It is highly likely that this year investments in digital advertising will exceed investment in TV advertising. Globally, in some markets, companies spend more than 40 percent of their advertising budget on digital marketing, according to the study of media company Magna. We are rapidly approaching the point where companies will spend more on social, search, online video and display advertising than on traditional advertising platforms.
But building up advertising budgets for digital channels is not enough, according to the joint report of The Boston Consulting Group and Facebook titled The Digital Marketing Revolution Has Only Just Begun. The most successful companies are using today available large databases to radically personalize the user experience.
“Most traditional marketing technology that marketers have learned to use, such as the wide segmentation of consumers and marketing channels, are superfluous in digital marketing,” said Marc Schuuring, a partner at BCG and one of the authors of the report, adding: “These methods have been helpful to marketers ten or more years ago, but now their work has to be based on digital data of consumers.”
The era of personalization
Consumers are finding traditional marketing methods increasingly boring. More than 25 percent of all users of smart phones already installed ad blockers, according to eMarketer data, and this number is rapidly growing. When selecting new products and services, consumers more than ever rely on the advice of people whom they know and trust. In addition, consumers are more skilled in the use of digital technologies and increasingly impatient when they are served an ad that they are not interested in, is intrusive or irrelevant, which is why personalization is key element of differentiation.
New marketing technologies on the market allow for far more personalized and targeted advertising. Video is replacing traditional static ads. Data and analytics are encouraging advertisers to engage in experimental testing and learning and encourage media buying through automated platforms and auctions. In as little as three to five years, personalized advertising could occupy as much as eighty percent of the budget for digital advertising, and it is expected that it will continue its push into traditional media.
The most advanced digital marketers are involved in the analysis of piles of available data on consumers: media data, data about customer relations, information on the use of applications and so on, all with the purpose to better understand the behavior of individual consumers, what interests them, when are they thinking about buying, where they are and how they respond to specific advertising messages.
How can brands transfer to digital
In order to better take advantage of the transformation of digital marketing, BCG and Facebook have worked with the leading producers of consumer goods on the application of modern marketing techniques on specific business challenges.
These companies have taken advantage of three forces that fundamentally change the way in which marketing works:
- Access to a large number of data that are used in campaigns in real time.
- The ability to develop long-term and multi-channel access to the consumer (rather than one-time, random interactions).
- Flexibility in the application of multiple concepts and collecting feedback from consumers in real time.
All companies involved in the project recorded outstanding results through the use of new marketing techniques. “After the implementation of the pilot campaigns, companies reported that they had a number of positive results, including the growth of marketing ROI as much as 30 percent, a dramatic drop in the cost of acquiring new customers and a measurable increase in the use of applications and engagement of customers,” said Diederik Vismans, principal at BCG and one of the co-authors of the report: “When it is used correctly, digital marketing can completely transform the model of business growth.”
You can download the report here.
