Digital marketing is booming. While the pandemic negatively impacted the economy, it did little to reduce digital ad spending. In fact, recent data shows that US digital ad spending increased by a whopping 35% in 2021 and is forecasted to grow by nearly 50% in the next four years. With this increase in demand and activity, prices have skyrocketed. In 2021, Google, YouTube, Facebook, TikTok, and Snapchat showed a dramatic increase in the cost of their digital ads year-over-year.
Whether companies are getting their money’s worth is an open question. In a survey of 1,000 marketers worldwide by Rakuten Marketing, respondents estimated they waste an average of 26 percent of their budgets on ineffective channels and strategies. And about half of respondents said they misspend at least 20 percent of their budgets. Despite this, companies are compelled to compete online as they fear losing customers to more digital savvy competitors. Part of the explanation for the ineffectiveness is that many companies are finding it difficult to evolve from traditional marketing to more “modern” marketing organizations that leverage agile marketing, analytics, and data science.
Given the growing challenges and complexity in digital marketing, it’s perhaps no surprise that the average tenure of Chief Marketing Officers recently dropped to 40 months, its lowest level since 2009. To effectively lead marketing, most CMOs need to deliver results quickly. And since it can take roughly two to three years to make significant changes to a marketing organization and fully implement new marketing tools, CMOs need to move quickly upon arrival or they will be stuck with the org, tools, and talent they inherit.
In light of these trends, one can reasonably ask: How can companies more effectively use their digital marketing budget while also taking steps to upgrade their marketing organization talent and technology? Here are five areas where we believe you can make a difference.
With soaring ad prices, the right strategy around spend, targets, and attribution models is critical to drive return-on-investment and impact, and generate high-quality leads.
Rethink marketing effectiveness. Start with questioning if you have the right mix of channels and budget to reach your target customers. Are you wasting your marketing budget on channels or prospects that may never become customers? Are you not spending enough to target more high-value leads that look like some of your best customers with a high lifetime value? With soaring ad prices, the right strategy around spend, targets, and attribution models is critical to drive return-on-investment and impact, and generate high-quality leads. Identifying the right metrics such as Margin return on Ad Spend (MOAS) can help show how much margin each dollar of ad spend is actually delivering.
Following disruption by customers buying services via new digital “meta-mediaries,” one B2B services company recently re-evaluated which marketing channels were performing and which could drive incremental growth. A marketing-effectiveness assessment helped them prioritize their marketing spend and identify which digital marketing channels needed further investment and where they could save money by reducing spend in less effective channels.
Develop your agile marketing muscle. Agile marketing is different than traditional marketing in that it focuses on frequent test-and-learn campaigns and purposeful experimentation. Rather than looking backward at historical data in reports, you should be looking forward using A/B testing to analyze and optimize your marketing campaigns in real-time. Test and invest for two or three weeks with keywords, display ads, emails, and different landing pages to gauge click rates. Companies with agile marketing capabilities are relentlessly focused on optimizing their digital marketing spend priorities and channels. This can help identify channels where you are over- or underspending, and allow you to quickly make changes in real-time to drive greater impact.
Hire the right marketing talent to round out your team. Many companies are still struggling to fully evolve from traditional marketing organizations to more “modern” marketing organizations. Traditionally, marketing departments valued more right-brained “MadMen-style” advertising creatives and brand managers. Today, digital marketing requires more left-brained skills in digital technology, analytics, and data science. These skillsets are typically more difficult to recruit and retain, but they are crucial for marketing organizations that want to evolve to the next level.
One global investment bank was struggling to evolve its marketing operation from a cost center that largely supported sales to a “lead generation machine” that could drive revenue growth. A marketing-organizational assessment helped them identify the talent gaps and pinpoint key skills and roles they needed to hire or potentially outsource. The assessment also revealed places in the marketing organization needing greater role clarity to reduce confusion and overlap. This exercise uncovered opportunities to retrain marketing staff into digital and social content roles to help drive more qualified leads for the sales organization.
Modernize your marketing tools. A marketing-tools assessment can help quickly identify which tools are providing you with the most value and which may need to be replaced or dialed back. For example, license fees can add up quickly and you may have tools with a broad set of features that are only being partially used or may overlap with another tool’s capabilities. Likewise, fully implementing new tools can often take one to two years, so it’s important to quickly take stock of the tools you have and identify what tools you need. New tools can have major benefits—some even offer artificial intelligence (AI) and machine-learning capabilities as well as automation to help deliver the right message to the right customer at the right time.
During a recent tools assessment, one B2B food-services company identified not only an outdated email marketing tool, but also a gap in marketing technology. They were missing a Customer Data Platform (CDP) that generates a single view of the customer and could stitch together first- and third-party data sources, helping them create more targeted, relevant, and personalized marketing campaigns.
Focus on first-party data. Recent laws like GDPR in Europe and the California Consumer Privacy Act (CCPA) increase data-privacy hurdles. And the age of the “cookie”, or code embedded by websites in order to track our behavior, is coming to an end soon, thanks to the growing awareness of online-privacy issues. This will be welcomed by many consumers, who don’t like the “creep factor” associated with digital marketing, seeing ads suddenly appear based on their browsing habits, or getting reminders from Alexa that seem to mirror their private thoughts.
Now more than ever, it’s important for companies to focus in on gathering and making good use of their own first-party data, with approval from their own customers. With the right data, companies can create personalized experiences across the customer journey that lead to greater loyalty and advocacy from their most valuable customers. As the regulatory security of customer data obtained via third parties continues to increase, companies that are able to successfully capture, use, and activate their own first-party customer data will be in the driver’s seat to deliver a differentiated customer experience from their competitors.
A trajectory for success
Marketing continues to evolve at a torrid pace and marketing leaders must take action to keep up. Chances are whatever marketing strategies you were using in the last year or two may no longer be working—or they may be too expensive and not delivering the desired ROI. But how you position yourself at this key inflection point in the digital-marketing era has the power to transform the trajectory of your business. If you take the right steps now to transform marketing, you can deliver significant impact and better position your organization for future success in the digital age.