What’s the real value of digital marketing?
One of the biggest questions marketers face, regardless of specialism, is “what is the real value of your work?”. Senior stakeholders want to understand the return on their investment, and many are still unsure of the value that digital marketing channels can bring into their business.
For many, digital marketing has become an integral part of business strategies over the last decade. As new channels popped up and grew, so did new ways for brands to reach their real potential, nurture existing customers and bring in new ones. Plus, with advanced targeting options, increased customer insights, and detailed value attribution, it became easier and more cost-effective to drive value from digital marketing than with traditional marketing – especially when you use the services of an experienced and proven digital marketing agency.
However, understanding your real digital marketing value is no easy feat. Digital journeys tend to be a lot more complex and varied than traditional ones, so understanding what each channel and interaction brings to the table involves a lot of analysis. However, when executed thoughtfully and consistently, you stand to see substantial value from your digital marketing efforts.
The digital marketing value of a tweet
It’s difficult to quantify the value of a single digital marketing activity. There is very little you can glean from engagement with a single social media post, blog or email.
If you’re implementing social media marketing, for instance, you won’t be able to see the real value of one of your posts if you’re just looking at it in isolation. The user journey involves many different touchpoints to drive a conversion, so looking at individual activities might cause you to underestimate the value that they can drive. An Instagram post might not be the catalyst for someone to convert, but it might be the catalyst that leads them to research your brand more.
The real value of your digital marketing, then, is most apparent when you look at your digital marketing strategy as a whole. Having a holistic understanding of your marketing activities will give you the most accurate view of the impact you’re having on the customer journey and your bottom line.
Setting up your digital marketing so you can see its value
To truly understand your real digital marketing value, the most important thing to do is to set up an attribution model. Using the right attribution model can make all the difference when you’re analysing the performance of your digital marketing strategy. As part of your marketing strategy or any time you introduce a new channel into your marketing mix, you’ll want to decide on the right way of attributing a conversion.
As we’ve mentioned before, digital journeys can be incredibly complex; with multiple touchpoints occurring over a large number of channels, sometimes over a long period of time. On average, it takes at least 6 interactions with a brand, product or service before they convert – even if it’s a brand they know and trust – so understanding how effective your digital marketing efforts are can be a daunting task.
Book a call with The Brains to find out how we can help you understand your digital marketing value.
Tracking your digital marketing efforts is much easier than tracking the performance of traditional marketing. You’re able to clearly see interactions with your social media marketing, and follow a click from a Facebook post all the way to a sale. You can get the exact number of people who viewed your display ad and see the ratio of people who clicked through to your site. This level of reporting isn’t available for traditional marketing methods, making it much easier to see your digital marketing value.
Using attribution models to understand digital marketing value
Building an attribution model will help you to understand how effective your marketing channels are at converting customers, by attributing some or all of the value of a conversion to touchpoints that played a role in getting the customer over the finish line. There are a number of different attribution models available to suit your needs:
- Last click attribution
- First click attribution
- Last non-direct click attribution
- Linear attribution
- Time decay attribution
- Position-based attribution
Last-click (or last-touch) attribution gives 100% of the credit of a sale or conversion to the last thing a user interacted with before they converted. No matter how many steps there were in the user journey, last-click attribution places all of the weight on the final step.
In some ways, this makes a lot of sense. The final step is the one that actually drove the conversion, so it is the most accurate point to measure. There is a lot to learn from the channels that drive the most conversions: the messages that resonate and the channels where your audience is spending their time. This information can help you to build your digital marketing strategy for the next period.
However, we know that all of the interactions a consumer had with your brand will have played a role. Organic search activity may have helped build an awareness of your offering. An Instagram ad may have led to a lost hour of scrolling through your site to understand your offering. An email from a nurture campaign might have shown off a new product launch or partnership. Even if these steps didn’t directly lead to the conversion, they certainly helped contribute to the journey. Without even one of those stages, you might not have seen that conversion.
With all of this in mind, last-click attribution is the best choice for those with a short buying cycle: if you don’t have many touchpoints in the journey, the last touchpoint will almost certainly be one of your strongest channels.
On the opposite end of the scale, we have first-click attribution, which instead gives 100% of the credit of a conversion to the first interaction a purchaser had with your brand. If they found you on Pinterest, it doesn’t matter how many other touchpoints they went through on their journey: Pinterest will get the credit.
For those with a long buying cycle, first-click attribution won’t be of much use. You won’t be able to see the weight that clicks on display advertising or acquired via SEO had on converting that customer; just that Pinterest started that awareness journey. If retargeting plays a big part in your marketing strategy, you’ll want to consider a different model of attribution.
First-click isn’t without its merits though. It’s a simple and straightforward model that is a great option for those who are either just getting started with attribution, have a shorter buying cycle, or need to know more about the awareness stage of their journey.
Last indirect click attribution
The slightly more sophisticated sibling to last-click attribution, last indirect click ignores any direct traffic to the site and places 100% of the credit on the last “meaningful” interaction. In practice, this means that if a user went through an Instagram ad, then a few days later navigated directly to your site, the credit for the conversion will go to your Instagram ad.
Last indirect click adds a bit of much-needed nuance to the last-click model because you can get a much better picture of which of your active marketing channels is the tipping point for a conversion. However, it does still attribute 100% of the conversion to a single touchpoint, which won’t be as useful to those who want to understand the impact of a full customer journey.
With linear attribution, things start getting a bit more interesting, especially for those with a longer buyer’s journey or who want to get a deeper understanding of all touchpoints in a typical customer journey. The linear attribution model splits credit for a conversion between all touchpoints in a journey.
So, a user finds your brand on Facebook and explores your website. A few days later, they get served a retargeting ad that reminds them of a dress they wanted to get, so they check it out again and subscribe for email updates. An email comes through over the weekend, and they double-check the rest of the range. That night, they navigate directly to the site and purchase the dress.
Let’s say that dress costs £100. Each touchpoint in that journey will then get a £25 conversion value attributed to it, to account for the role it played in getting the sale. This makes it really useful if you want to get an idea of all the channels involved in the customer journey. However, it won’t be able to handle the nuance of which channels were more effective than others. That’s not necessarily a bad thing, just something to be aware of.
Time decay attribution
The next step from linear attribution is the time decay model. This model still splits the value of a conversion across all the touchpoints in that journey, but it weights that value depending on when a customer interacted with them.
The first interaction that a user has with your marketing activity is given the lowest weighting and so on, with the last interaction being given the most credit. This gives you great insight into the way users engage with the brand throughout their journey while being able to identify your most effective channels.
Perhaps the most effective and insightful model of attribution is the position-based model. In this model, all interactions are given some credit for the conversion but most of the credit is given to the first and last touchpoints. So, a journey with 4 clicks would see 40% of the credit go to the first interaction, 10% to the second, 10% to the third and the last 40% to the final interaction.
This makes a lot of sense. The first interaction is incredibly important to understand as it shows what activity is most effective at drawing new customers and prospects in. In the same vein, your last interaction is important because it tells you want’s effective at spurring a customer into action. Those other touchpoints have a role to play, but it’s not as significant as the first and last.
Bonus attribution: Custom model
If none of these models suits your business needs, and you have the capability to do so, you can have a look into custom attribution models through Google Analytics. This will give you complete control over how you allocate credit for conversions, and allows you to have an attribution that exactly matches your business needs. They aren’t for the faint of heart though, and require a lot of data to power them – but they can be incredibly insightful when deployed correctly.
With an attribution model chosen and applied to your marketing activity, you’ll be in a much better position to understand the real value of your digital marketing. You’ll be able to see a good estimation of what revenue each channel is bringing in, and how they contribute to your conversions and user journey.
Different types of digital marketing value for businesses
There are a number of ways that digital marketing can drive value for your business. Aside from the monetary value that you can bring in, there’s also the value that comes from greater brand awareness, generating customer loyalty, and building a community of passionate customers. Making sense of the different kinds of value that digital marketing strategies can bring to your business will give you a better sense of how to tailor your activity so you can meet your goals and drive success.
The monetary value of digital marketing
When stakeholders ask for the value of your digital marketing strategy, they most likely want to understand the value your activity is driving for their bottom line. They want to be able to put a number on this value so they can work out the return on their investment, and how to shape the marketing budget for the next period.
Establishing the tangible value of your digital marketing strategy relies on you having set up appropriate attribution in your marketing management platforms. As we discussed when we broke down the different attribution models, you’re assigning some of the value of a conversion to the channels that a customer interacted with during their purchasing journey.
This data can then be analysed in a number of ways, but most importantly it shows how much revenue individual channels are bringing into your business. You can then demonstrate the value that each channel brings; individually or as a whole.
Digital marketing value will vary depending on how much you’re investing in the channel, the level of optimisations and types of test you’re running, and how closely the activity aligns with customer journey. The more considered your strategies, the more value they will return.
Digital marketing, on the whole, is very cost-effective. It allows you to be very targeted and granular in the way that you use your budget. You can target the right audiences on the right channels, and craft messaging that will best appeal to those audiences. In this way, digital marketing is incredibly good at generating ROI for businesses and driving value.
Improving brand awareness
We now turn to the other ways that digital marketing can bring value to your business, starting with how it improves brand awareness. While not something you can measure as easily as revenue, brand awareness is so crucial to your business. Brand awareness is an awareness of your brand name, product offering, and your brand’s attributes and USPs.
Strong brand awareness is hugely valuable because it primes potential customers to purchase from you when the time is right. They might not need your product or service at the moment they come across your brand, but with high brand awareness, you remain front of mind when they are ready to buy. You want to be among the first that come to mind when someone thinks of your service area.
Digital marketing covers a whole host of channels; giving you countless new ways to introduce yourself to prospective customers. From the search engine results pages (SERPs) to social media platforms, email marketing and beyond, there are plenty of ways to put your business in front of interested prospects with digital marketing. This means it’s a fantastic way to grow your brand awareness, because it allows you to reach more and more people with highly relevant messaging.
There are a number of different ways that you can measure brand awareness. Surveys of general consumers and prospective clients offer fantastic insights into awareness of your brand and how your proposition is viewed in the market. Google Trends data and insights from social listening tools are also very effective, as they’ll show you how much people are talking about your business as well as give you some insight into their overall sentiment towards you. Consider the needs of your business and your stakeholders, as well as your position in the market, to determine the best way of reporting on your brand awareness.
Fostering customer loyalty
Retaining customers is often a cheaper strategy than acquiring new ones, but it can also deliver great value to your business. The best method of retention is through fostering customer loyalty and digital marketing, with its powerful targeting and segmentation capabilities, is the obvious choice for realising this value.
Segmentation allows you to target your existing customers with specially tailored content to help foster loyalty. This will involve building up greater trust with your customers by paying attention to their purchasing habits and sharing relevant information with them. Use your first-party data to your advantage here: this will show you what your customers are interested in and how best to reach them.
Customer Lifetime Value (CLV) is the most common metric to track when it comes to defining the value of customer loyalty. The simple calculation is Customer Value multiplied by Average Customer Lifespan. For those with access to Google Analytics, you can explore CLV reports and discover data on how you acquired these customers, goal completions, revenue, transactions and more.
Ideally, your CLV will either hold steady or rise. A declining CLV would suggest you’re not retaining customers as well as you were previously, or that you’re not bringing in high-quality customers. Use this data to assess your digital marketing activities: are your strategies bringing in returning customers? Are you engaging enough with your existing client base? How can you expand on your digital marketing efforts to boost customer loyalty and increase the value of a single customer?
Building your community
Building your community relates to a fourth stage in the customer journey: the delight stage. Once a customer has made a purchase, you want to make sure that you continue to keep them engaged with useful information, loyalty programmes, and proactive customer service. When done right, customer loyalty schemes can create powerful promoters for your business.
Your customers are your biggest advocates: they’re the ones who use your product and know your business the best. If you treat them well and engage with them, you’ll be rewarded with one of the most coveted marketing “strategies”: word of mouth.
People buy from people, so word of mouth is one of the most powerful ways to attract new customers. Think about how many times you’ve read the online reviews before making a purchase, skimmed the comments on social media, or trusted a friend or family member when they’ve recommended a new product. Evangelising your existing customers by providing excellent customer service beyond their initial purchase, adding additional value through online channels like social media, and incentivising referrals makes existing customers more comfortable (and hence more likely!) to share their experiences and bring in new prospects and customers.
Digital marketing is the perfect way to build your community because it provides places for your community to grow and gather at scale. Social media – in particular Facebook groups – and email campaigns allow you to build up a relationship and provide ways for your customers to connect, as well as giving you channels to easily spread information and value.
Measuring your community-building efforts is more of a fast-and-loose method. You’re looking for more comments on your social posts – particularly those with a positive sentiment or that answer someone else’s questions, a growing email subscriber list or Facebook group, and increased views on your content. Loyalty programmes and referral codes are also useful ways to quantify your community and see how much value your community is bringing back into the business.
How can you drive more value out of your digital marketing?
We’ve walked through all of the different ways that digital marketing can bring in value, as well as the attribution models that you can use to track and analyse the value your digital marketing channels are bringing in. But knowing the value of your digital marketing is only the beginning – how can you drive even more value from these channels?
There are a couple of optimisation strategies that you can use to drive even more value from your digital marketing activity that we’ll walk through in this post:
- Layering Targeting Methods
- Testing, Testing and More Testing
- Getting Additional Support
Layering targeting methods
Making the most of your budget is a surefire way to improve your digital marketing value, as it will help to improve your ROI. This means you need to be smart with how you’re spending your budget, by making sure you’re targeting the most relevant users with the best messaging for where they are in the customer journey, at the perfect time.
Digital advertising channels, such as paid search, paid social and display, will be the best place to make gains here as managing your budget is much easier to do. Bid modifiers such as time-of-day and day-of-week, targeting through audience and remarketing lists, and device modifiers allow you to be incredibly precise and granular with your ad spend; so you’re able to serve your ads to the people most likely to convert. This way, you’ll spend less to return more revenue; driving more value from your digital marketing efforts.
Testing, testing and more testing
While a lot of strategic marketing decisions are based on data, there’s often a lot of guesswork involved when building campaigns. What’s the best call to action for this post, what’s the best imagery?
Continuously running tests, whether that involves straightforward A/B testing or trying out new campaign formats, will help you to hone your marketing to perfection. Each time you run a test, you’re finding out more and more about your customer: you’re learning more about what kind of messaging they respond to, the kind of imagery that resonates with them. All of this information is valuable in and of itself as it helps you to craft better and more effective campaigns, but in turn, this will help you to drive more revenue.
If testing isn’t already a part of your marketing strategy or processes, you can start small with some A/B testing on the wording of a few of your paid search ads, or the times you post on social media. The more confident you get with running tests, the more risks you can take and the more you can try out. Digital marketing gives you the flexibility to run these kinds of small-scale experiments because it’s much easier to segment a portion of your budget and run a handful of testing ads in a controlled way.
It is worth remembering that testing can be an expensive endeavour, and you may wish to carve out a portion of your budget specifically so you can run testing in a controlled way that doesn’t impact your regular digital marketing activity. However, the knowledge and value that you stand to gain will have a huge impact on your business and bottom line.
Getting additional support
The bigger your digital marketing goals, the bigger your team needs to be. These team members don’t need to be in-house, though. Digital marketing agencies have a lot of expertise that they can bring, as well as additional manpower to run optimisations and testing, freeing you up for the big strategic thinking and analysing your performance.
Hiring a digital marketing agency gives you access to some of the best minds in the industry, who are specialists at what they do. This means that they can add an additional layer of excellence into your campaigns so that you can realise more value from your marketing strategies. While there is the upfront cost associated with an agency, you’ll make that back and then some with the value they can add to your business.
Digital marketing can bring a huge amount of value into your business, from tangible revenue to information about your target audience and customers, to evangelising your customers into avid promoters and supporters of your brand. The key to realising this value is through using the right attribution model for your business and its goals, as this will allow you to get a better picture of how your campaigns are working to drive results.
Through testing, targeting and optimisations, you stand to gain even more value from your digital marketing, which makes it one of the best channels for businesses who are aiming high for the year ahead. Cost-effective, highly creative, and hyper-targeted, the real value of digital marketing is clear.
To learn more about how digital marketing services can benefit you and your organisation, get in touch with our experts today – we can help you generate leads and improve your bottom line through dedicated, carefully planned digital marketing strategies.