New problems are rarely fixed by applying old thinking. In the last decade, a combination of circumstances has evolved that requires new thinking from marketers. This new thinking takes advantage of the digital environment and transforms business as we know it.
Online advertising is continuing its inexorable rise and increasingly dominant within Australia’s total advertising spend. The latest Interactive Advertising Bureau (IAB) Australia results show online ads surged 33 per cent year on year to reach $1.6 billion for the September quarter.
According to the latest CEASA analysis, that means online advertising now accounts for 41.3 per cent of total advertising revenue.
That rapid growth can be attributed largely to three factors: The highly-measurable nature of online channels; the ability to target to a specific audience; and then the ability to attribute activity back to an outcome.
It is a set of capabilities that other media formats struggle to match. So if the growth of online spending is being fuelled by marketers’ desire for ROI, what future does that leave for offline sales and marketing channels?
“Digital is obviously a lot more granular in terms of it being at a user level,” says Andrew Hughes, a consultant with marketing agency, Louder. “Without the attribution underpinning investments, why would you continue to invest in a channel that you do not know is demonstrating success?”
Offline media and data providers are not ignorant to the problem of course, and in many instances are working together to provide greater attribution to offline media. One example is Quantium’s partnership with MCN to enable targeted advertising to predefined audiences through linear television.
At the same time, Hughes says more traditional offline media is being delivered through digital channels, such as streaming audio and video, while the OMA’s creation of the MOVE network, using eye tracking and other technology, creates a more robust measurement metric for outdoor.
But many of these projects do not solve the fundamental problem for marketers.
“Unless you are bringing it back to real users - so people who saw my ad and converted - everything else is inferred,” Hughes says. “There are correlations that you can draw between media spend through market mix modelling. But unless you are doing attribution at a customer level and targeting at a customer level, then you have big holes in your attribution.”
Mixing online with offline
That online data will inform offline performance seems inevitable. But according to founder and chief executive officer of data analytics agency Datalicious, Christian Bartens, more work needs to be done to bring the two worlds together, particularly with regards to mix modelling.
“In the offline world, you can’t record every single touchpoint, so the only thing you are left with is an econometric modelling exercise, like a media mix model,” Bartens says. “And you need at least two years of data to capture things like seasonality. It doesn’t really update with your changing media mix. Often the output gets forgotten or discounted three or four months down the track.”
So is it a case of online data to the rescue?
“Your digital data coming in on a day-to-day basis can be helping your offline model keep up to date and evolving over the months,” Bartens says. “But it is a difficult thing to do because you have to get the offline marketer to cooperate with the online marketer.
“You will see a convergence of those two areas - the digital attribution and the traditional media mix modelling for offline - over the next two to three years. I think that will happen pretty quickly.”
Head of media and digital for marketing consultancy Millward Brown, Mark Henning, agrees there is increasing pressure from clients to compare different media on a like-for-like basis.
“The cost of some of the data collection approaches is expensive,” he says. “So we are starting to look at how we can passively match up exposure to different media. That starts to bring in a range of different data options, and you can start pulling that together and get a better data aspect around that.”
The trend of bringing online and offline data together has also been noted by Nielsen, and head of its Media Industry Group, Monique Perry, is seeing more partnerships between online and offline consumer datasets to bridge the divide.
“Most if not all offline media also have digital businesses and are getting better at understanding their consumers across devices and meaningfully connecting the respective datasets together,” Perry says.
“Many of the big print media and TV networks that Nielsen work with in Australia have fantastic online and offline data about their consumers and are working hard to better tailor advertising and content for them across various screen sizes and media platforms.
“That being said, this all has to be underpinned by providing an enhanced consumer experience, otherwise we are all wasting our time.”
Not the answer to everything?
While the growth of digital appears unstoppable, that doesn’t mean that it is always the right solution for every situation. CEO of ADMA, Jodie Sangster, has noted a slight swing back to offline channels for some brands, as it they find it getting harder and harder to achieve cut through online.
“As marketers our job is to find the best way to reach customers, and sometimes we lose sight of that,” she says. “Because we can track digital and it can give us that real-time measurability doesn’t necessarily mean it is always the right channel to be putting more dollars into.
“A marketer’s job is to make sure they are looking across the full spectrum of channels and doing their diligence.”
Hence Sangster says the future remains a mix of online and offline channels. But for the latter, the problem of attribution remains.
“The topic of attribution and what drove the customer to take the next step has been a discussion for many years, because it is really difficult to do,” Sangster says. “But there are a number of technologies now which are specifically for trying to match online and offline data to make better purchasing decisions.
“Where companies are trying to get to is absolutely to be using both online and offline data to better understand what marketing is working for them and where to invest their dollars.”
The downside of data
But while the pursuit of measurability and attribution seems unstoppable, it is not without its dangers.
Speaking at the World Marketing & Sales Forum in Melbourne in November, professor of marketing at the Melbourne Business School, Ujwal Kayande, suggested the pressure on marketers to demonstrate ROI could be to the detriment of their career development.
“They start focusing on advertising, because you can measure the return on advertising investments,” he says. “It is a perfect way to demonstrate their value to the organisations.
“But it is making these marketers go into a much tinier silo than where they should be, which is talking at the boardroom level about where growth is going to come from. The moment you start becoming incredibly ROI focused, you start putting marketers into a small little hole. It’s a really big issue of our times.”
For Kayande, it is important marketers argue with their CEOs and break out of the pure ROI conversation.
“The way in which you are going to get growth is by innovating, and being so incredibly ROI focused and allowing data to drive that ROI is going it make you less and less innovative over time,” he says.
The solution is to ensure that the metrics of success are expanded beyond the simple ROI metrics. “We’ve got to also look more broadly at what kinds of investments are being made in new products and new markets,” Kayande says.
Bringing measurability to B2B
Melbourne-based sales B2B marketing specialist, MathMarketing, is seeking to take the effectiveness discussion a step further. Its chief executive officer, Hugh Macfarlane, says MathMarketing is connecting its sales planning tool to client CRM systems to measure progression rates and to provide correlations between tactics and effective progression, with visitors to its FunnelPlan website able to participate in an aggregated benchmark study.
“We’ve got 1000 plans in there at the moment, so we are actually getting per-tactic progression data out of it. When we have enough plans – and we intend getting to 100,000 – we can actually look at cross-correlation to work out probable effects,” he says.
The goal is to create a tool of sufficient complexity to give clients an understanding of what is working and what they should change.
“None of our clients are measuring the actual effective of an individual tactic in the way that you would any digital tactic,” Macfarlane says.“The whole notion that sales and marketing are arts and not sciences is used as an excuse to not measure that which they know they should.”