Are retailers ‘blind’ to digital marketing’s flaws?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
Spending by manufacturers on digital marketing has almost tripled in the past five years, from 7.7 percent of total marketing spending in 2012 to a projected 19.9 percent this year. Yet retailer and shopper impact has lagged.
That’s according to the just-released 2017 Marketing Spending Industry Study from Cadent Consulting Group.
With about $225 billion being spent annually on marketing, significant money is being redirected with an incomplete understanding of ROI, says Don Stuart, managing director at Cadent, and Karen Strauss, principal at Cadent and co-author. The study’s title, “Blinded by the Light” — a reference to Bruce Springsteen’s song made famous by Manfred Mann in the 1970s — alludes to the challenge.
“If you know the song you may remember it is next to impossible to understand. Well, that’s one predicament facing most sales and marketing executives at consumer companies today, when it comes to the ROI on marketing expenditures,” says Mr. Stuart, warning against “chasing after the bright, shiny new objects but not thinking about marketing ROI.”
As digital marketing channels have developed, spending has also become increasingly fractured.
“Social media is expected to continue to grow into 2017, representing $1 in every $4 spent in digital, but is considered less influential by shoppers than its share of budget,” the Cadent research says. Digital/banner and online coupons will be the second-largest components at about 16.5 percent each. Online coupons carry disproportionate weight with shoppers.
Cadent notes that while digital spending continues to grow, retailers seem less wowed by most types of it. While online coupons and social media remain the most effective in the eyes of the retailer, both have declined in effectiveness versus two years ago. Online coupons are seen as most effective, but fell from 83 percent in 2014 to 75 percent in 2016.
Shoppers say digital coupons are the most influential, whether they come from the retailer or the manufacturer. Brand and retailer websites each have the second highest awareness and influence among shoppers, with banners holding third place, the Cadent research says.
DISCUSSION QUESTIONS: Are retailers embracing digital advertising at the expense of traditional approaches? Do you think retailers should be more or less aggressive with digital marketing? Which approaches should get more or less attention?