Digital Media Up, Spending . . . Not So Much
Okay, so now people spend an average of 30% of their total media time on digital media.
"Digital media," of course, being a general advertising industry expression for "all that online stuff, from Yahoo to YouTube." And "total media time," meaning "all the time they spend with every kind of media, from newspapers to virtual worlds."
Not bad! For a medium that most advertisers dismissed with the wave of a hand 10 years ago, online has grown to almost 1/3 of our total media attention.
No. Wait. Let’s say that again. Almost 1/3 of our total media attention goes online.
Now, sit back and think about that for a while. Ten short years have brought massive changes. From 65 million internet users total in 1997, to over a billion. From zero percent of our media time, to 30%. From huge, heavy, tethered-to-the-home PCs to ubiquitous wireless for laptops, and handheld devices that are designed for media consumption. The world has already changed.
What hasn’t changed is spending. Today, companies only spend about 5% of their media budget online, on average.
Let’s say that again, too: they spend 5% in a space where people spend 30% of their time.
Why is this? Is it some conspiracy by the giant agencies to keep television advertising going at all costs? Are advertisers afraid of online? Is it that their target audience is still more in front of the tube (er, panel) than the computer or the phone?
The short answer is there are no easy answers. A modern media mix will encompass both online and conventional media, skewing towards one or another based on the target audience. Total spending depends on the brand, its goals, and its current campaign focus. In some cases, it will skew more towards conventional media than seems appropriate.
But, 5%!
Yeah, I know. And I’ve started to wonder if the smaller-than-expected spend might be due to a simple factor: ROI. Not ROI in terms of "ROI is less for online marketing," but in terms of "ROI is measurable for online marketing."
Or, in other words, "I really don’t want the ROI of my marketing measured."
Conventional advertising is great that way. You really can’t tie a TV ad in with any specific purchase. You can wave your arms and talk about impressions and Neilsens and overall averages, but you can’t say that Joe Consumer and his wife Martha went out and bought a new Hoover because they saw an ad on the tube.
Online, you can. You can easily produce numbers like "our average cost to acquire a new customer is $17.28, for a $103.22 average sale through our online store." Which sounds good, unless your average cost to acquire a new customer is $408 for a $57 average sale.
The irony is that $408 cost for a $57 average sale might be a complete success in terms of conventional media, because the campaign delivered a $1.75 CPM, or $1.75 cost per thousand impressions.
And, if we could measure deeper into online, and track the people who simply saw the banner ad, then went to a brick and mortar store to purchase, that $408 for a $57 sale statistic might be completely incorrect. If we could track out a month or more, across all possible online purchase venues, the numbers might get even better. The campaign might be extremely successful, in terms you cannot measure.
But the $408 cost for $57 sale is what you have to bring to your marketing management, because that is what you measured.
And there goes what might be a highly effective campaign. Killed by ROI.
So, let’s ask ourselves: is this what is happening, in aggregate, online? Is this why spending doesn’t match media use? Is ROI all that it’s cracked up to be, with our limited ability to measure it?
