How To Determine the Business Impact of Our Digital Marketing Investments

As we said last week, not everyone at ProcureCon Marketing agreed that the phenomenon that is digital media is sweeping the advertising world with far-reaching results. In an industry insight session with Head of Digital, Tim Hussain, and Head of International Effectiveness, Mike Campbell from independent marketing analytics specialist, Ebiquity, we learnt that this is in fact far from the truth. And that given the significant rise of investment in all forms of online advertising, procurement needs to ensure an efficient return for the business. In their session, they gave us a look into some of the harder realities affecting effectiveness of online advertising, and, having spoken to some members of the audience afterwards, clearly came across as ‘inspirational.’

The questions procurement needs to be asking are: How can we make better planning decisions? How can we make our budgets go further? and What is the business impact of our marketing investments?

There are vast amounts of data to help us, but it is how we are processing it that matters. Some computers have bugs – especially the most powerful computer: the human brain.

That got us into the approach to problem solving that is heuristic – ‘a practical method not guaranteed to be optimal or perfect, but sufficient for the immediate goals,’ - enabling a person to discover or learn something for themselves, without being overloaded by data.

Looking at that in the context of the digital advertising industry, they explained, means you are more likely to distrust results; it is more likely you will look for evidence that supports a view, rather than looking at the view itself and then looking for evidence to support it. So basically, our brains overcompensate for what we can actually easily measure. If we are told there has been three plane crashes in three weeks, we assume it’s not safe to fly – but statistically – that’s not true.

We still think of digital as at its beginning, and still small – but it’s twice as big as the second biggest medium – the TV. And 72% of display advertising is being traded programmatically (2016).

So what would happen if digital wasn’t as powerful as the investment growth indicates? The reality is, digital doesn’t perform better than any other media. For every £1 you invest in digital, you get the worst ROI – especially if you're a small company. Yet there is still a massive belief that digital is the best thing since sliced bread.

Looking at UK newspaper brands vs Google for example, quality time = increased advertising response. Print is 2.5 times more effective per impact than online display, with £1.40 return for every £1 spent. And this return is higher for some categories – like retail. A brand science study for Microsoft shows that print delivers £6.41 revenue for every £1 spent compared with £2.84 for online.

And it is important to remember that your investment reduces in value as it goes down the chain from client through to publisher. With a few % sliced off at each stage, starting with say 5% by the agent, by the time it reaches the publisher the worth is only 40%. Add to that: only 20% of ads that are viewed are looked at for more than a second.

But when the audience was asked whether they would consider reducing marketing investment in digital advertising, answer came there none. Psychological behaviour versus empirical evidence is imbalanced. Just because you spent 20% budget on it last year, doesn’t mean you have to spend 40% next year.

The problem is, they explained, we are measuring the wrong things. We need to consider what are the most appropriate KPI’s to measure digital marketing performance, and decide who is best placed to be responsible for digital governance – the agency? But what about conflict of interest given some have vested interests in the tech companies that supply measurement.

Because we look for confirmation to justify our view that digital is working, the challenge for marketers – and this is where procurement can help – is to move away from confirmation or ‘availability bias’ and look at statistical data to determine our strategy. Pursuing a ‘test and learn’ approach will show where and how parts of the digital activity are working. Then, using empirical data, we can determine the appropriate level of digital investment. And remember that media usage is not the same as media effectiveness.

It’s also important to understand the role of digital in the customer path to purchase. For example, we move money from TV to online because we think that’s what young people respond to. But there’s a bigger decline in ad watching online.

Digital media can be over-credited – it is driven by business working in silos, the trade team, the brand team, for example -- optimising within their silos leads to suboptimal optimisation. You need a balanced view of everything that impacts digital media. Clients are not right sizing their digital investments because they don’t have the data or the knowledge of what digital is doing for them – it’s just shiny and new.

So what should you do?

Don’t be afraid to challenge the existing marketing rationale: don’t get caught up in the shiny new trend – you are best placed to do this

Beware the simplified KPIs and acknowledge the vested interests – clicks and impressions are not indicators of ROI

Move beyond silos and understand the whole customer path to purchase to right-size digital investment

Keep an eye on effectiveness of online and offline space

Implement an ongoing test and learn culture to build digital ROI – test locally, get sensible numbers, then scale when confident of what it is actually doing for the business.

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