Advertisers are investing in generating demand, only to see their competitors capitalise on it. Fortunately, the solution is surprisingly straightforward.

Marketers often say “half of my ad budget is wasted, I just don’t know which half,” as a half-hearted justification for not knowing what happened to their ad spend.  Yet sadly, it’s not unsubstantiated. Research from 2023 found that many companies ineffectively spend between 40% and 60% of their budgets. The portion that isn’t wasted generates demand but is often left for competitors to mop up due to the challenges advertisers face in following brand-building activities with effective performance ads.

“Many marketers have a whole apparatus that’s drumming up demand and interest for their brand. However, the crucial step of capturing this interest and converting it into growth opportunities remains disconnected,” warns Microsoft Advertising’s director of advertising insight, Thom Arkestaal.

“Marketers find themselves up against siloed departments with differing KPIs, and constantly changing consumer decision journeys. As a result, brands are missing out on a lot of potential demand, which is likely being taken by their competitors.”

Cutting through the chaos

For many, the digital advertising landscape is complex, with the volume of channels and platforms so numerous – and expanding all the time – that it’s an almost impossible task to stay on top of it all. Arkestaal agrees, insisting that marketing teams must manage their channels like a conductor guides their orchestra.

“The next phase of optimisation and mastering the full funnel is about discovering the synergies between channels. By fostering collaboration between performance, search, and brand teams, agencies and brand organisations can unlock new levels of efficiency and effectiveness. Encouraging these teams to work together can lead to innovative solutions and a more cohesive strategy, ultimately driving better results for everyone involved.”

Put like that, it sounds remarkably obvious. Yet it’s also incredibly rare.

“We did a study a couple of years ago looking at linear TV to find how those campaigns drove search behaviour. Only one of the 10 advertisers we spoke to had a way to connect their TV campaign to the search campaign,” Arkestaal reveals.

This highlights a big, missed opportunity. When advertisers miss opportunities to connect the dots, their competitors are ready to capture those clicks.

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The importance of being nimble

The impending festive holiday peak season represents a massive opportunity to capture attention and wallet share.  Yet it requires a strategic, and nimble approach.

“Everyone knows that the Black Friday peak is big, but our data shows advertisers aren’t ramping up their activity to match the surge in customer engagement. They recognise it but underestimate it,” Arkestaal warns. Timing may be of the essence but there is also an art and science to engaging consumers effectively.

“Brands have a very good understanding of who is on their site, and who’s buying, but many lack the insight into what happens before the customer arrives on their site.  Advertisers need access to rich data to complete that picture, and access to partners who can provide this is critical.”

Simply put, brands miss out on potential demand because they don’t fully understand current consumer behaviour.

Nimble advertisers, the early adopters and those who test different formats, features and technology frequently, are the ones capturing market share. Arkestaal insists “our competitive benchmarking analysis shows that winning advertisers leverage consumer data and AI to drive engagement and consideration. Those who try new things get ahead more easily.”

And this isn’t just a strategy for big advertisers with deep pockets. Generative AI tools like Copilot in the Microsoft Advertising Platform, are revolutionising marketing, especially for small and mid-size businesses (SMBs) and new advertisers. These tools are helping to overcome common challenges such as budget constraints, skills shortages, and competing priorities, which are often more pronounced for SMBs than for larger enterprises.

“There’s never been a better environment to be an SMB,” Arkestaal shares. “Generative AI tools make it easy to research your market, launch campaigns and leverage ad types that easily finds and targets the right audience.”

With all that is available to marketers today, it’s time to move beyond uncertainty about where your budget is going.  Encourage collaboration across teams to create a clear path forward. Identify synergies between channels and optimise them to capture demand.  And crucially, build partnerships that can help you access the data and innovative technology needed to complete the picture, and join the group of agile advertisers ready to succeed.

Microsoft Advertising

Discover more insights from Microsoft Advertising to help you navigate the evolving landscape and create campaigns that convert with this marketing playbook for 2024.

Microsoft Advertising offers scalable technology solutions, spanning search, native, display, video, and retail media, to reach consumers across all aspects of their digital lives.

Connect with more than a billion people using Microsoft experiences that have a proven track record of higher buying power and online spending or reach any audience across the open web. We operate one of the world’s largest global marketplaces and are using our data-driven platforms, audience intelligence, and AI-capabilities to transform the industry.

We are committed to making the web work for everyone – consumers, advertisers, publishers, and platforms alike. Our end-to-end solutions and globally scaled advertising business serves partner properties, and buyers and sellers of media to help them deliver business results.

Thom Arkestaal

Thom is the visionary Director of Insights for Microsoft Advertising in Europe, with a passion for data. Thom leads a talented team of analysts, crafting insights that are not just thought-provoking but also actionable, empowering Microsoft’s clients to make informed decisions.

With a Masters in Economics from Stockholm University, Thom’s career has spanned the globe, immersing him in analytics across Sweden, India, Hong Kong, Germany, US and now the UK.

An outdoorsy city dweller, foodie, music fanatic and global nomad, Thom is always on the hunt for the next fishing spot or ski slope to conquer!