Why is digital advertising underachieving?

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Apr 06, 2017
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MarketingCharts staff

Through a special arrangement, presented here for discussion is a summary of a current article from MarketingCharts, a Watershed Publishing publication providing up-to-the-minute data and research to marketers.

Some sobering results from Boston Consulting Group (BCG) and Google Digital Academy: on a 100-point scale, marketers working at advertisers around the world score their organizations’ digital capabilities at an average of just 57.

Worse yet, that number hasn’t budged since the last time the survey was fielded 18 months earlier. To arrive at their conclusions, the researchers surveyed 2,200 marketers at 141 advertisers in 41 countries around the globe. So where are advertising organizations having the most trouble?

The study results show that mobile advertising is the biggest pain point among channels, with an average digital capability score of just 45, followed by mobile web and apps (51.1) and display media (55.9). Respondents seem more confident in their abilities to master social media (66.6) and search (65.5), while video (52.1) also presents challenges.

Marketing analytics scored an average of almost 60, but advertisers gave themselves low scores in testing (49.8). Digital targeting (53.3) is also a troublesome area.

The findings found advertisers especially weak in mapping the consumer journey, tailoring content to match the stages of that journey, using ROI metrics to adjust the marketing mix across channels for greater impact, and measuring the effects of their campaigns on actual business outcomes such as sales. Attracting and retaining critical digital talent and receiving support from finance, legal, and IT were also seen as hurdles.

There is one silver lining, though, if it could be called that: in a corresponding survey of 2,900 employees at 126 advertising agencies in 28 countries, respondents seemed more confident in their abilities. Their overall score of almost 68, for example, while not world-beating, was more than 10 points higher than their advertiser counterparts. In fact, agencies scored themselves higher than advertisers in each of the 15 capabilities measured.

The biggest gaps between agencies and advertisers? Mobile advertising (62.4 for agencies vs. 45 for advertisers); display media (68.7 and 55.9, respectively); and digital targeting (67.2 and 53.3, respectively).

DISCUSSION QUESTIONS: Why has the transition from traditional to digital been so rocky for advertising? Do you see planning, executing or measuring as the biggest hurdle toward improving digital advertising performance?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Analytics and the growing number of advertising instruments have raised the bar significantly."
"The problem is that silos persist among paid, owned and earned media channels in many companies..."
"First, most brand content is not valued by shoppers or customers as it is shallow marketing drivel."

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24 Comments on "Why is digital advertising underachieving?"


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Brandon Rael
BrainTrust

The biggest challenge for the industrial advertising complex, both digital and traditional, is that the Millennial generation has almost an aversion and resistance to advertising in general. Folks have paid a premium (Netflix, Amazon Prime, Hulu), to simply opt out of advertising. The expectations are that the brands and marketers should have all the insights they need to offer compelling, personalized promotions and advertising in a seamless and non-creepy manner.

What has been quite effective is giving the digital native population the option to opt in to advertising, emails and digital promotions. They want to control this journey and relationship with the brands. If the brands, retailers and marketers offer incentives, a sense of community, transparency, naturally intriguing promotions and limited-time offers you have a winner.

Scott Galloway and the L2 team succinctly captured the current state of the industrial advertising complex and where we are going from here.

Lyle Bunn (Ph.D. Hon)
Guest

Scott’s L2 presentation is a must-see for all media professionals. Good note Brandon.

Brandon Rael
BrainTrust

Couldn’t agree more Lyle! One of my favorites! I even would recommend that all professionals, media or otherwise, watch this as it is extremely informative and captures how advertising has evolved into what it is today.

Jasmine Glasheen
BrainTrust
It’s true that Millennials aren’t interested in traditional advertising. Successful advertising initiatives will be focused on engagement, storytelling, identification, and/or humor. I realize that’s pretty vague, so let’s get down to specifics: take a look at the most popular Super Bowl ads this year. Kia, “Hero’s Journey” featured female comedian Melissa Mcarthy on a humorous quest to save the whales. Not only are the political undertones of such a commercial undeniable, but the ad connected with customers by making us laugh. And we feel subtly confident that Kia is one of the good guys. The fact that the second most popular ad starts out with female comedian Tina Fey is not a fluke, guys. This is how brands make a connection in the modern era. And the third most popular ad, Audi’s “Daughter” is undeniably taking a pro-women stance with their brand. The commercial’s entire message is “We’re one of the good guys. We advocate for women, so you can feel good about buying from us.” So yes, “digital targeting” is a problem because companies… Read more »
Brandon Rael
BrainTrust

Thanks for sharing your thoughts Jasmine! Taking a stand, albeit a humorous/personalized one, is critical for resonating with the Millennial generation.

Max Goldberg
Guest

Since digital adversing reached viability marketers have been wrestling with how to effectively use it. There have always been a number of theories, but no truths. Marketers are still grappling with this dilemma. There is so much data and so many outlets that it’s not a seemingly simple matter of reach and frequency. Marketers need to constantly gather data, test strategies and tactics, measure results and then adjust accordingly. It’s an ongoing process.

Lyle Bunn (Ph.D. Hon)
Guest

Analytics and the growing number of advertising instruments have raised the bar significantly. And with increased options for ad commerce has come fraud as bots and counters misrepresent the realities of, in particular, online advertising. Madison Avenue has struggled to deliver value to brands in the face of these enormous changes while wary, on-the-go consumers set the bar even higher. As agencies run to GRPs and hustle to place ads (it is how they get paid), more thoughtful messaging approaches such as place-based digital out-of-home and native advertising on these and online devices are capturing a larger share of ad investment, but at less than 1 percent of overall ad spend (including merchandising dollars) share, it is clear that media agencies are asleep at the switch from a broadcast mentality to audience and contextual content. Agencies that can return to their roots of message composition and integrate tactical media placement will fare well, as will the brands they serve.

Adrian Weidmann
BrainTrust

In order to publish and present valued content to meet and match the shopper along her shopping journey you need to 1.) be able to curate and publish content relevant to the appropriate display and 2.) you have to have relevant and valued content.

First, most brand content is not valued by shoppers or customers as it is shallow marketing drivel. Telling valued stories through short video vignettes is the best as most people don’t take the time to read anymore, as evidenced by our communication being done through emojis! Second, most brand content is fragmented across numerous agencies and repositories and not managed and curated through a central publishing library.

Ricardo Belmar
BrainTrust

The main challenge to digital advertising from traditional models is with the execution of various different tactics and the resulting coordination in analysis of the results. Digital native generations (Millennials and Generation Z) have proven harder to influence via advertising and are more likely to opt out if given the chance if they do not see an intrinsic value in accepting advertising from a brand. Brands are having difficulty finding the right way to build relationships with their audience in an authentic manner across multiple digital platforms. It’s no surprise that mobile is seen as the most challenging as it has both tremendous potential as an advertising platform that strengthens relationships and as one where the consumer can easily dismiss, block or opt out of advertising completely. We are still in an evolutionary process in digital advertising and will continue to improve.

Lyle Bunn (Ph.D. Hon)
Guest

While the marketing profile world is structured around the paid-owned-earned media model, brands in retail, food services, financial services and other B2C areas are placing more emphasis on the use of their on-location owned media, such as dynamic signage to address patrons. The brand reinforcement and conversion that comes with these tools show measurable results in revenue and margin achievement, with the further benefit of adding vitality and improved ambiance to physical locations. The day of “cardboard as king” is over, as dynamic animated and video messages, departing, audience targeting and contextual content entice and satisfy consumers while allowing brands to tell their story, sell their story and enable customers to align with brand attributes.

Brian Kelly
Guest
2 years 9 months ago

Well, it’s complicated for most and very complicated for some. Digital channels are as complex as traditional ones, and because digital advertising facilitates commerce it is even more so. For our purposes here we’ll exclude search and social and focus on brand-generated content.

  1. Traditional delivers mass audiences in an apparent way that digital doesn’t — you know, that whole Super Bowl thing. Digital is low-reach and high frequency.
  2. Increased splinterization of audiences requires far more customized points of engagement. It functions as D2C media, e.g. snail mail, which requires multiple views.
  3. Communications planning: paid/earned/owned digital content can be delivered across multiple channels.
  4. Programmatic buying is problematic due to little transparency, fraud and viewability.
  5. IT requirements for marketing automation and data management often are outside the CMO’s core skills.

Measuring is the greatest hurdle as solid data to confirm ROI is often challenging.

Charles Dimov
Guest

Part of the tricky transition has been the need to be continually learning, evolving and changing with the digital landscape. Most marketers are still not used to the new mindspace. Marketers have to be ready to measure and analyze everything they can about a campaign to refine, fix and adjust as they go. Marketers also have to go in with an experimentation-oriented mindset. It is about trying new angles and trying two to 14 variations; getting an early read then dropping the under-performers and doubling down on the winners.

Ralph Jacobson
BrainTrust

All of the aspects of digital (planning, executing, measuring, etc.) can be daunting if the objective is not well-defined. While many retailers are jumping in with a me-too objective, we all need to really understand the “who,” the “what” and the “why” of going digital. The “who” refers to the target audience. This is easier said than done, and should never be assumed. The “what” is the content and delivery channel(s). And the “why” is the true, intentional business objective. This is because both shoppers and marketing and advertising staff will typically default to traditional techniques within their comfort zone.

Digital will become more and more effective over time, of course. We are seeing more and more retail and CPG brands migrate to digital, exceeding 50 percent of their trade promo spend as of this year.

Sean Wargo
Guest

Part of what we are seeing is a disconnect between the vision of what we’d like to be possible and what is actually easy to accomplish. Take the data side of digital advertising in particular. While the collective vision these days is enamored with Big Data and mapping the customer journey, the actual logistics of doing so are much harder than one might think. Companies today are inundated with data from multiple sources. Coherently and effectively mapping that data together is a large challenge which can’t simply be wished away. It requires significant investment in the appropriate BI skills, tools and processes to accomplish — something which is still evolving. Yes, some cool solutions for data integration and visualization exist, but a company still needs to provide infrastructure to support it. Chalk it up to an area of major opportunity for firms with the savvy to help guide this process of integration as we go from here.

Julie Bernard
Guest
This data highlights the challenges inherent to the transformation of traditional marketing approaches into contextual, location-informed, next-generation mobile experiences. And yes, these challenges are being felt across verticals. It’s not only marketing leadership that’s working to address mobile consumers’ expectations; it’s also our creative directors, who have to reinvent digital ads from desktop-display models of 10 years ago (or more), remaking them into a dynamic range of immersive, context-rich formats for the future. And it’s our sales leaders, who have to translate all this progress and value into something that advertisers, agencies and other partners can grasp with immediacy and confidence. Shifting the outcome of studies like this one, empowering the marketing ecosystem to be mobile-savvy, deeply in touch with the omnichannel consumer journey and gathering the measurements we need to deliver the most effective campaigns — all of this will turn on the sophistication and scale with which we approach the industry’s technology partners. Marketing as a whole must embrace, learn along with and then empower its partner teams of mobile engineers, app and web developers… Read more »
Dan Raftery
Guest

The biggest problem here is the notion that there should be a transition, as stated in the question. Rather, it should be approached as an additional ad channel, mainly because of the increasing fragmentation in society. The mass market is no longer reachable by advertising in one or two channels.

On the plus side, if you can define your segment as one that lives in the digital space, then you would transition to digital. Marketers find it increasingly complicated, for sure. Don’t expect this to change any time soon.

Camille P. Schuster, PhD.
BrainTrust

What is the difference between digital advertising and digital marketing? Which tools are included in each or both? How are those tools and metrics integrated with your company’s promotion strategy? How is this strategy personalized for your consumers? Examining the effectiveness of one piece without considering the whole is like examining one part of the elephant.

Gib Bassett
BrainTrust

From my experience with customers, the problem is that advertising in a digital context has remained a separate function, budget and activity apart from the broader digital marketing efforts of retailers as well as consumer goods organizations. While targeting messages at select audiences is a benefit of digital ads over mass media channels, when it’s not stitched into a broader customer acquisition and engagement strategy you lose a lot of the potential benefits that extend into the dialogs and orchestrated marketing that is possible on the back end of converting an eyeball to a known consumer. The problem is that silos persist among paid, owned and earned media channels in many companies and needs to be resolved at technical and business process levels. This is challenging because agencies tend to control the dialog around media, while internal staff control direct digital consumer engagement. These groups need to work in unison.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
2 years 9 months ago

Digital advertising was sold with tremendous overstatement and hype. Marketers are realizing it will never deliver on what was promised to them.

And that is a good thing. Because digital is merely a media option — one of many. And as a media option, it is incredibly fragmented and offers little control over knowing that you are getting the value you think you paid for.

Advertisers need to be very careful about what they ask digital ads to do for them. So I think this survey reflects a dawning reality that digital hasn’t lived up to the hype. Now let’s let it live among the many media options while we focus on the most powerful strategic options — including choosing the best mix of all media.

gordon arnold
Guest
For decades advertisers have struggled with getting a willing audience for their message — any message for that matter. We all have something to say and are willing to pay for the audience regardless of the severe levels of unwillingness and or apathy present in the audience. Entertainment, coupons, contests and many more gimmicks are now the mainstay of what must be done to get listeners. Consumers are willing to purchase hardware and software to rid themselves from the drudgery of listening to advertising of any sort. What people of any and all demographics do want is information. As long as the person in front of you is feeling informed, the value of the presentation is present and the message content is retained to levels of stimulation. The sad truth is that you can say anything to people and they will use the information to your benefit if the message is listened to, clear and compelling. So it isn’t the message, it is the messenger that is being turned off in today’s advertising. It is… Read more »
Cate Trotter
BrainTrust

I think digital advertising often falls down in its planning and execution. More than ever, I think audiences are looking for adverts to be relevant and not to interrupt their journey. How many of us have skipped ads on videos for example because they’re a) not at all relevant to us and b) an unwanted annoyance getting in the way of the thing we want to view?

I think there’s a lot of work still to be done around tailored content, so that audiences only ever see ads that are personal to them in some way and offer them value. There’s a lot of bad adverts out there still and people are more and more equipped to spot and ignore them.

Craig Sundstrom
Guest

I would hasten to point out this survey didn’t actually measure effectiveness, it measured people’s opinions of effectiveness, which to me reinforces the point that proof of results remains the problem. Jon Wanamaker’s gripe of not knowing which half of his advertising money is being wasted seems to still ring true.

Tom Brown
Guest
2 years 9 months ago

A survey where marketers score their own organizations is absurd. Anyone that thinks this data means anything about what digital advertising is actually doing should do a little homework.

david salisbury
Guest

While digital advertising has a lot of hype and decent targeting, in an age of mobile ad blocks and reduced attention spans, it was bound to not always work. We are looking into how to better connect the dots between offline and online with our IoT solutions in the store of the future.

We have to remember that most retailers aren’t truly omnichannel natives yet. Most do multi-channel rather badly.

We talk about “digital influence” in retail, but it should be mobile influence. With smart speakers and new connected experiences such as AR teaming up with digital signage, we have to also begin to think post-mobile.

Knowing our target audience and anticipating and testing the channels that work the best for them, is now more important than ever. Increasingly integrated customer and product analytics has to inform the campaigns in real-time. With the resistance of consumers to hand over private info, technologies such as QR codes are making a resurgence to connect the dots better between offline and online offers.

wpDiscuz
Braintrust
"Analytics and the growing number of advertising instruments have raised the bar significantly."
"The problem is that silos persist among paid, owned and earned media channels in many companies..."
"First, most brand content is not valued by shoppers or customers as it is shallow marketing drivel."

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