It's its singular ability to micro-target messages
By Diego Vasquez
Jun 25, 2009
The future of digital advertising can be summed up in one word: Customization. That will drive growth in all manner of digital media, from email marketing to search to mobile phones, over the coming years, and because of it, online ad spending will hold up better than offline as this recession lifts. That’s the conclusion of a new report from Experian Marketing Services, which also examines the current state of online advertising and highlights trends of importance to advertisers. Customization is the biggest. It allows advertisers to tailor their messages to very targeted subgroups, and that increases the likelihood of a positive response. Customization gives digital advertising a nice advantage over traditional offline media, which do not allow for that sort of personalization. Ashley Johnston, vice president of marketing at Experian Marketing Services, talks to Media Life about the cost-effectiveness of digital marketing, how it has evolved, and the struggle social networking sites face in figuring out how to monetize their users.
Why is digital marketing more cost-effective than traditional?
Aside from the obvious production costs such as airtime, crews, agency costs, etc., the real value is gleaned through the quantifiable metrics of digital advertising including the inherent targeting, segmentation and testing capabilities that this channel provides.
But ultimately, the cost-effectiveness of any campaign (digital or traditional), comes down to targeting techniques and tracking return on investment, and that's where digital has the biggest advantage.
Most of today’s brands leverage both mediums to engage customers—creating integrated campaigns that more accurately acknowledge the purchase triggers and drivers of individual customers.
Why will online ad spending and especially paid search remain resistant to a short-term economic slowdown?
Paid search has a few things working in its favor, despite the economic slowdown.
Overall changes in the ratio of offline to online ad spending, as well as increased search engine usage by consumers, has bolstered the position of search marketing.
In fact, recent research from Experian Hitwise found that search engines continue to be the primary way internet users navigate to key industry categories.
Comparing April 2009 with April 2008, Business and Finance, Sports and Online Video categories, Hitwise found double-digit increases in these categories’ share of traffic coming directly from search engines.
Also, inherent to the value of pay-per-click (PPC) advertising during the economic slowdown, is the premise that you are only paying for clicks by people who are interested in that particular search term.
We've seen some growth of rich media and video ads. How much bigger will these sectors get, and why are they appealing to advertisers?
Rich media will continue to grow as marketers seek to leverage more progressive and viral-savvy technologies and tools.
The appeal of rich media is evident: you can have the persuasiveness of a TV spot, the interactivity of a web site, and the tracking ability of an email campaign.
The value is there, it's just a matter of finding the right balance with audiences' expectations and what they are willing and able to consume.
Has digital marketing done a good enough job evolving as consumers’ online behavior has changed? Why or why not? Please give an example.
The digital space has presented both consumers and marketers with more choices in how they engage with one another than ever before. Consumers have more control over the type of content they receive, the frequency in which they receive it, and the channels through which they receive them.
This presents a win-win for both groups.
Digital marketing has allowed marketing to evolve to more of a conversation. It’s allowed marketers and consumers to have a more meaningful relationship and dialogue with one another. Brands like Zappos, Rolling Stone, Wet Seal and Borders have all evolved their marketing to reflect the behaviors and interests of their customers through multiple online mediums.
It’s exciting to see the widespread adoption of these mediums and the creative approaches brands are taking with their marketing strategies.
You say "By measuring only the ads that result in clicks and conversions, marketers are shortchanging all of the sites that exposed those converters to advertising before the click." What does that mean exactly, and how can advertisers be mindful of the impact of multiple impressions?
Regardless of your marketing strategy, it is vital to note external factors in your marketing reports, as they often play a key role in influencing online behavior.
Measuring site traffic across a comprehensive campaign timeline can help marketers identify indirect benefits of their campaigns, as well as elements beyond their control.
Think of the random traffic burst Research In Motion must have gotten during the presidential election when a candidate professed his love for his RIM-produced BlackBerry. Sometimes the best traffic generators are the ones you never planned for.
What are conversion drivers, and how can media buyers and planners take advantage of them?
Conversion drivers boil down to how relevant the message is to the individual consumer.
Each customer segment has a particular set of ideals, phrases, imagery and emotions that they are likely to respond to positively. The key is determining what those motivational factors are, and then identifying a scheme to segment your customers appropriately.
Marketers should use all of the vast consumer data available to them today, including demographic, psychographic, attitudinal and geographic data in order to strike the right cord with their customers. This can come from data collection techniques, or by working with a trusted consumer insight provider to create segments relevant to your business.
Why is increasing the frequency of email campaigns a sound strategy?
Each email program has an optimal cadence that is just waiting to be discovered.
For example, businesses that have more brand-conscious customers, such as the fashion-forward customers of Neiman Marcus, emailing every day actually makes sense. Their customers get value in seeing the latest trends in fashion, a fast-moving industry, on a daily basis.
For other retailers, mailing once a day could cause list fatigue and subscriber opt-outs. The lesson to be learned here is that each brand, customer and engagement is unique so testing should play a big role in your overall strategy.
You find that consumers are increasingly entering branded terms during their searches. How does this impact search marketing techniques?
The data we have from Experian Hitwise shows that branded searches increased 18 percent from first quarter 2005 to fourth quarter 2008, as consumers are increasingly entering branded terms (such as company or product names) to navigate search engines.
As we stated in the report, there is an increasing trend among consumers to use branded terms in their searches. In first quarter 2005, 71 percent of the top 1,500 search terms were branded, increasing to 89 percent in fourth quarter 2008.
So while many consumers are aware of what they are looking for, they prefer to use a search engine to navigate rather than typing a URL directly into the browser bar. Branded search proves that brand advertising helps feed your overall awareness when it comes to online marketing.
Many social networking sites have thus far had trouble monetizing their success. Will this change over the next few years, and what strategies must they use to attract more advertising?
That's a great question and one that all of the social networks are trying to figure out right now.
The big issue revolves around transparency and targeted advertising.
People are skeptical/concerned as to what social networks are doing with their information (the combination of so much personal information, combined with behavioral data) when it comes to targeted ads. So it will be interesting to see how this develops over time.
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