The secret is out – up to 60 per cent of digital marketing spend is wasted and, as a result, failing to deliver the promised return on investment.
From bots to viewability, fraud to simple confusion, in the worst case just 40 per cent of digital investment is reaching its target.
One of the biggest problems is, ironically, a lack of digital transparency. Despite digital’s promise of delivering unprecedented measurability, the truth is that significant money is being wasted due to poor transparency of both day-to-day activities and the actual contribution made by digital marketing to wider business objectives. Much of this wasted investment occurs across the diverse number of specialist agencies, brokers and intermediaries commissioned by companies unsure how to progress against a backdrop of media fragmentation and huge shifts in connectivity, attitude and behavioural changes.
A good starting point for marketers would be to create a dashboard with relevant metrics showing the CEO that marketing spend is under control. Procurement can help by highlighting the effectiveness (ROI) for each channel and component of marketing investment. Metrics should include brand health measures such as awareness and positive sentiment, or campaign data such as percentage of Gross Rating Points (GRP) planned or achieved, percentage of budget spent, and share of voice.
• Think beyond digital marketing
Digital marketing is more than an email; more than a website. But with limited resources internally, prioritising based on business impact and speed to value is essential. What will be better for the business - getting an online social media presence or developing an in-store location-based marketing solution with mobile payment? Both perform different roles, but if you could only do one at a time, which would you do and why? Indeed, is a digital solution even appropriate?
Elevating thinking beyond campaign outcomes toward profit impact forces marketing to acknowledge the consequences on the wider business. Mapping out a digital ecosystem and understanding customers (both internal and external) will improve focus and deliver the best impact. This is where procurement leaders can help by working with agencies to demonstrate the value of shifting investment to digital media – with the emphasis on full cost transparency.
• Understanding programmatic buying
Programmatic media buying and selling is going to become a larger part of the digital media equation. But many companies are struggling to optimise this area of spend. There are opportunities to achieve great results – but, done badly, the risk of waste or reputational brand damage is significant. While media agencies have the edge over marketing in terms of experience, few are passing the benefits on, leaving the client bearing the risk.
Any company spending money on online digital media needs to have a position on programmatic media buying. What are the pros and cons; the opportunities and risks? This understanding is key to support a strategy and gain the insight required to hold agencies to account. With higher quality of impressions data, programmatic enables better targeting, which should result in lower costs and reduced waste, it is essential to hold an agency accountable for demonstrating pre- and post-buy; the forecasted versus realised benefit; and how that compares to traditional buying methods.
• Aim for real-time decision making
From Oreo’s brilliantly timed and opportunistic Super Bowl spot to Vodafone’s immediate response to Lewis Hamilton’s F1 championship on digital outdoor sites, harnessing data and swiftly generating insight can lead to the rapid creation and deployment of brand messages.
While it is possible to serve up-to-the minute relevant content to the target audience in a precise location, it is essential to establish rapid authorisation mechanisms to significantly enhance decision-making time, exploit opportunities and deploy at the optimal price with minimal wastage. Procurement can act as the linchpin between marketing and agency to set the direction and work with existing or new advertising and media partners to develop and deploy policies, freeing marketing to focus on the brand strategy and content.
• Demand full transparency
With 50 per cent of UK advertising being spent in digital channels and some of the biggest network buying groups and agencies refusing to disclose the price of advertising media bought (which traditionally they would), it is no wonder trust is low. Procurement should manage the agencies in a way that gives the transparency required to identify improvements in control, cost and quality and even speed to market. Questions should be asked if agencies are not willing to give the transparency in costs or demonstrate that discounts negotiated are being passed on.
In a maturing market, it is time to accept the truth about digital marketing and to move from irrelevant and opaque measures towards a highly transparent model that enables companies to stop wasting up to 60 per cent of the marketing investment. But this is not just about wasted digital marketing spend; it is about business value. When a poorly placed advert can have a detrimental impact on a brand, reputation or share price, no company can afford to get this wrong.
To reduce this risk companies need to gain control over this digital investment – and that requires not only transparency but a clear focus on delivering against business, not simply marketing, objectives. It is clearly time for a best practice approach that will deliver a clear understanding of the priorities, and opportunities, closely tied into commercial objectives, and truly enable companies to realise the full value from the digital investment.
• Five top tips
1. Collaborate around a standard dashboard of relevant and balanced metrics that include input, output, impact and ROI measures – to increase team performance and improve CEO reporting.
2. Set better balanced targets around digital activity including campaign and “always-on” components, managed in an integrated way as part of a broader multi-channel mix.
3. Gain more influence over the programmatic policy to know whether to build capability in-house or outsource – ROI improves as media costs are pushed lower, reducing spend wastage and pushing measurement towards business, not purely marketing, objectives.
4. Content deployment and innovation should be happening in real-time, pushing the performance boundaries of the business.
5. Gain full transparency to understand the performance of the full marketing mix, achieving full control over marketing effectiveness. Knowing which half is working, and which half is not ensures a business is empowered to make changes.
☛ John Butcher is category director, marketing at Proxima