an entirely new market of online businesses thriving off their social and digital media advertising channels. The key factors in this change has been the low cost of entry to start digital advertising, and the wealth of tools that allow SMB's to automate their marketing processes on a large scale.

And it's still growing, with spend in digital media forecasted to surpass US$200 billion this year, which will be the first time that advertising spend in digital will exceed that of TV.  Until now TV has been the largest advertising channel by spend globally, and is where the big brands have traditionally put the majority of their ad spend - however the tipping point is here with big brands looking to shift their budgets from TV to digital in 2017. However it's going to take time for these large brands to make the shift from their traditional focus of the past 50 years, to digital advertising and the need to focus on individuals rather than a market. But the big brands are well aware of their need to upskill and shift focus quickly, with restructures and new teams being formed to take on these challenges.

“It has been a big shift,” says L’Oréal’s head of digital and media for A/NZ, Christophe Eymery “And to achieve that, it was not about just changing the media mix. We also changed internal team structures, making sure we had more expertise in-house, and made sure we were growing the expertise externally through our creative and media agency partners. We have also had a very big focus on digital education across the board.”  

So while big brands still have some kinks to work out in the digital marketing arena - once they do will it signal the end of the golden age? Let's be brutally honest now - with the massive budgets these brands command, somewhere in the region of US$80 million per year, how can we not expect prices for digital advertising to increase? We are already seeing prices go up, with online advertisers currently paying a lot more to reach audiences than they were only a few years ago, and it's getting harder and harder to reach customers. 

"We're no longer in a period where you can just get organic growth," said Tamara Gaffney, principal analyst at Adobe Digital Insights. "Now it's a dog-eat-dog competitive world."

The majority of the forecasted US$200 billion in digital ad spend in 2017 will be going to Google and Facebook, who accounted for nearly all of the growth in ad sales last year. With the expected influx of money from big brands budgets, and the current monopoly by the ad giants, we could be looking at the beginning of a long uphill climb in prices. And while the big brands have the bandwidth to compete in that arena, it's the SMB's that will lose out.

So how can you protect your business from a potential hike in digital advertising costs? It's actually pretty simple:

Create your own channel.

This is not about creating the new Facebook or Snapchat, this is about acting as a media company in order to build an audience around your brand. The big brands have already seen the need to own a channel, with many brands like Adobe, Red Bull, Virgin and Intel leading the charge and creating publishing driven sites focused purely on building an audience.

The same opportunity exists now for SMB's to build channels they can own, and with platforms and tools, like Cognitives, readily available to create great content at a low cost there is no excuse for SMB's to not be taking on this challenge. The result being a loyal and organically growing audience, the best buffer you can have to protect against pricing fluctuations or digital advertising monopolies. 

One thing is clear - the future of digital advertising is in flux, and whatever changes occur in the next few years will shape how businesses will be able to attract, engage and retain their customers in the future. This is a change that is coming - and businesses need to prepare now.

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