Digital advertising wastage was up more than 17% on last year’s figures to $6.149 billion in 2023, according to Next&Co’s annual Digital Media Wastage report.
The wasted digital advertising spend was the highest on record and represented nearly half (43%) of the $14.1 billion invested in digital advertising nationally this year.
The figure is significantly up on last year’s overall ad spend wastage, which hit $5.46 billion, comprising 41% of the overall $13.9 billion spent across the year.
The data from the quarterly Digital Media Wastage report represents the billions of advertising dollars that failed to further digital advertising objectives in 2023 across a range of verticals, including real estate, retail, insurance, finance and FMCG.
The performance digital marketing agency audited more than 400 companies for the report with digital ad budgets of between $500,000 to $21 million, including multinational (23%), national (31%), ASX-listed (24%), and SME (22%) companies.
The retail sector reported the highest amount of wasted digital ad dollars for the second year in a row, with more than $155 million wasted, eclipsing the $80.4 million wasted by retailers in 2022.
Following behind were the professional services and finance sectors, which recorded the next highest digital ad spend wastage, at $120 million and $102 million, respectively.
Next&Co’s report found Google topped the digital media channel waste list with 49% of digital ad dollars at $167 million, up significantly on the $109 million recorded in 2022.
Another 41% was wasted on Meta’s Facebook and Instagram platforms, reaching $140 million – another rise on the $119 million wasted on the channels last year.
John Vlasakakis, co-founder of Next&Co, said as an economic downturn looms, spending will likely decline across the board, and advertisers will need to be strategic with their budgets in order to maximise returns.
“The annual figures are startling, revealing that of every $10 spent on digital ad spend, $4 is wasted. This data shows that brands are still throwing away billions of critical advertising dollars by failing to understand best practice data use and running campaigns that don’t deliver a strong ROI.
“Many brands are relying too heavily on AI and automation to drive their spend without understanding the platforms and how to best use the data they have.
Vlasakakis noted that while the IAB Australia Online Advertising Expenditure Report prepared by PwC noted while online advertising grew 7.8% to $3.732 billion in Australia, there is still significant wastage.
“As we head into the new year, businesses need to undertake an independent assessment of how their ad spend is delivering and look to make changes – fast. Now is the time for brands to really hone their data sets and use the data strategically to tap into previous customers and build new audiences.”
See also: Online advertising jumps 7.8% to reach $3.732 billion in Q3 2023
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Top image: Nick Grinberg and John Vlasakakis