While traditional media such as television currently maintain a sizable lead in expenditures, forecasts indicate that digital-ad spending is closing the gap, growing from $32 billion in 2011 to $60 billion (80 percent of TV- advertising total) by 2017.1 And mobile-ad spending alone will account for 45 percent of all digital outlays by 2017.
Despite the surge in digital spending, the operational infrastructure required to make it work effectively (such as an agile IT architecture, automated processes, integrated business and IT capabilities) is painfully behind—even for those among the top 20 to 50 digital spenders in the world.
Across many organizations, business units pursue their own digital strategies with an independent digital-marketing budget (for example, tied to a business unit or type of customer), leading to varying results and limited economies of scale. External agencies are often hired to optimize different areas of digital marketing–for example, the agency handling the paid search budget may be different from the agency advising on organic search-engine optimization (SEO). This approach means that key decision makers spend more time trying to coordinate efforts and rationalize competing budget requests, often preventing them from having a unified view on how to allocate the company’s digital-marketing spending.
A typical company’s digital buy can have as many as 20,000 keywords and 10,000 display ads by size, type, and placement, each with individual performance information. In such a data-rich environment, in-depth analysis at the granular level can identify significantly more value by uncovering both good and poor performance than reliance on misleading averages.
However, several approaches―ranging from heuristics to survey data on the consumer decision journey to econometric modeling2―can enable companies to get a much clearer view of how digital channels affect analog ones (and vice versa). By analyzing web triggers and web behavior and linking it to purchase behavior (both online and offline), they discovered that digital ads were driving about 0.4 orders in other channels for every order they drove online.
Best-in-class digital procurement relies on keeping up to speed with the latest innovations in the market (for example, real-time bidding) but also enforcing a unified cost model that all agencies use so that companies can clearly compare products and make better decisions. In the rush to boost returns from paid media, companies often overlook the significant value that can be captured by maximizing the value from owned media (such as a company website) and earned media (such as a blogger writing about your product).3 When managed properly, this category can help reduce the need for paid media, driving higher ROI in the process. … By profiling different consumer paths for all incomplete checkouts on its website, it developed a tailored retargeting strategy for each type of consumer, which resulted in a twofold increase in ROI.