How to make digital marketing work better for you?

Updated: Jan 5, 2019

Many early-stage businesses tend to utilise social media and performance marketing as their sole source of lead generation; the latter especially if the business is chasing quick results. However, almost always, in time, the business would also leverage traditional channels, while seeing a gradual decline in ROI from their digital activities. Why is this so? And how would one optimise their marketing spend to avoid this?

#marketing #digitalmarketing #SEM #Facebook

Facebook, Instagram and Google paid ads are table stakes toolkits for marketing executives, but do they make sense and are they really any good?

When some of us on the Agility team were operating a digital media business over a number of years, at times up to 85% of our quarterly marketing budgets would be focused on a combination of Google and Facebook. Each time we had a marketing budget review, the convenience of having a single admin interface across multi-market/regional operation, transparent reporting, and a seemingly infinite audience base, tipped the scales in their favour. To add, the "sticker" pricing on these inventories measured in CPM, CPI, or CPS came across, at first glance, as very affordable. Video CPM on the Google Network, YouTube, is currently around US$2 for the Southeast Asian region; i.e. 1,000 impressions delivered to 1,000 people for the price of a McDonalds cheeseburger value meal. There isnt much not to like to be honest. For us on the team, as time went by, the decision to leverage G and F hard, had hardly evolved and solidified into an unwritten rule; and would have gone on that way had we not had deep and thorough debates about its merits and demerits.

Let’s break the down the costs to begin with. Typical average CTRs for a search word can be around 3-4% though admittedly this does tend to vary quite a bit, while the CTR for an FB ad can range from 0.1% through to 2-3% depending on how exciting an ad is. Cost per app Install, CPI, can range from US$0.5 to US$2-3, depending on volume of buys and how specific targeting attributes are made, while CPCs could range between US$0.1-0.3. These stats are about average for the Southeast Asian region, Malaysia included. It is worth noting that installs don’t always make for new registrants. Given login flows and crash faults, a typically conversion is 50%, which means cost per new customer (non paying registrant that is) is US$1-6! As for click-based campaign conversions, it’s not much better, cost per registrant via app is ~US$5 once factoring in the play store conversions, while website fairs better at ~US$1 given prevailing bounce rates, browsing only visitors (high predominance given much harder to gate a website with registrations) and so on. To be frank, there are very few services that can find a way back from a negative starting customer lifetime value or customer acquisition cost of say (-US$3), given suppressed price points and low willingness to pay for online services. By and large only high basket value commerce marketplaces are able to balance out such a high expense, and that’s assuming an acceptable level of loyalty over a number of repeat buying transactions.

The added challenge in the use of digital as the only medium for marketing is the lack of a halo effect to broader audiences beyond those being targeted. Algorithms of FB and Instagram for example favour focusing ads on the same type of customers, against a base of demographic attributes coupled with historic stats of click rates and conversions. The issue with this is what we term audience recyclement and ad lethargy. Over a 6 month period in some of our online services we marketed we measured a 15-20% recyclement rate, where the same users had been show the ad again after uninstalling or stopping use of a service. And a steady and gradual decline in CTRs from high single digits, i.e. ~6-9% down to less than 0.5%, due to ad lethargy (same users seeing the ad multiple times). To add, retention is extremely poor even if they do click the ad and register the second time.

What this means for you: It is important not to treat digital performance marketing as a fire and forget channel. Audiences are not infinite, and after some time quality issues like audience recyclement and ad lethargy become very real challenges. Add to this issues of brand safety and fraudulent bot-clicks and you have a minor nightmare on your hands, especially if 80% or more of your marketing budget is focused on these platforms.

Mobile battleground: digital consumers in Asia are predominantly accessing the internet from their mobile devices. What does this mean for you?

The statistics are compelling in support of mobile internet. In a short time mobile access is overtaking any other form of connected device for example PCs, laptops, or connected TVs. For example, mobile internet subscribers now total around 115mn for Indonesia, up from 70mn in 2015 (out of ~250mn population), while for Malaysia, the figure is 20mn today, up from 17mn in 2015 (out of ~31mn population). Smartphones connections in Malaysia total some 34mn up from 26mn in 2015 and 10mn in 2013, that makes the number of smartphones higher than the number of people in the population. This pace of growth has been tremendous.

Malaysian consumers: mobile features heavily, and thus social apps such as YouTube, Facebook, Whatsapp, Messenger have a higher predominance vs. rest of world.

Source: Global Web Index
Malaysia consumers vs global benchmark. Source: Global Web Index

Malaysian consumers: time spent online via mobile close to that of PC/laptop at younger ages and has high replacement rate

High social media usage amongst Malaysians. Source: Global Web Index

Until just a few years ago, companies would obsess about details of their desktop-friendly websites, only to leave their mobile-friendly one as an afterthought. Fortunately today that is less the case with most savvy digital brands. However a stylish and functional mobile-friendly interface web or app version of the main site alone may not cut it; here are some reasons why:

(1) Alternative uses of the mobile screen are aplenty, all competing for user attention, with many playing for high stakes. Firstly, consider the fact that the average person only uses 8 apps repeatedly over the course of a week; therefore, finding a place as the next app that gets frequently used is a monumentally hard task over the long run. Secondly, a lot of what users do on their mobile screens is social in nature, and the psyche is deeply interlinked with addictive biochemical triggers like dopamine (achievement), oxytocin (socialising), and serotonin (empathy) - just imagine the accomplishment from unlocking a reward in a game, the small feeling of joy you get from having someone comment on a picture you shared on FB, or how you feel you are helping others by forwarding a message of advice you got on WhatsApp.

(2) Precious real estate on the mobile screen requires greater contextualisation and personalisation to the user. And there is less space for ancillaries forcing a need for prioritisation to ensure positive experience. We once worked with a Korean e-commerce player that was struggling to figure out how to curate the right products based on target personas on a mobile site. Unlike a desktop site there is far less space to kitchen sink every single item available in rows and columns.

(3) Habitual behaviour in mobile is different therefore requiring a rethink of the user journey and experience. We once ran an email verification step for a mobile app and were flummoxed for days wondering why the verification rate was below 30%. In comparison OTP SMS’ can typically reach activation rates up to 80% or even higher. In simple terms; everyone uses SMS and reads notifications on their phones but not everyone uses email with the same voracity as us corporate types. Likewise sharing behaviour over mobile is more predominant given most use FB and whatsapp via their mobile devices and not their PCs.

(4) Eco-systems dominate the mobile screen and create moats for other players to steal away share of time. In China, one could wake up to videos on Tencent Video, game on any of the thousands of titles from Tencent Games, chat all day with your friends on QQ or WeChat, travel around town via the Didi app, listen to music on QQ music, shop online from, and pay for everything offline using WePay. What do these services have in common? Ownership or affiliation to Tencent. Google, having dominated search for many years built out the largest mobile OS by market share, Android, which it has used time and again to establish reach of their services such as Gmail, and YouTube.

One advantage often cited about Facebook and Google are their wide addressability for the total online market of consumers, particularly given the high penetration of high-speed/4G mobile internet in markets such as Malaysia, Singapore, Thailand and Indonesia. It is true that social platforms like Twitter, FB and Youtube are indeed more predominant among mobile internet users compared to the big screen. Questions remain about the depth of engagement given different ways consumers are using these platforms, and also efficacy of advertising given banner blindness, ad blockers, so marketing managers should be wary about the choices they make.

What this means for you: think deeply about your mobile strategy; for example (1) do you have a clear mobile agenda you would like to push, i.e. sales or engagement, or loyalty?, (2) establish which mobile platform is most used by your target segment, and how frequently and deeply do they use it?, (3) what would make your brand stand out given the way consumers engage on that platform?

Attribution challenges stand in the way of using traditional channels, but we for some companies, TV and radio are still important

Most of us grew up witnessing ourselves how consumer goods brands heavily leveraged traditional media channels like TV, print and radio to reach audiences. One can safely assume the impact of such activities was very positive, otherwise the music would have stopped a long time ago. So why aren't newer businesses utilising traditional media channels more? The statistics are telling, traditional media revenues are already flat or even in decline in some markets, whereas digital advertising is still enjoying double-digit growth year on year in many markets. When we ran our digital business, we only leveraged TV for two short campaigns in 3 years; you could say there was momentum to spend on digital until and unless there was a way to make better sense of TV and radio spending. One challenge is what’s called attribution; a measure of efficacy of the channel, often discriminated to the individual user level. Unfortunately, robust attribution cannot be achieved with traditional media without deteriorating the user experience (e.g. through administering surveys). Another challenge is the fact that audiences are becoming increasingly fragmented across different mediums and platforms, more so than ever before. Today, the older 45+ demographic are still spending a lot of time on TV, however the 15-24 demographic are spending 4-5 hours a day on social media such as Twitter, Snapchat, Facebook, YouTube and Instagram; contrast this to the 90s and 2000s when the entire family would congregate around the TV every evening for entertainment. And so to reach all the audiences required multiple mediums are required to work in concert. These relatively simple but formidable challenges have diverted millions of dollars away from traditional channels like radio and television towards Google, Facebook and other digital inventories.

What this means for you: even if you are a digital-first business, don't be too convinced that disproportionate sum of your marketing budget should be spent on digital media. Ultimately you need to understand your audiences intimately and understand which channels are best suited to deliver your brands message to them. At minimum, traditional media still offers a compelling way to (1) provide brand legitimacy, (2) spark awareness and consideration with a broad swathe of audiences, and (3) reinforce a holistic message through cross-/multi-media, both digital and non-digital.

Good marketing today is left AND right brain. Think about this before committing a large chunk of your budgets on the usual suspects

It is important that marketing managers don’t fall into the trap of thinking too tactically and in a way, objectively, about how they market to consumers. Leveraging left brain digital tactics runs the risk of prioritising targeting accuracy and cost efficiency, and trading-off halo 'feel-good' effects of a brands' message. Take for example, a banner ad for a 25% discount promo code from an e-commerce site is bound to achieve positive metrics in CTR, CPC, CPS, however long term loyalty and positive lifetime value could be questionable. Alternatively, Nike's decision to endorse sports star Kaepernick in September, although was deemed as negative publicity, drove a surge in daily social media mentions for Nike of 1400%, and most analyst say it has had a positive impact on sales.

Many new brands enter the marketplace with shock and awe tactics of aggressive digital marketing, e.g. YouTube mastheads and pre-rolls, FB and Google banners, and aggressive search marketing. And while there is no denying short term results in traffic visitors and registrations look good rarely does the party last/sustain itself over the long term. Truthfully, today, the noisy marketplace makes a lot of news and marketing short-lived ephemeral hype. No business can be sustained on this alone.

An emerging technique by brands that have a matured digital presence is to build communities that foster strong brand engagement. Tactics like content marketing through a blog site, EDM or social media pages; and the use of influencers can help foster such communities much more effectively. This underlies a broader shift that is happening in the marketing space - the role of like minded groups of people, tribe's if you will, of communities that gather in the virtual space, exchange thoughts and comments and help introduce the brand to a host of new consumers. For example, on Twitter, Apple has 2.4mn followers, Samsung 12mn, Nike 7.6mn, Adidas 3.5mn. On Instagram its Nike 84mn, Adidas 23mn, Apple 11mn and Samsung 3.5mn. These followers form a loose community that the brands can draw upon to deliver on multiple consumer engagement and sales objectives.

What this means for you: Fundamentally over the long run it is brands who take the effort to grow and nurture the trust of their circle of brand followers that reap the sustainable benefits from their efforts. These followers are in constant dialogue with each of the brands, providing feedback and comments to posts and new marketing messages. At the same time, each is effectively plays the role of ambassador for the brand amongst their friends and social networks.

What do you think are your key priorities to improve your marketing and digital marketing activities? Talk to us to get some ideas.


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