The promise of digital marketing continues to grow as big data gets bigger and is turbo charged with mobile and social. In theory, digital marketing should be more precise and better than traditional analog marketing.
So why is digital marketing still so ineffective?
Data from the 2012 Direct Marketing Association benchmarks say that direct mail—yes, junk mail via snail mail—still reigns supreme, offering response rates of 1.1 percent to 1.4 percent versus 0.03 percent for email, 0.04 percent for Internet display ads, and 0.22 percent for paid search.
Digital's return on investment (ROI) is better than the ROI on analog marketing for one reason: Because it’s cheaper. Cheaper equals more emails, which in turn equals more noise. Nearly 145 billion emails are sent daily and, of that, 94 billion is spam. Banner ads, pop ups and other forms of intrusion marketing are growing and becoming more invasive. This is only going to get worse.
There are two opportunities to improve this. First, by focusing on the “return” portion of the ROI equation, not just the investment, we can use the power of digital to be more effective, not just cheaper. Second, we need to fundamentally re-think digital marketing. Digital can shrink the path to purchase—and, in some cases, it can eliminate or even reverse it.
First, focusing on the effectiveness vs. the efficiency of digital marketing is a huge opportunity. Let's start with email, which still has the highest ROI. Think of how many marketing emails you receive each day. We estimate the average consumer receives 20 to 30. After a while, many consumers get fed up. This leads them to hit to the dreaded unsubscribe button. When someone unsubscribes, they're often not just saying “I don't want to be on your list.” In fact, they’re frequently so fed up that they mean “I don't want to be in relationship with your brand.”
The way out of this big data black hole is integrating digital with economics and emotion, via your super consumers—the top 10 percent that drive 50 percent of a category's profit.
Take the most comprehensive customer relationship management (CRM)/transaction data you have and rank the consumers from highest spending to lowest. Take the top 10 percent and filter for those who truly love the category (they are the who) and start an ongoing dialogue with them to figure out the why, when, where and what to offer to make your current digital marketing efforts more effective. Since super consumers are at the "tip of the spear" for your category, the efforts you undertake to win with them will carry over to the majority of your customers and prospects as well.
Use social to find out why super consumers care and spend a lot on the category. Twitter is the world's largest poetry slam. Poetry is passion--good and bad. So when a consumer talks about a category or a brand on social, there is something to learn. If you don't believe us, search for @meghanrosette on Twitter and ponder why she believes heaven should have Trader Joe's, or look for @ochocinco and reflect on why he believes Keurig and low-fat ice cream are the best cures for a broken heart.
Use super consumers to find key decision points and chokeholds in the path to purchase. By understanding the path to purchase, you can figure out when to intervene and how to best allocate your digital marketing spend and website/mobile real estate. The digital path to purchase can also tell you where you should be delivering your offer. Is it at home? Is it in store? This is where mobile can be very powerful.
The what is the last, yet very important, piece when it comes to super consumers. Most digital marketing messages have an offer or deal, most of which are tailored toward light or even non-users (think Groupon). But super consumers care about benefits and innovation. By understanding who your super consumers are and what their demand is, you can market new solutions to them without aggressive offers for products or services they will purchase anyway. Save the deals for the light and new users you are trying to grow into super consumers.
The second opportunity for digital marketing is likely even bigger.
The core problem isn't digital as a medium, but rather the marketer's mindset. At their core, email, search and display ads are the same as direct mail, classifieds and mass media, respectively. We're taking the new wonders of digital and applying it to old ways of marketing. Digital provides much more than just precision. It also provides speed and amplification. We need to start with a clean sheet of paper.
Speed and amplification enable digital to disrupt the path to purchase. Typically, an advertisement sparks a trip to the store where the consumer purchases a product and fulfills a need. Digital can dramatically shorten the path to purchase and even reverse the flow.
The quickest path to purchase is no path to purchase, such as auto-subscription models. Other innovations like “one-click-ordering” and “mobile scan and buy” apps are other speed-related game changers.
Amplification is another way that digital marketing can disrupt the path to purchase. Amplification occurs when consumers who already are buyers help to market your category/brand to other consumers. (This is often called peer-to-peer marketing, earned media, or word-of-mouth.) Digital has the wonderful ability to create communities at lower levels of scale that build on one another and amplify the category (or a brand's benefits). These communities are super consumer-driven because super consumers love to connect with each other. There are numerous profit and business models to monetize this. Marketers should monitor and, as appropriate, engage with these communities.
We all have to do something to improve digital marketing because the big data black hole will continue to get bigger. If you hate spam email, wait until you start being besieged with spam texts. Then social spam. And so on. If every company followed this blueprint to improve digital marketing, we'd each receive one-10th as many marketing messages as we get today, but they would be 20 times more powerful and relevant. This might fit @meghanrosette's view of heaven (right next to the Trader Joe's).
This article was originally published on the Harvard Business Review.