19 Feb Digital marketing: profitability and impact on management
The digital revolution is increasing the impact of marketing and advertising investment in management, by monitoring information to segment markets and allow strategies based on the customer’s life cycle, with a view to obtaining a better ROI from campaigns. You may also like to read putting flyers on cars via Ask4files.com.
Digital marketing is already a first-rate predictive tool that allows us to know exactly not only the income that a client will generate in the future in order to establish a business strategy, but also to know the benefit obtained from a certain expenditure (ROI) in advertising. . The information is already here, and the real challenge is to access it and bridge the gap between technology and management, which requires advertisers with skills and abilities that are very different from today. The new panorama is promoting a progressive transfer towards a digital investment whose keys to success are the possibility of choosing the type of client, increasing the purchasing power, as well as the strict control of the results and with it the profitability of the campaigns.
Despite this reality, the pending issue in advertising departments is both the application of a marketing system focused on ROI that establishes a causal link between strategy and tactics based on operational and specific metrics, as well as the evaluation of the impact of this strategy in the value generated for the company. One thing to keep in mind is that in the industrial sector, only 21% of marketing managers claim to be able to measure the ROI of their business operations and are skeptical about the concept and its application and causal relationship with other KPIs (key performance indicators). For his part, Eric Schmidt, CEO of Google, points out that corporate marketing is the last bastion of irresponsible spending in corporate America.
Towards new innovative models
Marketing departments are focused on improving performance indicators, but many of their managers admit that they continue to base their budget calculations on obsolete criteria, such as the previous year’s history, instinct, or intuition. There is also consensus that these conventional tools will progressively give way to others focused on decision-making based on forecasts calculated with the analysis of an increasingly wide range of data: big data and the challenge of turning it into smart data.
In this context, a study by the software development company Ifbyphone shows that the most effective metrics for calculating the ROI of advertising investment are the closing percentages (52%), the cost per acquisition (51%), the cost per lead (45% ). ) and the average size of the sale (40%). The stumbling block is that the calculation for a traditional advertising investment such as television is difficult, and what is not measured does not exist. This reality has allowed the industry to live placidly for quite some time, but currently, there are alternatives, and budgets are closely watched.
At a time when the crisis is giving way to a situation of greater stability, it seems clear that we will not return to the previous situation in a context in which the digital revolution is rapidly changing the way we live, work and we consume About 40 % of the advertising pie is today in the hands of conventional media, mainly television and the Internet, with 40% and 20%, respectively. In an environment of strong budget constraints that are more acute in industrial corporations, the marketing departments of all types of organizations have defended their contribution to the company’s value creation. According to McKinsey data, global spending on advertising exceeds one trillion dollars and accounts for between 1% and 2% of world GDP.
In the industry, only 21% of marketing managers say they are able to measure the ROI of their business operations.
Digital marketing and optimization of resources
Faced with this reality, there is increasing pressure on marketing managers to measure the true added value of the items assigned to their budgets. After the crisis, the optimization of resources is key, and more and more CEOs – and not advertising or marketing directors – are involved in how these advertising funds are used and in their allocation. Advertising departments are rapidly improving performance indicators to provide an objective guide from which to drive the impact of marketing and ad spending in their management systems.
Digital marketing makes it possible to quantitatively isolate each step taken to get a client and monitor the profitability it provides, the two key components of ROI. The starting point is to generate traffic and measure the cost of each visit, and also the digital world shows us how much of this traffic has been converted into leads and where the ones that fall by the wayside come from. Thus, it is possible to know the profitability of a campaign almost to the millimeter and in real-time, analyzing all kinds of data, visits, contacts, or sales. In this way, a forecast model can be configured, investments refined and focused on generating higher-quality traffic, as well as dedicating specific resources to boosting leads. So that they become sales through segmented offers, seeking cross-selling, or reinforcing the brand.
It is about focusing on profitability, not just revenue, taking into account the associated costs. In this way, we can see from a transactional perspective the income derived from the client or track the relationship with that client over time, discovering if it is profitable to bet on the business that it can provide us in the future.
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