Report: Aussie advertisers wasted $5.46bn on digital advertising in 2022

New Next&Co report shows more than 4 in every $10 spent on digital advertising ranked as a waste last year

Australian advertisers threw away 41 per cent of their overall digital advertising spend in 2022, according to the latest Next&Co annual Digital Media Wastage report.

The digital media agency said $5.46 billion of digital ad spend was wasted out of a total $13.9 billion spent in 2022. This was up from $3 billion wasted in 2021.

The data came from Next&Co’s quarterly Digital Media Wastage reports and its Prometheus media auditing tool, and encompassed a raft of industries including real estate, finance, pharmaceutical, insurance, retail and FMCG sectors.

However it was retail brands found to be wasting the most dollars last year at $80.4 million. The sector was followed by finance ($72.6m) and FMCGs ($21.4m).

The digital media channels where waste was most evident were Facebook at $119 million and Google at $109 million. Bing proved the least amount of waste as a percentage (30 per cent) at $21.7m.

“With advertising costs increasing year-on-year, brands are struggling to keep up with the innovations most advertising platforms offer. It shows many businesses’ internal resources are not across best practice or are running advertising that isn’t profitable or sustainable,” Next&Co Co-founder, John Vlasakakis, said. “For example, brands are still struggling to adapt to the impact the IOS 14.5 operating system and later releases have on Facebook’s advertising platform.

“The 2022 data shows ad spend wastage continues to grow, despite brands facing mounting costs of advertising. The data is shocking – it shows brands really need to deep-dive into their spending and 2023 campaign planning, and ensure their digital ads are really delivering results. A lot of brands will feel the pain this year due to not acquiring customers at a cheaper rate in 2022 and, as a result, it will stunt growth this year.”

A recent CMO Council US report found only about one-third of marketers surveyed expressed clear confidence in their media and marketing capabilities, while 53 per cent expressed ‘moderate’ confidence. Fifteen per cent showed a decided lack of confidence.

To come up with its wastage figures, Next&Co’s Prometheus platform uses pre-set KPIs including leads, customer conversions, ROI and reach. The auditing tool then determines wastage in dollar terms as well as and where the wastage is occurring, campaign-by-campaign, and on a creative level. This results in a score out of 100 on the overall performance of each metric and an exact dollar figure of ad spend wastage. Data is then individually audited for each type of advertising activity run within the tool and an individual score prepared for each.

“An action point for brands in 2023 is to get an independent assessment of how their ad spend is delivering, and only scale their spend if it can maintain or increase profits,” Vlasakakis added.

Last year, Next&Co said it audited 198 companies with digital ad budgets of between $500,000 to $27 million, including ASX-listed (15 per cent), multinational (39 per cent), national (27 per cent) and SME (19 per cent) companies.

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