A new Nielsen study uncovers key trends in digital marketing
Marketing is on the cusp of disruption. For the first time, marketers plan to spend more of their ad dollars on digital media than traditional channels. Digital now captures more than half of all advertising spending in the U.S.Opens a new window
But how do marketers perceive the effectiveness of all the new channels at their disposal? Are those insights driven by measurement data they can trust? How does perception versus reality ultimately influence budget decisions?
According to Nielsen’s new research, marketers’ enthusiasm for digital is limited by severe data quality issues and measurement challenges. Digital has made the customer journey more complex. With new metrics, platforms, and tools, measuring that journey is even more difficult.
While the number of digital channels continues to grow, skepticism around digital lingers. Many marketers have indicated that they don’t have the right tools to measure and compare ad campaigns’ ROI across all the channels they use.
The report finds that media investments are driven by a sense of effectiveness that isn’t entirely grounded in data, leading to wasted spend and huge missed opportunities. To maintain a seat at the table, marketers must prove their marketing strategy improves the top and bottom line.
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The new findings in the report provide an in-depth view into the state of the industry.
Digital Media Budgets Are Reliant on Perception Rather Than Data
The report found that novelty plays a huge role in marketers’ confidence. Newer channels tend to benefit from the doubt—even when measurement and a channel’s perceived effectiveness aren’t necessarily aligned. Moreover, a digital channel that’s perceived to be effective invites more spending even when that effectiveness cannot be readily verified—a scary proposition when millions of dollars could be at stake.
The story is very different for traditional media. Traditional media such as linear TV, radio, or print have been around for much longer, and their effectiveness is not a guarantee that budgets will increase. Consciously or not, marketers seem to hold traditional channels to a higher standard.
To move away from perceived value to unlocking real value, marketers need to seek out confirm that their decisions are well-founded.
Data Quality Is Low Priority
Running an effective advertising campaign starts with setting the right objectives and having a good idea of how to use all the media channels at one’s disposal. But once the strategy is in place, what are modern marketers focusing on?
The top priorities are targeting and reaching an audience with the best creatives possible. Audience targeting is ranked at the top by the most number of respondents (53%), followed by ad creative (37%), audience reach (31%), and data quality (28%).
Brands value data quality even less so than agencies do. This could become a problem in the long term. Companies typically have access to much more data about their brands than their agencies do (first-party customer data, partner data, multi-campaign performance data, historical trends, etc.).
Marketers need to focus on improving data quality because sophisticated targeting won’t mean anything if the data that sustains it isn’t accurate.
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Digital Will Break Through Advertising and Promotion Silos
Marketers view all forms of media (paid, owned, and earned) as much more critical to their success than trade promotions. For instance, owned media is very important to nearly 85% of respondents, but promotion barely hits the 30% mark for brands.
That’s a surprising result because brands generally spend more on trade promotions than they do on advertising, but that’s also a reminder that trade spending is often seen as a cost of doing business outside of the marketing department’s purview.
The report suggests that trade promotions are ripe for disruption. Digital will break down the silos between trade and above the line spend. Future technology such as augmented reality/virtual reality will reduce trial and error and give greater control in-store, enabling better planning and optimization.
Brands Are Cautious in Their Approach To OTT
OTT has the potential to be the ultimate advertising platform: a bridge between traditional and digital media, it combines, on paper at least, the reach and captive audiences of television with the addressability of paid search and video. But there are many reasons why it hasn’t been more widely adopted.
The report notes that concerns associated with measurement capabilities give pause to marketers’ largest number (62%). Internal knowledge gaps play a big role as well (58%). The most striking finding is that OTT adoption as an advertising platform is hampered by a wide variety of challenges—not just one or two.
But savvy marketers who want to be the first to this new channel before the competition crowds have the opportunity. Marketing success boils down to marketers’ ability to detect the complex web of factors that affect consumer decisions. Partnering with vendors to fill coverage gaps is one way brands can overcome these obstacles.
Marketers Prioritize New Customers Over the Old
Most advertisers accept the 80/20 rule as true: In general, approximately 80% of a company’s revenue and profits come from approximately 20% of its customers.
Despite the value of existing customers, marketers prioritize acquiring new customers and increasing brand awareness.
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The report found that for marketers acquiring new customers came out on top for 41% of all respondents. For 28% of respondents, increasing brand awareness is the top priority. Customer retention came in a distant third at just 13%, while preventing churn is least important.
This lack of focus on churn is a missed opportunity for marketers. Recent researchOpens a new window also suggests that global disloyalty is growing, with just 8% of consumers considering themselves firm loyalists to products.
To keep the revenue engine running, marketers need to segment high-value customers to guide media planning and messaging strategies.
“Our research found that the perception of a channel’s effectiveness rather than hard data sometimes drives media planning. Marketers (especially agencies) are bullish on relatively new digital channels such as paid search, video or social media, and they give these channels the benefit of the doubt. At the same time, they hold more established channels to a higher standard,†the report observes.
The good news is that the industry is hard at work to bring credible measurement solutions to market, make sense of these new channels, and compare performance across all channels, old and new. These solutions will level the playing field