Are CMOs Putting Too Many Eggs in One Media Basket?

According to recent research, U.S. digital advertising revenues rose 16% last year, and the trend indicates another double-digit percentage rise this year as well. As the economy improves and marketing budgets increase, the dollars are flowing disproportionately to online ads.

Marketers last year spent $19 billion on search advertising, $7 billion on social media ads, and almost $4 billion on display (primarily banner ads).

But are these increases the best way for CMOs to spend (still hard-earned) marketing dollars? Or would a different allocation across channels contribute more to long-term brand success? And how can CMOs make such decisions?

There are several reasons for CMOs to take a hard look at digital advertising, particularly non-search ads, in the coming year.

First, as the IAB research also notes, increased competition for limited ad space has led to “higher prices in the cost per click for ads.” More bucks will be required to get the same bang.

Second, ad blocking software is a growing concern. A quarter of all Internet users, and 41% of millennials, now use ad-blocking browser plugins. That’s a lot of eyeballs not seeing ads.

Third, and most importantly, spending on digital advertising needs to be balanced against other channels, as paid presence is just one pillar of a paid-owned-earned-shared media strategy–and not always the best for achieving long-term brand objectives.

paid owned earned shared media

Image credit: Pear Analytics

 

As noted here previously, the KPIs most important to CMOs fall into three groups: brand, competitive, and website performance measures.

Digital advertising can increase brand awareness, but must be created and targeted very carefully to have a chance of improving brand preference. Ads viewed as stalking or annoying (a significant concern, given the growing use of ad blockers noted above) can actually reduce brand preference.

Online ads can improve webshare (the competitive share of a brand’s web presence within a product/service category)—but it’s an expensive way to do so. And they can actually decrease website engagement, as ad landing pages often have high bounce rates.

None of this is to suggest brands should spend less on digital advertising, or even necessarily that they shouldn’t spend more. But CMOs do need to focus on the most revealing, future-looking KPIs in order to make the optimal decisions for their specific circumstances.

For more on this topic, download the Web Marketing KPIs white paper. Learn about web presence optimization as a web marketing strategy. And be sure to follow CMO Dave on his 2015 Measurement Odyssey on YouTube!