How do we rationally shift dollars between traditional and digital marketing tactics?
According to a study by the Association of National Advertisers released in July 2012, the top concern of digital marketers is return on investment (ROI). Nearly two-thirds cited their inability to prove ROI in "new media platforms" as the main factor holding back greater investment in it, followed by having the right metrics to determine marketing mix across traditional and digital channels, and the lack of understanding of digital among management and key personnel.
The Grand Digital Canyon - Traditional vs. Digital
So, we continue to refer to digital vs. traditional channels and tactics. And there was good reason for this up till now. Digital was only just a tiny portion of the ad spend. And the metrics were entirely different.
The metrics of traditional channels - TV, print, radio - all have to do with the size of the audience to whom the ad was shown. So while it is impossible to draw a "straight line" between marketing investment and business return, there are sufficient years of experience and general acceptance of the processes to estimate it that it continues to be used. On the other hand, the metrics of digital channels - display, search, social, mobile, etc. - all have to do with actions that users take - like clicking a banner ad, typing in a search, or sharing something in social media. And while it is infinitely more measurable, many marketers are still "gun-shy" about using more of it.
So how do we rationally shift dollars between traditional and digital marketing tactics? Sophisticated marketing mix or media mix modeling has been done over the years. But the scarcity of directly comparable data, the reliability of the data, and the fact that it involved advanced math has relegated it still to the domain of academicians or the "stats geeks" in the analytics "back room."
How do we break through to reallocate dollars across traditional and digital channels to most efficiently impact business goals?
Digital Strategy Tree - Rooted in Business Strategy
A great place to start is with the consumer. Start with what are the bits of information they need to know - i.e., their "missing links" - at every stage of their purchase funnel: from awareness to consideration to choice to purchase and loyalty. If advertisers were able to help them answer these missing links, they would help the users move expeditiously down the purchase funnel toward the purchase.
By understanding these missing links and also the habits and expectations of these modern users, advertisers can select the right marketing tactics to use and tailor them to most efficiently address these missing links. For example, if modern users are in the habit of going online to do more research no matter what channel they received their inspiration from - seeing a TV ad, reading a print ad, or heading a radio ad - then the advertiser should be prepared in digital channels so the users can find them when they look.
Digital strategy is the selection of the right tactics across all channels, driven by users' information needs across the whole purchase funnel and informed by digital metrics and insights. From this perspective, digital strategy is the "trunk" of the digital strategy tree that is rooted in business strategy. The branches are the various tactics (both traditional and digital) that are ideal for helping a particular set of users move speedily down the funnel toward the purchase. In some cases, if awareness was the main marketing challenge, then awareness-driving tactics like TV, print, or radio would be selected. In other cases, where consideration and choice are the main challenges, then choice-driving tactics like search and social media would be used. In this way, advertisers are actually putting into practice "whole funnel thinking" to address and impact consumers' needs at every stage of the purchase funnel, and not just egregiously spending the majority of their ad dollars on TV.
Unified Marketing Framework
Once we have decided what tactics to use, we can use the Unified Marketing Framework to decide what budgets to allocate to each tactic or how to reallocate budgets from where they are now. Using this framework, marketers can quickly visualize where they are overspending - e.g., if awareness were not the problem, but 90 percent of the budget allocation is plotted against the awareness "quindrant" (five parts in the circle), then the budget should be reallocated. If consideration and choice were the main marketing needs, and practically no spending is allocated to search and social media, then budget should be reallocated. So without any advanced math or statistics or suspicious comparisons of data that are apples to oranges, the Unified Marketing Framework provides a way to rationally shift budgets from areas of overspending to areas of underspending and need.
And note that all channels and all tactics are taken into account. This is not just a "digital thing" or a "traditional thing" any more. The right tactics are chosen based on insights about what bits of information customers need - their missing links - and what channels and tactics would be most effective in addressing these missing links. Then based on actual metrics of the performance or yield of each of these tactics, the budget allocations can be even further refined to maximize business impact.
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Dr. Augustine Fou is the senior digital strategy advisor to CMOs, marketing executives, and global brands. Dr. Fou has over 15 years of Internet strategy consulting experience and is an expert in social media marketing strategy, data/analytics, and consumer insights, with specific knowledge in the consumer packaged goods, financial services/credit cards, food/beverage, retail/apparel, and pharmaceutical/healthcare sectors.
He is a frequent panelist, moderator, and keynote speaker at industry conferences. Dr. Fou is also an Adjunct Professor at NYU in the School for Continuing and Professional Studies and at Rutgers University at the Center for Management Development, where he teaches executive courses on digital strategy and integrated marketing.
Dr. Fou completed his PhD at MIT at the age of 23. He started his career with McKinsey & Company and previously served as SVP, digital strategy lead, McCann/MRM Worldwide and group chief digital officer of Omnicom's Healthcare Consultancy Group (HCG). He writes a blog "Rants, Raves about Digital Marketing" and can be found on Twitter at @acfou.
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