Why Digital Marketing Fails
It doesn't take a statistics Ph.D. to figure out that the likelihood of success is greatly decreased when there are no best practices or history to reference. Also, NBDB programs are inherently more difficult (read: costly) to implement, which means a marketing effort that would have returned a positive ROI otherwise, might not when it's a NBDB program.
But NBDB programs have their place. They make sense when evaluating potential media partnerships -- but only if the experimental cost can be isolated, and marketers are actively looking for ways to compare the results of their NBDB test to other media channels so that they can evaluate their media mix, and apply learnings at scale.
This brings us to the second reason most digital marketing fails: lack of scale. Too many digital agencies are tasked with an impossible task of showing positive ROI on digital budgets 1/100th of their traditional media counterparts.
The lack of scaled spending against digital initiatives makes it nearly impossible to show a positive ROI, for a couple of reasons. First, a lack of scaled media spend means that many digital marketing effort do not have the ability to reach positive ROI by spreading out the fixed cost building the program. By fixed cost, I am referring to all of the planning that goes into a coordinated marketing effort, in addition to the cost of producing the campaign assets through the work of graphic designers and programmers. The greater the media spend against a channel -- and this applies to any channel -- the more the fixed cost can be spread across many exposures.
This is the uphill battle most digital plans face right out of the gate. You can come up with a plan to create an ideal customer experience within digital, but if you don't reach people at scale with said experience, the cost will always appear too high. Imagine it cost $1 million to produce a television commercial that you only show to 10 people. It won't matter one bit how good the commercial is, or how powerful the media experience is; no marketer would be happy with the ROI of that program.
Then there is the self-fulfilling prophecy of digital's inability to "move the needle" in sales the way traditional media does. I hope there's no need to go into all the numbers of how many people are online, and how much time they are spending there. I think we can just agree that online has some potential.
The real issue is that reaching people in an effective, standardized manner with marketing messages online is still very difficult. In the cases where it is possible, it can easily be dismissed as an SEDT ("Someone else did that") program -- which makes no sense to me. You usually don't hear markers say, "We don't use commercials because our competitors already did that." If it works, it works.
But without scale, it's currently impossible to compare the ROI of digital programs against traditional media programs, because ROI on traditional media programs is measured at the macro level. When one buys $10 million in market media, sales go up in-market, but it's just not possible right now to tell how much of that was the mere $200,000 spent on digital, especially since that $200,000 was earmarked for an NBDB program. This is why I issued "The $1 Million Social Media Marketing Challenge" a few months ago, and the offer still stands.
There is a lot of amazing work coming out of digital agencies and digital departments of brand marketers. Digital efforts have been delivering fantastic results -- even with certain inherent disadvantages when being measured against traditional media. Once digital teams have the ability to scale the distribution of their digital strategy and not every campaign is forced into the NBDB bucket, digital will move your sales needle in exactly same way television does. Given the right support, there's no question that marketers' and agencies' digital departments will be the key to the future of the advertising. The question is: Who will get there first, you or your competitors?