The way marketing budgets are being spent has changed a lot recently and one of the hot-button issues – which is spooking some agencies – is whether advertisers should bundle their digital, search and social media activities into a single agency. This trend was underlined by a recent Econsultancy report that shows that 71 per cent of businesses worldwide plan to increase their spending on digital marketing this year.
What’s going on? Why is the marketing industry increasingly going digital?
The article “Marketing is dead” published on the Harvard Business Review website last August gives some insight into the reasons. It cites research showing that 73 per cent of chief executives think “[chief marketing officers] lack business credibility and the ability to generate sufficient business growth” and 77 per cent of the same CEOs have “had it with all the talk about brand equity that can’t be linked to . . . equity or any other recognised financial metric”. These damning statistics suggest that in the post-GFC world, the “soft” metrics often used to justify marketing spend fail to deliver. Business leaders want each dollar spent on marketing to be linked to sales.
Digital marketing and social media excel in the area of measurement. Every activity can be measured, in real time, down to a single click.
Another, more important factor is that the consumer is driving real change in the market, forcing brands to interact in new ways. Social media and the consumption of content through digital channels have reached near ubiquity. While this will not spell the end of TV, radio and newspapers, digital is capturing a bigger proportion of market share. And today’s consumer is sophisticated.
When she wants something, she wants it personalised and she wants it right away. Only the online environment can meet these kinds of demands.
Businesses simply do not have the skills required to keep up with the pace of change and are looking to invest. IBM’s study, The 2012 IBM Tech Trends Report, found that across the four technology areas it explored – mobile, business analytics, cloud and social business – only one in 10 organisations had all the skills it needed. Within each area, roughly one-quarter reported major skill gaps and 60 per cent or more reported moderate to major shortfalls. An integrated approach digital marketing would address all of these areas so it makes sense to invest wisely.
The one thing for certain is that the marketing industry is going through upheaval. When it emerges, it will be permanently altered – and this is a really big deal.
As the famous management author Peter Drucker said, “Business has only two basic functions – marketing and innovation.”
Mark Cameron is CEO of digital strategy and social media agency Working Three.