The ROI of online marketing

Brands are increasingly questioning online marketing effectiveness as the need to generate a measureable return on investment grows in importance. Platforms offering transparent measurement and audience insight may soon be the preferred channels for brands seeking to justify their expenditure.

The challenge

Retailers operate in an increasingly complex multichannel landscape where consumers frequently switch between different online and offline marketing channels along their journey towards a purchase. A key challenge is how to manage a consistent brand presence with relevant offers across all the different online channels – to raise awareness, engage interest, stimulate purchase and build customer loyalty.

Online commerce is growing at five times the pace of the high street. Some argue that consumer expectations already exceed what retailers can deliver online, such is the level of consumer sophistication.

Despite the desire to quantify the success of specific online activities, isolating a single catalyst is often difficult. Neatly attributing incremental sales to a new search campaign ignores the pivotal supporting role perhaps played by mobile, social media and display advertising in building initial consumer engagement and brand awareness in advance.

It can be argued that understanding how to secure better returns from your online marketing investment is largely about two key insights – firstly, having a clearly defined understanding of your marketing objectives and secondly, using the optimum mix of channels and activities to achieve objectives. The second point is about understanding how search, social media, mobile, display and web TV can be used in various combinations to achieve specific branding, customer acquisition and retention objectives. The optimum mix creates powerful synergies which deliver greater value than the sum of the parts. This is a crucial concept to grasp.

Understand your marketing objectives

Retailers typically run different online campaigns in parallel for branding, customer acquisition and retention. However, the emphasis will shift depending on business priorities, the product or service mix, target consumer groups, competitive position and emerging market opportunities.

Brands need to clearly define their pain points before a channel strategy can be planned to cover each objective.

Online channels

Search

This is a dominant channel, clearly measureable and extremely versatile. Search branding increases awareness, visibility and ‘share of search’ across specific keywords, which drives web traffic. For customer acquisition, search generates leads and sales conversions. Technology such as real time advertising enables the automated generation of relevant offers in response to both specific and generic searches. Search is also ideally suited to retention activity such as the provision of customer support.

Social media

This is such an integral part of many consumers’ lives that it is difficult to see how retailers can afford not to have a presence in this space. Social networks are a highly receptive channel for encouraging brand engagement, building relationships, pushing product ideas and promotions, as well as gathering consumer feedback. Given that friends and family are the key influencers in shaping perceptions, social media has a pivotal role to play in the process of building trust in a brand.

However, non-sales measurement is the Achilles heel for social. While it is possible to track the number of fans, likes, replies, views and tweets a brand attracts, linking this to ‘hard sales data’ is a problem. Marketers will stress a longer term view should be taken and that social media builds brand loyalty, which ultimately drives sales but often through other channels.

To a degree social remains a leap of faith that requires a long term commitment.
Riding to the marketers’ rescue is the emergence of Facebook and LinkedIn as sales channels. With Facebook, the opportunity to ‘micro-target’ local audiences with relevant offers tailored to their needs and known preferences is driving sales, with SMEs also tapping in to this new ‘localised’ frontier. Social is also proving to be a powerful channel for managing customer relations, as it is an ideal forum for providing support and sharing ideas with your brand’s followers.

Mobile

Mobile is considered by many as the key integrator of the multichannel. Mobile-driven brand activity has a powerful role to play in driving consumers to relevant apps and mobile web pages offering convenient shopping experiences. Apps provide great customer insights while also generating revenue in their own right, either through advertising on freemium models or paid for apps.

In terms of search, 15 per cent is already completed via smartphones (iPhones and Androids) so a strong brand presence is vital in this channel. Mobile makes it easy to deliver search offers and lead customers to purchase directly from their mobile. It is also invaluable for providing customer care, after-sales support and for conducting surveys.

Display

Display advertising is a key channel across all the big four display networks – Google, Facebook, LinkedIn and YouTube. It is the second largest channel, and potentially a more cost-effective method than print for promoting your brand to a specific target audience. Display can also be used to launch relevant ads to re-target consumers who may have recently left your website without making a purchase. Display can be combined with search to promote offers based on consumer interests tracked from previous search activity.

Web-TV

This is a small but rapidly growing channel which currently attracts less than 10 per cent of display spend. It provides an attractive alternative to mainstream TV channels. As such, some retailers are allocating part of their TV budget to experiment with YouTube and pay per view, which both offer attractive branding opportunities for certain TV spots.

Channel synergies and ROI

The real value measurement of online activity requires both an understanding of how to create synergies between the different channels, and knowledge of what drives sales conversions in each channel.

Some goods and services are better suited to promotion through certain channels. Facebook, being a classic ‘push’ channel, has shown great promise in selling good value and fun products such as wine and magazine subscriptions. Conversely, search is a more focused ‘pull’ sales channel that allows you to build stable long-term sales volumes across a whole product range. It is also important to understand how all the online channels can work together with offline – for example, over 50 per cent of UK consumers regularly use online to complete initial product research ahead of an offline purchase (according to a YouGov online survey of 2,000 shoppers across the UK – commissioned by Keybroker in May 2011).

Attaching a purely financial measure to a specific activity or channel is too limited in scope, given the complexity of the consumer purchase journey. However, it is possible to measure sales, customer acquisition costs (CAC), ad impressions, clicks and overall media spend against specific outcomes. Consumer activity can also be better understood by using conversion attribution software to identify the specific keywords, responses or behavioural patterns which were the likely catalyst for an online sale or website visit.

In addition, the social space can be a valuable channel for measuring and shaping brand perceptions. BT has managed to shed the negative perceptions toward its call centres by offering real-time customer support via Twitter. Others have used their Facebook ‘fans’ as focus groups to gauge audience response to their products and brand.

Ultimately, perhaps the question for brands is not whether to shift focus primarily to channels offering a financial ROI, but whether the greater long term value can be derived from a deeper understanding of how best to use each channel within the online marketing ‘orchestra’.