Craig Macdonald is CMO at Covario.

How should companies determine the make-up and allocation of the digital marketing mix?

Most large companies do this a couple of ways, starting by benchmarking the competition. To do this in digital, you are almost forced to use Comscore, Nielsen, Forrester or Adage, which do studies on what “the average company” spends by media category. The alternative is to customize the analysis to the performance of a particular advertisers program.

SEO tends to be left out of this conversation. SEO is not considered “media money” since there is no transactional charge, so SEO is usually a project fee. Mobile is another one that should be called out. Most of our clients are trapped in a “chicken and egg” scenario with mobile. They get very low traffic to their site from mobile consumers, so they don’t invest in the site and the site experience is atrocious. Low traffic becomes a self fulfilling prophecy. Consumers don’t come because the experience is bad, and the experience is bad because consumers don’t come and the investment is not made. Advertisers have to realize that the payback period on mobile investment will be over 12 months – so a standard “IT like” investment scenario will have to be built.

What metrics are most widely used to track the effectiveness of digital marketing campaigns?

With most of our customers, we see the use of a standard funnel analysis to track digital marketing effectiveness.

The funnel is used to measure digital campaigns’ ability to create awareness through impression counts and CPM rates, gauge Interest as measured by click-throughs and onsite engagement statistics, and finally, measure purchase or purchase intent through conversion metrics online and cost per acquisition statistics. It is very straightforward to measure and manage this through the data available on a global, daily basis. The funnel visualization is something we see consistently across advertisers with the impressions at the top, leading to conversions at the bottom and all the salient waterfall rates and costs throughout the stages of the funnel.

How much does online search optimization impact offline retail traffic flow, sell-through and brand preference?

There has been considerable debate about the effectiveness of search advertising, both paid and organic, in branding. It is a tricky issue from a testing perspective since, with organic search in particular, it is hard to have a true “champion-challenger” test where you see how consumers select brands in situations where they do or do not see ads since organic search cannot be turned off. Most studies show that search’s impact on branding is negligible. Most consumers come to search engines looking for a category and are far more impacted by offline brand building efforts in their searching and clicking on a brand than making their brand choice through the search listings. The more prevalent factor is ranking. Consumers click on the first choice more often regardless of brand, essentially allowing Google to make their brand choice for them

Where we do see a lack of attention by advertisers is on comparison shopping engines. Consumers who have not made a brand choice take comparison engines and retailer shopping pages seriously, and ranking and presenting brand on these sources is really import. Often, retailers will rank well on search and then send consumers to a page that shows a whole series of competing brands on the same page. Companies like Intel understand this and provide co-op funds to the retailers to help pay for ads that send consumers to pages dominated only by products with Intel processors. This is becoming common in the consumer electronics industry, and we expect it to become more common in other industries as well.

What are the top ways to maximize search engine prominence on an organic level?

First, focus on keywords where the brand has “permission to win.” We see this all the time. We have many clients in the footwear industry, and all of them want to be number one on the word “shoes.” A lot of consumers search on this word and click the top few listings, so being there is important. However, only 4-5 brands actually have the brand permission to be number one on this term—Zappo’s, Nike, etc. For niche brands to measure their success on this term is like the Little League team being disappointed that they don’t win the World Series. We counsel our clients to identify the categories and niches where they can dominate and make sure they are excellent before trying to compete in areas where their brand is not as strong.

The second way is to combine social media and search practices at an organizational level. We see social media practices often run out of PR, which is a mistake. This should be done by the search team because the engines will drive a lot more quantifiable traffic to the brand than the PR ever will. And Google, Bing and other engines are making social media postings—blogs, press releases, and even tweets—far more prevalent on their pages and increasing their click-throughs. Let the search professionals drive this interaction, and they will do a better job.

Third, make sure that channel and procurement programs are knowledgeable on search. Google and the engines want to know the community finds content valuable, and [those engines] use links to the content to judge what the community thinks. So all partners, including all channel partners and the entire ecosystem for a brand, should ensure that online links are established to create that online community. This should be de riguer in the contracting process and contractually guaranteed.

Can you share some lessons from all of the digital marketing insights and analytics you have generated across multiple industry sectors?

Most organizations woefully under-invest in their web analytics environments. Web analytics supply critical information on the effectiveness of media used to drive onsite sales, brand interaction and traffic. In nearly 80% of the accounts with which we work, the maturity of the web analytics systems is so poor that having a stable way to measure onsite behavior is problematic.

Second, and this is a really techy point, but do not allow your agencies to dictate your data management strategy around media. For example, Microsoft has setup an internal team called RIO whose job it is to drive consistent processes for identifying which advertising drove which brand interaction. Why? Because allowing each agency to do it individually invites a data management fiasco. And without the ability to be able to track spend to media and spend to result through consistent data structures, measuring media effectiveness becomes impossible.

The 3 Fs of marketing

By Anisha Motwani

Today’s environment is questioning all known tenets of marketing principles, whether it’s the ever-changing consumer or ever-changing environment. The internet has been a significant inflection point as it enables the rapid dissemination of ideas and development of products around the globe. In effect, it acts to shorten the life cycle in many categories. Products emerge, surge, diffuse and are purged. With changing consumer tastes and preferences, some products become popular relatively quickly but also loose popularity dramatically and are replaced by the next best promise.

All this has led to the product lifecycle curve becoming steeper today than ever before, indicating that an increasingly large proportion of sale occurs soon after the launch of the product. A narrow window of opportunity exists to earn profits on a new product before competition catches up and margins begin to shrink.

But with technological advances, the quality of products is improving greatly, resulting in an interesting paradox for marketers—while the products are lasting longer, the time in which they are outmoded is growing shorter.

And this brings us to the 3 Fs of marketing in this new world.

Form

Quantum change in technology and innovation is not as frequent a success as marketers want it to be. However, the manner in which we invite consumers to consume categories is very important. The iPod is not just another mp3 player—notice how a simple difference like the color of the earphone wires changes the perception of the category.

The car industry is another prominent example of the criticality of form. One base gives birth to many models. It is true even for services and “formless” products such as life insurance where the form in which it is served is what makes the difference. Form drives desire. A focused investigation into the form in which we serve our product or service is a critical initiative.

Function

Consumer expectations of a product category and its use are fast changing. In just a decade, the bulky mobile instruments that could only be used for phone calls and SMS have transformed into sleek mobile phones that enable life on the move—phone, SMS, emails, music, photographs, videos, address book and even networking.

This change in ‘function’ has not only changed the way mobile instrument brands are positioned, but it will also change the ways digital cameras, computers and brands in many other categories need to look at their life cycle. Marketers must keep up with consumers who are pretty clever discovering the true function a product or service has in his or her life.

Flexibility

Environments change extremely fast. Add to this today’s consumer who has a point of view and expects to be taken seriously and impact a brand’s fortunes. There is a ‘me’ within ‘we’ waiting to be discovered. The digital explosion has enabled a single consumer’s view to multiply almost instantaneously, and any marketers who cannot quickly build on consumer feedback risk being consigned to the past. 

Today’s consumers are driven by a proactive desire for constant change. Brands need to have flexibility in form and function to constantly meet those changing consumer needs. Only by continually measuring consumer expectations and responding with new form and desired functionality will markets be able to build a brand.

Gone are the days of sticking to the line. Today is the day of having a small consistent core and values which invite engagement and consumer co-creation. And this is a monster that marketers need to tame.