For consumer packaged goods marketers who have spent years putting the bulk of their budget into TV, outdoor and print, digital media can feel like a mysterious black hole with a murky ROI.
But digital is consuming an increasing portion of the typical marketing budget; PricewaterhouseCoopers released a study in June predicting that digital ad spending in the U.S. will top print spending for the first time this year.
CPG companies on average spend six percent of their marketing budgets on online media, half of what other companies in other industries are spending. Clearly, there is an enormous untapped opportunity for the CPG marketer who gets it right. And that means having a clear, holistic view of your digital marketing spend across your entire organization.
Digital Challenges for CPG Companies
While online activity holds great promise to better reach consumers researching products and shopping, it also adds a significant level of complexity for creating, executing and measuring marketing programs. After all, you need to consider not only the role of digital but how it impacts traditional CPG media—and vice versa.
Marketers must coordinate the various internal and external constituencies that often use different metrics to evaluate the success of online efforts. And as digital media spends increase, they have drawn the attention of manufacturers’ accounting and finance groups, eager for quantifiable data on results. This is especially true within CPG, where very detailed evaluation systems for media, promotions and trade activities have been entrenched in companies for years.
Many manufacturers assume digital media is an area where applying what they already know about marketing just doesn’t work. And the fact that there are numerous methodologies to quantify digital brand and ROI metrics—coupled with the reality that digital is often planned and bought independent of traditional media—can lead to confusion. This in turn can result in a lack of coordination across various teams in the organization that support a brand.
Of course, many of the “challenges” are really benefits. Digital provides choice, transparency, and a broad ecosystem supporting the brand. And as television advertising costs increase and viewership decreases, digital’s inherent advantages of cost and targeting will attract greater share of the marketing budgets and with that comes the need for accountability.
Solutions Begin with Taking a Holistic View
Marketers must begin thinking holistically about their digital programs, starting with several basic questions, including:
• Over the short term, what are the goals of the digital campaign and how do they tie with those of the broader advertising and marketing program?
• Over the longer term, how does this campaign contribute to brand goals such as share of shelf, sales and market share uplift?
• What specific consumer actions does the company want to drive—do you want them to visit a Web site, print a coupon, buy online, go to the store?
• How will the team track information disseminated and measure the success of the campaign, both in terms of direct consumer response as well as the effect on offline activity
With answers in hand, marketers need to define clear, measurable objectives that enable them to set expectations throughout their organizations, as well as understand what metrics need to be applied.
CPG marketers must focus on creating a “single point of truth” by integrating data from disparate databases, ensuring that all analytic, modeling and targeting work completed is based on one set of information. In addition, CPG companies should have a single point of responsibility—a chief digital officer or chief integration officer responsible for the entire digital picture to facilitate the creation of best practices and to apply lessons learned from other marketing campaigns. This person should also manage integration of online and offline activities.
Establishing metrics in advance of starting a digital program is critical and CPG marketers, media companies and ad agencies share similar needs. Manufacturers should agree on a measurement plan prior to implementation of the campaign, a much more effective approach (and about half as expensive as trying to measure after the fact). Marketers should also involve other executives who will be involved in evaluating the program to ensure senior executive buy in.
In addition to requiring processes for evaluating success of online activities, marketers must have in place approaches for evaluating the offline effect of online activity and vice versa.
Ad agencies and media companies should facilitate CPG investment in digital campaigns by developing measurement approaches that resemble what CPG marketers are accustomed to seeing for traditional TV, radio and print campaigns. These companies want to be able to tell the manufacturer client “this was the objective and our campaign achieved these objectives within your budget” in a format the CPG marketer is comfortable with.
CPG companies should consider designating a person whose responsibility it is to integrate all forms of marketing to ensure this holistic approach takes hold.
Create a Marketing Framework
Developing a methodology for creating, managing and evaluating digital media campaigns helps ensure marketing and financial success, while setting expectations that allow for experimentation and organizational learning. Things to consider include:
Experimentation: This allows you to find the answers to several key questions, like what level of spend is appropriate? Or does display work better than search? Relevant testing approaches include looking at what times of year require heavier marketing approaches, and testing creative before you roll out a campaign.
Strategic Assessment: Marketers must evaluate how digital media activity contributes to the comprehensive marketing mix, how does the digital campaign supports traditional media campaigns, and how traditional campaigns support digital media.
Refinement: Digital allows for—and requires—constant refinement. Marketers must continuously look at whether a campaign is moving brand metrics, and consider consumer, sales and customer data when tracking market performance. And based on results, marketers can qualitatively and quantitatively report on success to senior management as well as continuously adjust activities going forward to improve results.
Moving the marketing team to think holistically about all activities—including integrating data, applying analytics, implementing a measurement structure, executing the program and evaluating results—will help companies realize the greatest ROI from their digital media programs and give them a competitive advantage to influence their most valuable customers.
A marketer’s ultimate objective is to build a company’s brands and increase sales. Without a measurement and refinement framework that seeks to optimize the strengths the digital media program and the integrated digital/traditional media program will underperform the competition. A basic framework for managing digital and integrated campaigns is straightforward, but marketers must keep in mind that its most critical component is accountability. It requires the marketer to assign accountability within their organization so that they can drive that accountability through to their outside agencies and research partners.
Douglas Brooks is senior vice president, modeling & analytics solutions for SymphonyIRI Group, Inc. JP Beauchamp is senior vice president, consumer & shopper insights for SymphonyIRI.