When Procter & Gamble, the world’s largest advertiser, says it will be relying more on digital, it becomes clear that online marketing has changed.
This past March, after P&G announced it intended to cut $10 billion from its marketing budget over the next five years, its CMO Marc Pritchard told digital industry leaders that the company would increasingly rely on the agility and responsiveness of digital. But he spelled out that P&G didn’t view digital as simply using technology for technology’s sake. “Today is not about digital marketing,” Pritchard said. “It’s about brand building in a digital world.”
P&G—known for its laser-like focus on understanding consumer needs—sees digital as a way to gain greater insights into consumer behavior. And that’s long been the draw of digital. But it’s not simply a matter of shifting dollars from TV and print to the Internet. Rather, it is about understanding how to create the right balance in a world where technology and platforms are constantly changing.
Advertisers have been spreading their digital spending over a dizzying array of options: digital display, video, rich media, search engines, mobile, social, tablets, apps, content sponsorship, to name just a few. With so much to choose from, the challenge becomes finding the optimal mix to create a truly integrated marketing campaign.
In P&G’s case, according to Alex Tosolini, VP of global eBusiness, the evolving social and digital media environment has caused the company “to shift from static marketing campaigns that we launch and adjust infrequently to real-time, always-on brand building.”
The number of tactics digital marketers use continues to grow. PointRoll, a Gannett company, recently commissioned Kelton Research to survey U.S. marketing professionals and discovered that more than half are using five or more tools on a single marketing campaign, with 15 percent saying they use seven to nine and 13 percent saying they use an average of 10 or more tools. But the tools must be used in an integrated and focused effort for them to be effective.
“There’s no one-size-fits-all in digital advertising,” says Cat Spurway-Hepler, SVP of strategy and marketing at PointRoll. “Marketers who measured, evaluated campaign performance and optimized based on results were best positioned to find the right marketing mix for their target audiences and, ultimately, effectively prove their ROI.”
Brands are shifting to digital to go where consumers are and generate the kind of buzz that is difficult away from the Internet. A video of a buff, but sensitive fireman and a fluffy grey kitten helped to create online buzz for Sauza Blue Tequila as part of the women-focused Make It With a Fireman campaign, its first all-digital initiative. The video, which attracted 2.3 million views in less than three weeks, was supported by a broader campaign, including banner ads on targeted sites, a newly designed website, blogger outreach, downloadable coupons and a sweepstakes promotion on the Sauza Facebook page.
“We relied on insights about our target to choose the best digital mix,” says Amanda Lamb, Sauza brand manager, of how the company parsed its spending. “We took a look at how she behaves and interacts online and built our digital plan to make sure we were reaching out to her in the spaces she’s already engaged in conversation."
Rather than spread campaigns over multiple outlets, other brands are focusing on a single high-profile tactic. Last year, Ralph Lauren spent just over $4 million on Internet advertising. Rather than go across multiple buys, it focused on new forms of digital, buying, for example, all the space in The New York Times iPad app for the entire month of September (coinciding with Fashion Week). “We fuse art, fashion and technology,” David Lauren, the company’s EVP of advertising, marketing and corporate communications, told attendees at this year’s National Retail Foundation conference. “It’s about finding the right technology to help tell the story.”
But not every advertiser can purchase that kind of premium inventory. Beyond first-tier sites, buys are still being done via demand-side platforms with an eye on increasing reach and lowering CPM.
“There is no winning formula,” says Marco Muzzi, marketing director at Acuity Ads, which has a demand-side platform that uses machine-learning algorithms to help media buyers make more cost-effective purchases. “Display only may work for some, display and pay-per-click may work for others. As measurability and technology increases, you’ll see brands grow more comfortable spending more money online.”
In fact, this year, for the first time ever, digital advertising spending in the U.S. will surpass print, according to eMarketer. Online advertising spending is expected to grow 23.3 percent to reach $39.5 billion this year, up from $32.03 billion in 2011—pushing it ahead of total spending on print newspapers and magazines combined (which is expected to fall to $33.8 billion in 2012 from $36 billion in 2011). Moreover, while digital ad spending is still dwarfed by TV (forecast at $64 billion in 2012), it will catch up over the coming years and in 2016, spending on digital and TV could be within $10 billion of each other, eMarketer predicts.
While there may be more comfort with digital, marketers and media buyers still face a constantly shifting landscape of digital tools. Mobile, social and tablets, for example, provide new channels for marketers to broadcast their message—and new opportunities to reach consumers. But managing a campaign with a variety of digital channels can be complicated, especially when multiple partners are involved.
“Digital can be everything, but if you don’t do it correctly, it can be nothing,” says Mark Himmelsbach, director of digital strategy North America at BBDO. “If you do a little bit of everything, then nobody sees it and it’s a waste of time.”
Ultimately, it comes down to data-based decision making in order to help marketers maximize their results. The question is: What data should be used? With digital ads being bought primarily through performance models via demand-side platforms and real-time bidding, most campaigns are still looking at impressions and page views. This may work for digital display, but video, mobile and the social Web present other issues.
“It’s really important to have resources—meaning research and tools—that tell you a bit about how the consumers engage in this ridiculous world of micro-fragmentation. Through the use of proprietary research, you can gauge how relevant an ad message or marketing message is when it shows up in a specific environment,” says Donald Williams, chief digital officer at Horizon, who added, “That information helps guide the investment strategy.”
Richer analytics are now being used to get a clearer picture of consumer behavior and how different digital tactics influence each other. Cross-media effect is occurring online between digital tactics and offline between digital and traditional print and TV. Media buyers and marketers need that real-time view to make their choices.
“We provide clients with the ability to change and react in real time as to how you’re going to bid on an ad impression or on clicks-for-search or Facebook or any other media. It’s key to enable people to see not only what’s going on, but to act on it,” says Marc Poirier, CMO of Acquisio, which sells a performance media platform for agencies.
“Data is the fuel that powers all smart marketing decisions,” says Mark S. Zagorski, CEO of eXelate, which offers a digital marketing data and analytics engine. “And, while more data isn’t always better, we’re seeing that more valuable data and the proper analysis of it can help accelerate marketer performance.”
Shifting dollars to social and mobile
While overall digital spending is growing, some categories are increasing faster than others. For example, the Interactive Advertising Bureau didn’t break out mobile as a separate category until this past year, but in 2011, mobile ad spending hit $1.6 billion and accounts for 5 percent of total digital ad spend.
Social probably presents the greatest opportunity. According to comScore, as of the end of 2011, social networking accounted for one of every five minutes spent online. Even so, the study found that social networking lags when it comes to attracting ad dollars, capturing 15 percent of spending on U.S. display advertising, despite serving up more than a quarter of the impressions.
Most of this comes from Facebook, which had ad revenues of $3.1 billion in 2011, according to its recent filings. And eMarketer forecasts it will be more than $5 billion this year.
Ferraro began using Facebook last year as part of its Christmas ad campaign for Nutella. The company found that the Facebook ads outperformed their TV ads, and it attributed 15 percent of its holiday sales to that channel. “As well as proving incremental reach and a positive cross-media effect between TV and Facebook, we demonstrated that Facebook lifts sales for [CPG brands] in brick-and-mortar stores,” says Angela Kim, new media manager for Ferrero.
As the Nutella example shows, dollars are also shifting between TV and online, and digital video spend will further complicate that. Media buyers are looking at ways to integrate TV and online video spending, if not this year, then in the near future. In 2012, online video ad spend is expected to exceed $3 billion, a nearly 55 percent increase from 2011, according to eMarketer, and that spending could triple to $9.3 billion by 2016.
“The beauty today is that online video is almost on par with broadcast TV in terms of the quality of the delivery and that everything about the digital engagement is measurable,” says Art Zeidman, president of Unruly Media, a social video platform. “There are companies like ours that are starting to conduct research to measure uplift, brand affinity, recall, association and intent to purchase via exposure to online video.”
Moving towards digital branding
Traditionally, driven by a reliance on last-click conversions, the bulk of online advertising has had some kind of direct response behavior, with success measured strictly by consumer action, not consumer attitude. This “spray and pray” approach often has meant buying mass impressions and hoping for conversions. Media buyers, in turn, have been highly dependent on clicks as a metric for evaluating campaign performance.
But advertisers are increasingly willing to look at non-click metrics such as brand lift. It’s a realization that if online is to succeed, it can’t simply be about driving immediate purchase decisions. “We have to be more deliberate about allowing consumers to go down certain paths. It doesn’t always have to be about buying,” says BBDO’s Himmelsbach. “It could also be about feeling better about the brand.”
The Sauza women’s campaign, for instance, had a significant branding element, enhanced by the social nature of the media placements. Sauza wants to create positive brand associations among women, or as Lamb puts it, to build “a memorable, meaningful brand connection with [a woman] that more importantly she’s sure to talk about with her friends.”
A recent eMarketer report, Quantifying Digital Brand Ad Effectiveness: Finding the Right Mix of Meaningful Metrics, acknowledged that there isn’t always a clear cause and effect when it comes to the success of a digital campaign.
“Marketers must break old habits of using single measures of success—be it traditional count metrics such as the GRP or native digital measures such as click through or page view,” says eMarketer analyst Lauren Fisher, author of the report. “Instead, they must look to uncover the right mix of traditional brand health metrics and select digital measures of engagement.”
“We’re migrating away from we call ‘swim lane’ measurements and moving more towards looking at the portfolio’s impact and its result so you can adjust in a meaningful way,” says Horizon’s Williams. “If you’re not looking at cross-channel influence, you’re shot-gunning investment across a bunch of digital channels and hoping you’re learning something. But you’re not.”
All this means that brands need to get past digital “impressions” and into richer, predictive analytics. As digital providers allow marketers to drill deeper into data, brands will be able to target consumers across digital marketing channels. Predictive marketing capabilities and analysis will allow marketers to create personalized experiences across platforms to maximize ROI.
“With all the data and the digital information we have, we can get incredibly personalized and predictive about where customers will be, without being overly deliberate or intrusive, of course,” says BBDO’s Himmelsbach. “We have all this information. It’s just a matter of what we do with it.”