What is the percentage of online media deals that are being missed because of dissagreement on payment terms and the fear of deception in the U.S?

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What is the percentage of online media deals that are being missed because of dissagreement on payment terms and the fear of deception in the U.S?

Hello! Thank you for your question about the percentage of online media deals that are missed because of disagreements about payment terms and the fear of deception in the digital marketing arena in the United States. Our team conducted an exhaustive search looking for hard and fast statistics to answer your question.
Unfortunately, there is no publicly available existing data that specifically addresses your needs. Because we could not find a direct answer to your question, we set about looking for information that could be used to triangulate an answer. In short, we found that many small to midsize businesses enter the advertising process with a lack of information. They often rely heavily on an agency's sales pitch to get started. Trust issues, and fear of deception in the industry, usually doesn't arise until after a company has had an experience with an agency. Data indicates that it takes about a year of engagement with an organization for an SMB to begin to build skepticism about results delivery. In most cases, these issues begin to arise when an agency fails to deliver on a promise or fails to produce results the SMB finds satisfactory. Accordingly, the information we compiled seems to indicate that approximately 15% of SMBs forgo or reduce their marketing agency relationships due to a lack of trust.

Though we could not find specific information to fully answer your question, in my deep dive below you will find statistically relevant information pertaining to the subject at hand. We have done our best to compile as much useful information as possible, in the hope that this information can be used to formulate a high level answer to your question.

METHODOLOGY

Our research team approached your question with the intent to find sources that would directly supply an existing percentage, based on data acquired in various market studies across the United States. Unfortunately, most organizations do not compile data addressing deals that fall through, and instead focus on acquiring data for the quantification of their successes. As such, we took our search down a different path. We began to search for statistical data and existing articles about the consumer experience when it comes to SMB and advertising. Many of these studies and articles focused on trust in advertising, truth in advertising, budgets, and so on. This led us to a number of articles and market studies highlighting the good, bad and the ugly in the digital advertising world.

INSIGHTS

According to a survey of small and midsize business owners, around 15% of organizations choose not to hire an advertising agency of any kind, because they believe they have been "ripped off" in the past. In a sense, this percentage (15%) could be considered a ballpark figure for deals that fall through resulting from a lack of trust (for example, business owners may harbor a fear that they won't get what they pay for).

Additional data coincides with this percentage as, beginning in 2011, 15% of small to midsize businesses have reduced their advertising budgets or canceled advertising accounts each year. And research indicates that, regardless of budget, most businesses will allocate at least 30% of their budget to online advertising; a figure that is expected to rise by 35% by 2019.
Though outside the United States, an additional piece of corroborating data indicates that in the UK, 20% of SMB's do not trust their SEO or PPC agency/provider. This data indicates that between 15% and 22% choose to reduce or forgo their engagement with an online advertising agency because of a lack of trust, typically hinged on a prior disappointment or wrongdoing.

RELEVANT STATS

-- According to a report about trust in advertising by Nielsen, at least one third of online advertising campaigns fail to work. According to the article, "they don't generate awareness or drive any lift in purchase intent."

-- A survey reported by adage.com indicates that only 4% of Americans believe the marketing industry operates with integrity. This survey also confirms that, to 69% of Americans, when it comes to advertising, a "lack of integrity" means a failure to keep promises. Deductively, we can assume that only about 4% of people living in the United States believe the marketing industry is true to its promises.

-- Google and Facebook represent 75% of the growth in the advertising industry overall. And believe it or not, in the United States, some advertising agencies are buying ad space and reselling it to their clients at markups as high as a staggering 90%.

-- Some data indicates that brand marketers are often unaware of industry wrongdoings, which could point to the fact that there isn't necessarily a trend of missed deals resulting from a lack of trust in the industry. To the contrary, awareness seems to be the paramount issue.

-- One piece of data, published by HubShout in 2016, indicates that small businesses are increasing monthly spending limits for online advertising through advertising agencies. However, other resources indicate that most companies have maintained their budgets (no increase or decrease) over the last couple years.

-- According to a 2017 survey published by clutch.co, the majority of small businesses (fewer than 500 employees) handle their own social media advertising in-house or through the use of freelancers. This study indicates that only 25% of small business owners use agencies.

-- Shockingly, in continuing with the lack of awareness trend, a survey conducted by marketingland.com indicates that as many as 62% of small and midsize businesses have no idea whether or not their marketing actually works.

CONCLUSION

To recap, because we could not find a direct answer to your question, we set about looking for information that could be used to triangulate an answer. In short, we found that many small to midsize businesses enter the advertising process with a lack of information. They often rely heavily on an agency's sales pitch to get started. Trust issues, and fear of deception in the industry, usually doesn't arise until after a company has had an experience with an agency. Data indicates that it takes about a year of engagement with an organization for an SMB to begin to build skepticism about results delivery. In most cases, these issues begin to arise when an agency fails to deliver on a promise or fails to produce results the SMB finds satisfactory. Accordingly, the information we compiled seems to indicate that approximately 15% of SMBs forgo or reduce their marketing agency relationships due to a lack of trust.
As always, thank you for using Wonder! Please let us know if we can help you with anything else.


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