Up to 60% of global marketing budgets being wasted every single year
Aug 3, 2015 8:00:00 AM
LONDON, UK - 3 August 2015 - New research by procurement services provider Proxima, finds that spend on digital marketing such as search engine optimisation, mobile apps and video-on-demand services in 2015 is failing to deliver the value companies should expect. With 50% of total advertising budgets in the UK (totalling around £7.9bn), and around 30% in the US (around £32.9bn) being spent on digital marketing, poor commercial management means brand and commercial content is not reaching the right audience.
Proxima’s marketing specialists found that up to 60% of global digital spend is wasted every single year. With up to 35% of all web activity being fraudulent or artificial and 54% of online ads not even being seen by a human, there are vast contrasts in spend effectiveness and a lack of transparency. It is therefore extremely difficult to correlate ROI in digital marketing back to direct commercial outcomes.
John Butcher, Marketing Services Director, Proxima, comments, “There are several factors causing a disconnect between digital activity and commercial outcomes: fear vs. rational thought as a driver for action; a generational gap within teams; measuring inputs vs. true business outcomes; and the gap between what is known and what is unknown in digital marketing. All of these factors combined create a lack of transparency and consequently, a lack of control over this significant area of business spend.”
Companies need to better understand how to buy digital marketing tools and channels, how to work with third party media networks and ultimately manage the digital marketing budget better. The involvement of procurement can help marketing leaders highlight the effectiveness (ROI) for each channel and component of digital marketing investment.
Butcher adds, “Achieving better control requires transparency across the entire spectrum of digital expenditure. For example spend on direct-to-customer acquisition channels has relatively clear ROI measures, as there’s no intermediary intervention. However, as the channel map moves from acquisition to engagement/retention, the number of intermediaries grows and ROI measurement becomes opaque.
“This opacity is resulting in ineffective digital marketing spend, fraud and wastage and because there is no “industry standard” approach, businesses do not have sufficient transparency, nor do they have sufficient capacity, to effectively control this area of significant investment. However, in such a turbulent environment, businesses can’t afford to get this wrong.
“Gaining transparency of any part of the supply chain can help drive benefits in cost, quality, control and risk management. Aligning agency and client relationship expectations and outcomes from the start can help avoid any future problems. This is where good procurement, acting as the ‘marriage counsellor’ between client and agency, can make a difference between a successful and a bad relationship.
“Tasking procurement to lead cross-functional collaboration between all intermediaries frees marketing leaders to better engage with customers, focus on brand ambassadorship and ensure the marketing strategy is aligned to true commercial outcomes.”
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Note to editors:
Proxima has published a report The Digital Disconnect including five tips for reconnecting digital back into your business – essential reading for CMOs, CPOs and business leaders who have digital on their agenda. Download here.
An infographic of the research findings is also available for download here.