In a fast-moving marketing landscape where new channels and platforms appear almost monthly, do marketers run the risk of losing opportunities because they haven’t yet been proven?

What are the barriers to investment in digital marketing?

An annual study by Oracle Marketing Cloud and Econsultancy asked marketers: “What is preventing your company from investing more in digital marketing?”

The 2016 results showed clearly that, along with restricted marketing budgets, inability to measure ROI, short staffing and company culture were top obstacles.

Crucially, the drive for strict ROI impacts the other factors, as without concrete figures decision makers are unwilling to increase budgets.

This impacts staffing and forces continued reliance on traditional marketing, creating a vicious cycle.

Is your company culture risk-averse or innovation-friendly?

In a risk-averse culture, innovation is stifled by the overwhelming need to demonstrate ROI. But innovation requires people, and hiring the right people requires budget.

With budget hanging on ROI, you find yourself stuck in limbo, unable to bring innovators into the team who can explore new channels, and bring positive change.

Your organisational culture should enable, support and catalyse change.

Research has shown that digital leaders see clear differences between companies with a digital culture and those without in their ability to adapt, innovate and create.

To gauge the current state, Oracle Marketing Cloud and Econsultancy asked marketers to agree or disagree with the statement: “We reserve a proportion of budgets for more innovative but untried marketing activities.”

At one extreme, a third (33%) of respondents disagreed with the statement, with 8% replying ‘strongly disagree’.

These companies can be said to have risk-averse marketing strategies with little room for innovation.

At the other end, 35% agreed to some extent that there was room in their budgets for trying new marketing activities, with 3% replying ‘strongly agree’. The remaining third (32%) were neutral.

It’s clear that newer marketing opportunities are not always enthusiastically grasped and explored.

But by relying too heavily on what has worked in the past, marketers run the risk of falling behind in today’s fast-moving marketing landscape.

What worked yesterday may be no good tomorrow. Ongoing marketing success requires an open mind and the ability to adapt.

That’s why it’s essential to set aside time and budget for charting new frontiers.

New channels pose a challenge to ROI reliance

Some channels are perceived as more measurable than others. Established formats like email and PPC win out over newer disciplines like mobile, personalisation and video.

This illustrates the danger of being driven purely by ROI. All indicators now point to mobile and video as the current and next big things in consumer consumption.

Mobile now counts for 25-29% of consumer time on media, and yet our survey of marketers found that respondents are spending only 4% of their digital marketing budgets on mobile marketing.

According to Sir Martin Sorrell, CEO of WPP advertising group:

Underinvestment in mobile… is due to a lack of clarity around the measurement of mobile advertising, particularly in the ‘walled garden’ ecosystems of Facebook and Google.

Creativity on mobile is one thing, but measurement is another; people are not sure of the ROI.

Only 18% of respondents said their ability to measure ROI was good for mobile marketing for acquisition, and 15% for mobile marketing for engagement/retention.

Between them, Facebook and Google have 70% of marketing share, with a higher penetration than desktop.

So it’s clear that marketers must put more budget into these emerging channels. A lack of innovation here will quickly see brands falling out of step with consumer behaviour.

Shop Direct case study

Investing in mobile doesn’t have to be a stab in the dark. As the channel matures, clear examples of brand success are beginning to emerge.

Shop Direct, the UK’s second-largest online retailer, ploughed budget into Facebook’s suite of advertising products for its Black Friday campaign.

It moved customers through every part of the funnel, from awareness (via Instagram and Facebook videos), to consideration (through retargeting video viewers), to conversion with Facebook dynamic product ads.

The results speak for themselves: a 20x return on investment, and Shop Direct’s most successful sales day ever.

What next: ROI vs Innovation?

The good news is that marketers are a dynamic and forward-thinking bunch of people.

Already, over a third of companies have room in their budget for innovation, with a core 3% leading the pack.

However, there is still much room for improvement. Perhaps due to restrictive budgets and risk-averse company culture, mobile, marketing automation and personalisation are yet to make it into the top ten priorities for budget increases.

But the industry is waking up to the importance of other new approaches like social media acquisition and video advertising; 60% and 58% plan to increase investment in these channels, respectively.

The marketing landscape and consumer behaviour continue to rapidly evolve. The field will belong to those who can maintain established ROI-led activities, and exploit rich new opportunities as they unfold.

Takeaways

  • Commitment to ROI is crucial but can be a dampener on marketing innovation.

  • Restricted budgets, lack of staff and a risk-averse company culture are the key obstacles to investment in digital marketing.

  • Your organisational culture should enable, support and catalyse change.

  • Newer channels like video and mobile are forcing marketers to innovate in order to keep up with consumer behaviour.

  • Ongoing success relies on ability to balance ‘safe’ ROI-driven activities with innovation and new approaches.

Find out how marketing budgets are changing, and how to extract maximum value from yours!

Download: Marketing Budgets 2016: Part of the Modern Marketing Actionable Insights Series.