http://www.ft.com/cms/s/0/8383bbae-5e20-11e1-b1e9-00144feabdc0.html#ixzz1ocDNOQeg
Only a few years ago, digital marketers might have thought all was plain sailing. After a decade of disruption wreaked by the emergence of the popular web, companies and advertising agencies had finally understood the intricacies of placing online display and search ads.
Yet in the past few years, a new generation of technologies has come along to disrupt once again the way advertisers operate. Led by Facebook and Twitter, and joined by behemoths such as Google and a bevy of start-ups, these Silicon Valley misfits have muscled into the ad business and upended traditional assumptions about how companies should allocate marketing budgets.
In addition to search and display advertising, big companies must now factor in social media, video advertising, mobile marketing and daily deals.
“We’ve gone from display and search to this much longer list,” says Nick Law, chief creative officer in North America for R/GA, the digital agency. “These things are connected, and you can’t do one without the other.”
The promise of these platforms is tremendous. The new world of digital and social media marketing can give companies increased access to their customers, fresh insights into their preferences, a broader creative palette to work with, and additional data and metrics to study.
Yet there are unsolved questions over how best to organise and execute digital and social campaigns. No single formula has emerged, leaving most companies and ad agencies in a state of constant experimentation. There is also lingering confusion over how best to measure the effectiveness of a campaign, and a company’s return on investment.
Ann Lewnes, chief marketing officer of Adobe, the software company, says she pushed the company into digital and social marketing early on. “We saw the insights we could glean from customers, the iterations we could do on a campaign,” she says. “We saw the ability to really, really measure results.” Adobe now spends 74 per cent of its more than $100m marketing budget on digital.
Even for a digital-first company such as Adobe, each campaign is a fresh start of sorts. Ms Lewnes says 20 per cent of her budget is going towards experimental campaigns, and that each product launch requires a different mix of paid, earned and owned media.
Perhaps the largest shift in recent years has been the transition from the one-way, broadcast messaging of television, print and outdoor, to the two-way conversation that social options now allow companies to have with their consumers.
“It requires a shift in your perception,” says Maryam Banikarim, chief marketing officer of Gannett, the media company. “People find it hard to realise marketing is a two-way conversation rather than a one-way pushing out.”
Yet quantifying the effectiveness, and return on investment, of digital and social campaigns, remains a challenge. Rather than tracking click-through and conversion rates as with search and display advertising, marketers are trying to count followers, measure sentiment and analyse purchase intent.
“A lot of people are just measuring their fans and followers,” says Ms Lewnes. “But what’s important are the insights you can glean from the data. Understanding if someone is happy or unhappy with something.”
Social signals obtained from Twitter and Facebook can also give companies real-time insight. When MTV saw there was a spike in online conversations around the news that Beyoncé was pregnant, it added more pictures and stories about the story to its website.
Yet many markers remain dissatisfied with the state of online measurement.
Keith Weed, chief marketing officer of Unilever, the consumer products group that is the second-largest advertiser in the world, says: “Digital is in theory more measurable than anything else, in theory and in practice, but it’s not broad enough yet. What we’ll see is a significant maturation of ROI in digital.”
More insights and creative opportunities mean more work for marketing teams, and can mean increased costs for marketers.
In-house and at agencies, marketers are scrambling to acquire new skills, and add staff to monitor the exponential growth of online dialogue about companies.
“You have to throw bodies at that,” says Ms Lewnes. “There are people who have to monitor it all day.”
Myriad options are also forcing companies and agencies to change the way they work.
“Twenty years ago there were templates,” says Mr Law at R/GA. “Now, we don’t have a typical client engagement. Because media are so flexible, we can get very specific.”
One brand may need a robust Facebook page, while another may call for a strategy of engaging with consumers on message boards, blogs and elsewhere on the web. Such approaches are forcing departments within organisations to collaborate in new ways.
“It’s brought the marketing teams much closer together,” says Ms Lewnes. “They all used to be in their silos. PR was off operating by itself, advertising was operating by itself. Now they’re working together.”
At its best, this can result in truly integrated marketing campaigns, with a unified message being pushed out across television, print, radio, and the web.
“Things really are getting joined up,” says Mr Weed. “The same creative is going to flow across multiple screens.”
Growing access to the web in emerging markets is also allowing for truly global campaigns.
“A few years ago I would be engaging much more of a national base on campaigns,” says Mr Weed. “But Google and Facebook are truly global media companies in a way the world has never seen.”
The amount of money being committed to digital marketing varies widely, with more developed countries seeing a higher digital spend.
Unilever, for example, spends about 35 per cent of its US budget on digital, compared with 25 per cent in Europe, and just 4 per cent in India.
Yet emerging markets could rapidly catch up, as they adopt digital media.
“In emerging markets they’re going to go through these cycles much more quickly than us,” says Mr Law.
And digital advertising is still a small portion of global advertising, accounting for 16 per cent of total spend in 2011, according to ZenithOptimedia.
That figure is growing fast, but television is set to remain the biggest advertising platform, accounting for 40 per cent of total spend through at least 2013.
Managing the growing array of digital and social initiatives has forced companies to revise their relationships with ad agencies, as well.
Unilever reduced its roster of more than 400 digital agencies to fewer than 100, with just 12 lead global agencies, including Razorfish, AKQA and R/GA.
“We’re already fragmenting our spend across different media,” says Mr Weed. “If you fragment, the message you’re making it less cohesive and joined up.”
Technologies are changing fast, and few marketers would claim to know what new social platform might demand their attention a year from now.
Pinterest, the online pinboard and sharing site, is the latest to draw a legion of users – and the interest of marketers – without having proved its business model or staying power.
How this shift in the marketing world plays out will help determine the winners and losers in the years to come. At stake are the valuations of companies such as Facebook, which earned $3.7bn last year, mostly from advertising, and ispreparing to go public at a value of up to $100bn.
Yet some basic trends are emerging, with mobile access to the web leading the pack.
“If the first 1bn users connected to the internet through PCs, the next 1bn will be through mobile,” says Mr Weed, who recently visited a family in the slums of Mumbai who nonetheless had two mobile phones.
Unilever was the first and largest customer for Apple’s mobile iAd marketing platform, and has renewed its contract for a second year.
“I want to get to the future first,” Mr Weed says. “I don’t want to be following my competitors.”
If marketers continue to flock to new digital and social options, Facebook and its social media peers may prove their worth.
Yet if a proliferation of online options fragments advertisers’ spend, or if the promise of social media goes unfulfilled, this moment could one day be seen as another bubble.
Regardless of that, it seems certain that new technologies are destined to change the way consumers interact with brands.
Just as the web reshaped the advertising world a decade ago, the new world of digital and social media marketing is forcing companies and ad agencies to re-evaluate where, how and when they engage with potential customers.
“Ultimately, this concept of digital will disappear,” says Mr Weed.
“My 20-year-old son laughs at me when I talk about online and offline.”
