In 2017, digital ad spend reached $209 billion worldwide. According to Magna Global online, mobile ad spend will grow by an estimated 13% in 2018, while offline ad sales will continue to decrease.
It is clear that digital marketing represents the highest (and growing) spend of any channel in the industry right now, but remains the least visible and understood portion of overall marketing spend.
If you're like many marketers, you have insight into individual channels, like paid search and social, but chances are you're driving blind when you try to understand how all the digital campaigns work together across the entire customer journey. Maybe it feels like social display ads aren't performing because they're not leading to immediate results; but what would be the impact on other channels if you were to reduce budgets or remove them completely?
It's time to break down this 'walled garden' approach and demand more transparency. This calls for better insight into individual customer journeys, more visibility into third-party technology solutions and a fresh look at measuring performance and return on ad spend (ROAS) across all channels: social, display, affiliate, email, SEO and SEM.
Instead of perpetuating combative relationships - where the social team minimizes the value of search, and the affiliate team is screaming for budget - consider creating evaluation metrics for the entire digital strategy and incentivizing teams to work together. Data, insight and higher ROAS will follow.
Here are three steps to help you chip away at those walls in order to gain a better understanding of how your digital spend is working together.
#1 Improve digital marketing measurement methods
The only way to improve is to learn, and the only way to learn is to measure. In order to drive measurable revenue and ROAS, we need to shift how we measure marketing performance. While metrics for specific channels - e.g. click through rate for retargeting source or cost per click for AdWords - remain relevant, the real magic happens when viewed through the lens of the anonymous customer journey and multi-touch attribution. Instead of only looking at customer acquisition cost at a Channel or Source level, it's critical to dig into acquisition cost as it relates to each user's individual path.
For example, traditionally you'd look at total CAC by channel:
Cost of individual marketing channel (e.g. Facebook, Google AdWords) [divided by] # of new customer names = CAC per channel
However, this formula isn't accurate since the user likely interacted with more than just Facebook or AdWords; they probably interacted with both, multiple times, so that user may have actually cost you four times what you're calculating on a per channel basis.
A more effective way to measure cost is by individual user:
Cost of individual user's path [Touch 1: Facebook ($5) + Touch 2: Google AdWords ($15) + Touch 3: AdRoll Retargeting ($2)] = cost of individual user
With this revised approach to measuring digital ad spend, you can determine which path leads to the best ROAS: What's the least expensive? Most profitable? Which users have the highest lifetime spend?
#2 Refocus optimization efforts through attribution and prioritizing first-party data
Critical to improving digital ad spend is refocusing optimization efforts from tuning individual channels to optimizing the entire cross-channel customer journey. What happens when AdWords is combined with a retargeting source? How will removing Facebook impact conversions?
Merging insights through a multi-touch attribution strategy allows you to best understand which unique combination of interactions are most impactful along the customer journey. It accelerates your ability to find new audiences similar to those who have already converted, or best retarget those who have interacted in some way with your brand messages. And by assigning appropriate weight to every touchpoint that contributes to a consumer's path to purchase, multi-touch attribution allows you to assess marketing spend effectiveness across channels, devices and touchpoints.
#3 Redefine where the customer journey actually begins
It can be difficult to track when a consumer searches for a product, reads reviews and compares prices. Yet these largely ignored first steps at the top of the marketing funnel - what we call the "anonymous customer journey" - are among the most crucial times for connecting with consumers to understand and influence purchasing decisions.
Leading brands have figured out this is where they can win: by understanding all of a customer's interactions with messages in social media, display ads, etc. before they first identify themselves (e.g. by filling out a contact form or signing up for a newsletter.) It's a critical stage that you need to understand and actively track, and it shouldn't be a mystery.
Because most marketing organizations have historically operated in silos, where search is separate from social is separate from affiliate teams, having a holistic view of the digital marketing spend and customer journeys has been technically and culturally problematic. Just as Salesforce opened up visibility into sales campaigns, now it's time to deliver the same for marketers.
When data is in sync, great insight follows, and that's when optimization efforts really take off. With visibility into not only individual channels and steps, but the complete customer journey, you'll be set up to deliver the right message to the right audience at the right time and optimize digital campaign spend that drives a new level of ROAS.