With the gold rush to online marketing over the past decade, one of the valuable metrics has been improved ROI. But, as competition increases for attention increases and costs increase, that ROI value is coming under scrutiny. According to a new marketing intelligence report from Analytic Partners, paid search ROI has decreased 27% in the last 6 years, online video ROI has decreased 32% and digital display ROI has decreased 14%.
But why are online ROIs dropping? According to Nancy Smith, CEO of Analytic Partners, part of the reason is because the cost is increasing.
“Costs have gone up and supply has not increased as much as demand,” she told FierceRetail. “So marketers are spending more on online ads but not getting as much in return as they used to. While online ROIs are still higher than offline, we will continue to see spend increase there until it is not an efficient place to spend the next marketing dollar. The increase in things like ad blocking can also be seen as a way the consumer is driving the efficiency of online ads downward.”
Still, brands continue to invest heavily in online marketing. In fact, 61% of brands increased their online marketing spend from 2015 to 2016.
According to FierceRetail, omnichannel marketing is still the most effective advertising, as combining the two efforts is 50% more efficient than TV alone and 20% more efficient than online alone.
“One thing we were trying to get across in this report is that marketers should not plan in silos. Online and offline media work in very synergistic ways,” Smith said.
Success is driven by combined approach
“And while there is a still an efficiency gap between online and offline, with online being, on average, 15-30% more efficient over recent years, this is not true across all brands and there is a strong case to be made for a combined-channel approach, the report said. “Analytic Partners has found that combining of offline and online in a combined channel approach is 50% more efficient than of offline alone and more efficient than online alone.”
Smith said, overall, marketers are becoming more sophisticated and spending efficiently, but if they are not taking advantage of unified measurement, they may be focusing too much on easily measured tactics. So looking forward, she recommended that marketers pay attention to the drivers of the ROI by tactic.
“For instance, 62% of ROI for video is driven by creative elements, but when looking at digital display, 65% of ROI is driven by executional elements,” she added. “Invest in quality creative where it makes the most sense.”
Marketers should, therefore, look at ways to maximize both their online and offline efforts. This is why Darwill’s combined digital and direct-mail solutions are effective. They can work together seamlessly, like our new Reverse IP Append service. This tool captures the IP addresses of website visitors, then appends the household address by matching to offline data sources. Marketers can now respond to the visit by sending a direct-mail piece directly to online individuals. This combination of digital and in-hand marketing reinforces the company’s message, while taking advantage of the unique potential of both. This targeted approach creates a powerful consumer experience, and increases conversion.