Originally published by Analytic Partners CEO, Nancy Smith – A look at digital advertising trends and our recent ROI Genome report.
With the publishing of our ROI Genome: 2017 Marketing Intelligence Report and its coverage of Digital ROI vs Offline, I have been thinking about the state of digital advertising a lot this week.
Digital advertising has been a topic of much discussion over the past several years with strong indications of continued growth as cited in Gartner’s CMO Spend Survey 2016-2017. The tenor of the digital discussion changed in January 2017, when Marc Pritchard Chief Brand Officer for P&G told Digital to clean up and outlined new rules for agencies and ad tech to get paid. The new, tougher talk continued with much press throughout the first half of this year as other advertisers such as JP Morgan Chase and Unilever announced plans for lower digital spend. More recently P&G has said that it cut over $100 million in digital marketing spend in the June quarter which had little impact on its business – thus indicating that those ads were largely ineffective.
Could this be a sign the bloom is off the digital rose? Is this a new trend that marketers should adopt – cut ad spend and if the business doesn’t appear to suffer – then it was likely wasted spending anyway? Or is this just an end of quarter (also end of Fiscal for P&G) business tactic to drop dollars to the bottom line and improve earnings for Wall Street. In my opinion, it is likely a little of both – a sign of more scrutiny to come from brands on their digital media spend, in addition to a short-term benefit to the bottom line.
Unfortunately, John Wanamaker’s legendary quote is still relevant for many marketers today: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” The adoption of advanced analytics to support data driven marketing is still roughly 50% or below as Forrester Analyst Jim Nail shared in an interview earlier this year. Marketers don’t have the internal resources or expertise to ensure their advertising spending is delivering incremental value to the business. As a result, there has been great appetite to buy technology solutions that will deliver on the promise of strong advertising ROI but these have fallen short and industry associations are working together to address gaps and educate marketers.
All of the above seems to be quite bleak for digital Advertising. However, independent data from our ROI Genome: 2017 Marketing Intelligence Report tells a very different story. In fact, digital ROIs are strong on average, but not always consistent and are declining over time, largely due to increased costs. While the average ROI for digital advertising remains higher than offline efforts, the two are rapidly approaching parity. In addition, there are great synergies to be gained by combining online and offline channels. A key recommendation coming out of the ROI Genome report is that marketers whether adding or cutting budgets, should think and plan their media mix holistically and focus on the customer rather than channels. The bloom isn’t off the digital rose, but brands should adapt to the evolving environment by planning their media holistically and without a siloed view that creates walls between digital and other media.
Learn more in our ROI Genome: 2017 Marketing Intelligence Report