Brands Will Waste 99.9% Of Banner Advertising Spend This Year

Brands must shift attention to RCS to avoid wasting a staggering $917.2 billion in digital media budget by 2028

Brands will waste 99.9% of digital advertising spend on digital banners, this is according to the findings of an independent report published by business messaging intelligence experts, Mobilesquared. This highlights the extremely poor return on investment achieved by digital banner advertising today—for every $1 million invested, just 0.1%, or $1,000 derives value for brands, resulting in $999,000 being wasted by brands. Left unchecked, brands failing to divert budget to more impactful digital platforms, such as mobile operator-owned messaging platform RCS (Rich Communication Services), stand to waste a staggering $917.2 billion on digital banner advertising by 2028.

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RCS is the new standard of messaging owned by global mobile operators around the world. Touted as SMS’ successor, RCS combines the best of two worlds; the reach, universality and targeting of messaging, with the richness and interactivity offered by existing messaging applications such as WhatsApp. This, all available directly from mobile users’ native messaging app, providing a trusted environment that turns messaging into an interactive, actionable, feature-rich and safe experience. What’s more, RCS is specifically designed for B2C engagement, making it an ideal communication channel for brands to drive purchases, cross-sell and upsell, solve customer queries, and maintain a two-way dialogue with their audience.

“The days of allocating billions of dollars to digital banner advertising must surely now be over,” said Kerstin Trikalitis, CEO and Co-Founder, Out There Media. “Committing so much money to such an ineffective digital channel, in view of changing consumer behavior, could serve to damage brand reputation, not enhance it. Brands need a compelling alternative to focus future investments – RCS is this alternative, and brands are starting to react.”

The report, “RCS: The game changer the industry has been waiting for”, published by Mobilesquared in association with Out There Media, calls for the undisputable need for change in how brands allocate advertising spend, and draws attention to the over-reliance of brands on the Google-Facebook advertising duopoly. According to the findings:

• Brands will spend $329 billion of their $700 billion global advertising spend on digital advertising this year, a number which is set to increase to $390 billion by 2022 when the global advertising spend is expected to rise at $749.8 billion
• Up to 74% of this budget will be shared across just seven companies, with Facebook and Google claiming the lion share, despite advertisers becoming increasingly disillusioned with these advertising giants due to concerns regarding ad fraud, issues around data privacy, brand safety and hate speech
• Despite brands spending half their digital media budgets on Facebook, only 11% and 10% of consumers want brand communication via Facebook or Facebook Messenger respectively

The report’s spotlight on the growing disconnect between consumers and digital advertising companies calls for an alternative: RCS.

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By the end of the report’s extended forecast period, a significant proportion of the 4.89 billion Android devices globally will be RCS users (3.7 billion). At which point, brands will be able to reach 61% of total smartphone users via RCS, this is twofold of what Google or Facebook can reach today. Just like SMS today, RCS will offer universality, and deliver unprecedented levels of customer targeting and 100% viewability for brands. The report further revealed that:

• Brands will spend $52.5 billion on RCS by 2028.
• RCS’s scale and reach has seen brands achieve average campaign ROIs of 207%; 730x better performance than existing digital advertising industry benchmarks; and read rates and engagement rates upwards of 70% and 80% respectively.
• Based on Mobilesquared RCS data modelling, recent campaigns conducted by Out There Media, in partnership with Vodafone, for large global brands generated ROIs up to 279% as described in the report.

Trikalitis continues: “The digital advertising world has been desperate for a compelling challenger to end the global dominance of existing digital advertising channels – RCS is it. It is the alternative for brands who have grown tired with spending so much money on digital advertising and seeing very low returns.”

Nick Lane, Chief Insight Analyst, Mobilesquared, said: “RCS presents a really exciting opportunity for brands, agencies, operators and consumers alike. Brands are wasting massive parts of their budget on underperforming channels, while consumers are becoming increasingly apathetic to ‘generic’ digital advertising. Our research indicates that 66% of consumers want RCS – they want a richer experience, something more interactive, that feels more relevant to them. Brands need to start diverting their spend to RCS so that they can reap the benefits.”

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