Six Pixels of Separation - The Blog
May 2, 2013 8:38 PM

The Power And Disappointment Of Digital Marketing

Everything is digital.

I've been banging that drum for well over a decade now. At first, it was heresy, then it was wishful thinking and now it is suddenly becoming a reality. You know it's a reality when traditional advertising agencies are claiming that digital is just another kind of execution when - in reality - they're watching both their budgets dwindle and the lion's share of advertising dollars shift in ways the industry hasn't seen since television became a red-hot medium. This is further being validated as two recent studies came to light that paint a very interesting picture of the marketing dollar landscape. According to the Marketing Charts news item, CMOs Predict Sizable Budget Shift to Digital Marketing: "Fresh on the heels of a report finding that 4 in 10 global marketers around the world will be reallocating budgets to digital marketing (a report which itself came shortly after a US-based study indicating the same trend), a new study from Accenture has emerged looking at the topic from the perspective of CMOs around the world. And the takeaway is much the same: digital marketing is going to get more of the overall marketing budget next year. About 2 in 3 respondents said they would be devoting at least 25% of their budgets to digital marketing next year, up from 46% who said they would allocate that much this year. What's more, the majority of that increase comes in the 'more than 50%' category. That is, fully 23% of CMOs surveyed plan to devote the majority of their budgets to digital marketing next year. That's about double the 11% giving digital that much of the pie this year."

It's a digital world, but there's something rotten in digital land.

What neither report speaks to is how effectively and efficiently these dollars are being spent. It's easy to stand up and applaud the simple shifting of the media dollars. It's easy to take a look at Google's advertising revenue and be impressed that it shadows that of the entire print industry's advertising revenue, but you still can't buy a Facebook like without hearing CMOs complain about performance. In short, they're shifting the dollars based on where the audience is but they're not, necessarily, adjusting their philosophies in terms of digital being that much more of an active media channel or how digital advertising is a very different game.

What? They're spending more in digital but not being smarter about it? 

In a word: yes. How can I prove it? Digital advertising is not "set it and forget it." It lives - live and in real-time. It can be performance-based (look at Google AdWords, CPA deals, affiliate marketing, retargeting campaigns and more). Beyond that, digital advertising is always proven most effective when it is driven by multivariate testing and marketing optimization. Sadly, most brands still run their digital campaigns much in the same way that they run their traditional campaigns. There is little testing before a launch and there is often little in terms of true marketing optimization that happens during the campaign to tweak it. A blanket statement? Sure, but the disappointment is not unfounded. Not even forty eight hours after the exciting news about budget reallocations to digital, Marketing Chats releases another news item titled, Optimization Activities Not Getting Any More of the Marketing Budget This Year. How this for horrifying: "Not only is optimization not getting a bigger slice of the marketing budget pie this year, it may actually be getting a slightly smaller share, per results from the Adobe 2013 Digital Marketing Optimization Survey. This year, 53% of the digital marketers surveyed from around the world said they devote less than 5% of their total marketing budget to optimization activities (including agency fees, professional services, and technology), up from 48% last year. Only 6% of respondents are allocating more than one-quarter of their budgets to these activities, relatively unchanged from last year's 7%. The study indicates that those allocating more of their budgets to optimization tend to have more success with their conversion rates."

Again: the more you optimize... the better your conversion will be!

When will we learn? Nearly a decade ago, my close friend, Bryan Eisenberg (widely regarded as one of the world's thought leaders on marketing optimizing and co-author of the best selling business books, Waiting For Your Cat To Bark? and Always Be Testing) once told me in passing that the first thing that typically gets cut from the marketing budget is the optimization work. It stopped me dead in my tracks. That's right, dear marketers, the one thing that actually works, increases conversion and makes the entire marketing team smarter and better is usually the first to go. Now, nearly a decade later, it's nothing short of reprehensible that this is still par for the course. Digital advertising is a monster (and a growing one). The only way that digital truly works is through optimization. It's also the one true way for all of us to actually test and see what works and what doesn't... and then optimize it. Instead, what are we doing? Tossing money where the audience is and hoping that everything falls into place.

More money is great. More money with smart people spending it is much greater.

By Mitch Joel


Comments Comments Feed
  • Posted by Don Schindler
    Mitch Joel

    Great post as usual, Mitch. Any advice on how to educate the current executive class on how digital is so different than advertising?

    Reply
  • Posted by Roger Dooley
    Mitch Joel

    Great stuff, Mitch. It's good that ad dollars are catching up with where people spend their time, but ideas like conversion optimization, behavioral targeting and customization, etc., are foreign to execs who think in terms of 30-second spots and magazine ads.

    Reply
  • Spot on, as usual.

    I imagine it comes down to fear of the unknown. Instead of treading new ground we think more of the same medicine that hasn't worked so far will somehow magically do the trick. It's a paradigm shift we're witnessing. I'm certain it will happen.

    Reply
  • Posted by Joseph Ratliff
    Mitch Joel

    Yep, companies can't bring the same set of philosophies to digital that they have in other forms of advertising (and marketing).

    They have to optimize for the digital experience.

    Reply
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