Digital marketing has entirely transformed the way businesses reach out to prospective clients. The Internet’s vast reach has enabled companies to not only connect with a higher number of prospects, but do so in a more engaging manner in real time. As a result, marketing spend on digital channels – social media, specifically – has increased significantly over the years.
Citing a Duke University study, The Wall Street Journal recently reported spending on social media advertising, currently represents 9 percent of advertising budgets. That figure is expected to increase to 13 percent by next year and will likely account for 21 percent of the pie in the next five years. Digital marketing spend in general is forecasted to increase 11 percent in the next 12 months, while traditional advertising budgets are expected to contract 3.6 percent.
However, one of the biggest challenges marketing professionals face in their lead generation campaigns is quantifying their spend. Just 15 percent of advertisers say they can effectively show the impact of social media campaigns, while 40 percent can demonstrate social media outreach’s impact qualitatively. That means almost half of marketers cannot demonstrate the impact of online networks on their business whatsoever.
Making sense of the data
Modern-day lead generation is predicated on creating genuine and relevant relationships with prospects, but social metrics are difficult to interpret when it comes to gauging return on investment. In general, marketing spending typically generates more than 8 percent of company revenue, according to the Duke University study.
As a result, spending on big data analytics is projected to increase from a 7 percent share of marketing budgets to 12 percent in the next three years. Yet, only 41 percent of companies use online data they’ve collected to better target prospects. Eighty-two percent of respondents said the amount of information they collect is increasing. That said, how can marketers make sense of all this data?
Quality data over quantity
Gathering customer information is highly beneficial for marketers, but the question still remains: How can advertisers best leverage all this information?
The digital and online experience for most consumers now is saturated with content, so marketers are finding it challenging to connect with prospects at the right time with the right message. No longer is data collection about the volume of information companies can obtain; it’s about the accuracy and relevancy of said data.
A recent Experian study found 89 percent of data management professionals are investing in quality solutions, with 52 percent spending more than $500,000 on these tools. Sixty-two percent of marketers are investing in monitoring and audit solutions, while 54 percent are spending money on standardization. Another 53 percent are investing in data profiling and 52 percent are spending on data cleansing. These solutions are aimed at processing the information once it’s harvested to better make sense of high volumes of data.
The investments seem to be worthwhile. In fact, Experian found 79 percent of respondents said they are seeing a return on investment from their data quality tools. Conversely, just 5 percent of companies said they do not see a return whatsoever. There’s a caveat, though. Fifty-nine percent of respondents calculate the return on investment in data quality solutions annually, which still leaves a relatively large gap between those that do, and the companies that are still struggling to quantify their data analytics solutions.
How to ensure ROI
While it may seem disconcerting that a share of businesses aren’t calculating ROI on their data quality solutions, Experian says there are a handful of reasons why this may be the case. First off, making sense of big data is challenging since every company has unique goals, implementation models and tools. There is no one-size-fits-all solution.
Secondly, businesses often fail to set benchmarks at the early onset of implementation, which significantly hinders the calculation of success. There are three solutions to ensuring ROI, though:
- Define quality metrics: Measure individual products and campaigns based on individual goals.
- Implement tools and measure progress: Companies need to test their tools after objectives are outlined. Use these results as a benchmark going forward.
- Share the metrics: Regardless of the result, marketers need to share the results with business leaders. The solutions that yield little to no return should be nixed.
Measuring digital marketing ROI is no longer about the quantity of data that advertisers collect; rather, it’s about how to measure the right metrics and optimize accordingly.