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Does Digital Advertising Actually Work?

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Anderson Collaborative

Digital advertising is anticipated to make up 66.8% of total media spending by 2023. But does it actually work? The short answer? Yes and no.

Digital advertising is anticipated to make up 66.8% of total media spending by 2023 according to emarketer. But is online advertising really everything it’s hyped up to be? The short answer? Yes and no.

It’s not an answer that most agencies and advertisers would likely share with their clients. The problem with the advertising world today is that digital advertising is “the hottest new trend” that media buying companies are hopping on because it’s new and sells better than traditional.

The truth is that digital advertising does not work when people expect the platforms they purchase ads from to be turn-key. It’s not a quick-fix and it’s certainly not easy to manage without experience.

Just using the latest and most advanced tools doesn’t mean that you’ll build a successful marketing campaign. I mean if you gave a caveman an iPhone he probably wouldn’t know what to do with it from the get-go (unless he was a really savvy caveman).

Great advertising happens when there is a strong, well thought out strategic plan behind the campaign. This strategic plan steers the bus in the right direction and takes your business where you want it to go. Without clear goals and strategy behind your marketing efforts you’ll end up throwing advertising dollars down the drain, I guarantee it.

Take search advertising for example. In theory, being able to capture your customers through “intent marketing” is almost close to magic. Search captures customers at the exact moment they are actually looking for a solution. However, just blindly selecting top keywords does not mean that you are suddenly going to be raking in cash.

Consider what happens when you google a brand like Nike. An advertisement pops up just above the organic link to the same website, next to their google business listing, all leading to Nike.com

According to research conducted by the National Bureau of Economic Research, advertisements like this have “no measurable short-term benefits.” Advertisements such as these known as “branded search” only give customers a perfect replacement for the non-paid link they would have clicked in the first place.

The only value that would be added is if Nike was paying to keep Adidas or another competitor from taking the top spot (which is probably where Nike sees the majority of the value in this placement).

Notice, however, the effectiveness of their dominance of the search term. This is done through carefully orchestrated search engine optimization. Nike approaches its online presence holistically and it is driven by an overarching strategy. They have built out a system that spreads their reach wide to build brand awareness, narrows it down to build customer consideration, narrows it even further to bring customers in to convert through product-specific retargeting, then transforms those customers into advocates by encouraging reviews and feedback through online reputation management.

Here is an example of this approach in action.

It is also a highly data-driven approach where they understand exactly what they’re getting out of each of their online marketing initiatives. There is a reason why there are 26 unique marketing trackers installed on their site.

They personalize ads so they are relevant to their customers. Not only that, but they ensure that they are reaching their customers cross-device. Lack of personalization and no cross-channel control (lack of integrated marketing communications) is why digital ad dollars are being wasted now more than ever. Without context and relevancy behind your ad dollars, you will struggle to generate any results.

Send the wrong message to the wrong people at the wrong times and you can get what you expected; consumers tuning out or blocking your advertisements. Signal’s programmatic ad study identifies these primary reasons why ad dollars are wasted due to lack of context and relevancy:

If you’d like to see an example of how Nike does this right, go visit their website and start shopping around. Then, check Instagram or Facebook a couple of hours later. Odds are the first ad that will pop up is that exact product you were looking at. Creepy, or effective?

Certainly creepy to some, but the majority of consumers do not mind personalized advertising. Studies have shown that 55% of U.S. consumers feel strongly that personalization helps them avoid wasting time on irrelevant content. It also results in a 50% lift in brand favorability and a 39% lift in purchase intent.

The key to success in online advertising is understanding the customer journey. The rule of 7 is a marketing principle that states that your prospects need to come across your offer at least seven times before they really notice it and actually take action. In a supersaturated online marketing world, this number may be even higher. Thus building a cross-channel marketing strategy is absolutely essential to maximize your return on investment from online advertising.

So to summarize, is digital advertising actually effective? In our opinion, it is without a doubt one of the most effective ways to promote your business if implemented correctly. It’s fully trackable if done right so you can know exactly what you’re getting out of it compared to traditional formats like television or print. Although we are a little biased because we’ve used it to generate a 56x return for a client at one point.

And we’ve generated great returns for nearly all of our clients because of the strategy we put in place, much like Nike’s. We utilize the SOSTAC planning model to build a highly-targeted cross-channel approach that drives our marketing efforts in the right direction. If you’re looking to build a strategy to guide the marketing efforts of your organization we could not recommend this model more.

It’s also important to understand that online advertising is not beneficial for everyone. In fact, it can be incredibly detrimental to certain businesses if careful financial analysis is not done prior. This is why we use our Advertising Budget Calculator to estimate return on investment and understand the media budget/key performance indicators needed to generate success.

If you want Digital Advertising to work well for your business, then you need to place your ad dollars in the hands of professionals that work with you to build a winning strategy plain and simple. It’s important to find an agency or firm that closely fits your needs and budget. Explore their case studies and make sure they have good reviews. Look for someone that wants to partner with your business to achieve mutual success.

Doing your homework will help you become one of the success stories and not one of the failures. We wish you luck!

What’s Next? Time To Manage Your Budget Effectively.

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