Teradata’s new report, Enterprise Priorities In Digital Marketing, is getting lots of press. The research is aimed at helping companies better understand how to prioritize marketing technology investments –and since that’s a top concern for any organization trying to update processes and become more digital-ready, I won’t be surprised if our results stay in the headlines for months to come.
I found several of the findings discussed in the report extremely intriguing (see this press release for a summary), but today, I want to focus on just one: the disconnect we discovered when we looked into the specifics of digital marketing budgets.
How are companies spending their digital marketing dollars? Here’s what the data told us:
In this graph,
Paid media refers to advertisements, “pay-to-play” media coverage, etc. At its best, paid media offers immediacy, scale and predictable traffic for owned media. At its worst, it’s expensive, hard to value, measure and justify.
Owned media is comprised of sites, apps, email lists and any other properties internal or external that belong to or are controlled by the brand. It’s where much of the customer experience occurs.
Technology spending is notoriously difficult to pin down because it’s not necessarily within the marketing budget. While the growth in marketing technology spending has shifted the balance away from IT/Tech departments in some companies, many still have traditional procurement processes. Roughly half of the respondents to budget-specific questions reported that technology was part of the digital marketing budget.
Earned media refers to the attention of consumers gained through public relations and promotions and spread through unpaid social channels.
Separate allotments for digital measurement and analytics is a relatively new phenomenon, and many companies do not separate these capabilities from technology or larger measurement budgets.
Take a look at the graph again. Do you see the same disconnect I did? Why are companies investing so much on paid media –and by comparison, so little on technology, or earned media or measurement and analytics?
Let me tackle technology spend first…
As I mention virtually every time I discuss data driven marketing, our industry (and indeed, every industry!) is becoming increasingly data-dependent. Consumers want a more personalized and relevant customer experience, and the C-suite wants more transparency and accountability. That means organization need to start taking data seriously. They need to invest in technology that can aggregate, manage, integrate, analyze and store it. Marketers, in particular, need analytics tools to identify what’s working and what isn’t. They need to be able to get insights from all the data that’s streaming in 24/7. Otherwise, what’s the point? Yes, data is the source of knowing more and doing more –but only if you can mine it for the insights you need.
And as for the small percentage spent on earned media…
I was surprised by this result, as well. We all know that consumers are growing more and more savvy. They’re learning the difference between an article or ad that’s paid for/sponsored versus something that’s “gone viral” organically –and hands down, every time, they’re going to trust the earned/organic media more. Why? Because it’s driven by people just like them. Earned media has always been the most valuable in terms of trust. Today, that trust is absolutely essential –it’s the foundation of the customer experience.
All told, it’s the combination of these two –the technology and the human side, the science and the art of marketing –that’s most powerful of all. For optimal marketing performance, you need technology. You need to recognize the critical importance of human factors, like trust. And you need a digital marketing budget that’s balances those components against traditionally more dominant categories, like paid and owned media.
Teradata’s report, Enterprise Priorities In Digital Marketing, is available now and is based on research conducted in July 2014 in association with Econsultancy US, a market research and publishing firm.