• by John Nardone , Op-Ed Contributor, January 26, 2006

As we analyzed our clients' 2006 media plans, we noticed that sponsorship and digital marketing are two of the hottest areas for marketing investment. We're seeing clients across industries starting to make significantly bigger bets on digital marketing this year. Even consumer packaged goods clients are planning on spending up to 15 percent of their media budgets on digital initiatives after only spending only 3 to 4 percent in recent years.

Of course this is good news for the Internet portals which are taking steps to increase their return on investment accounting to make clients feel more comfortable with these commitments. For example, Google recently launched new tracking and analytic tools for search marketing, and Yahoo! has partnered with MMA to offer an affordable econometric modeling solution to its clients.

These tools and services will be a big help to marketers as they begin to focus on digital efforts. From 1995 to 2002, marketers were primarily focused on determining whether or not online marketing and media "works." Positive conclusions were easier to draw for direct marketing efforts and certain industries, but it took a long time for many clients to become comfortable with the idea that digital could be a basic element of their brandbuilding efforts. Now it seems that the questions have shifted from "does digital work" to "how much should I invest" compared to traditional tactics like TV or print, and "how should I allocate spend across digital media" such as ads, e-mail, search, and the corporate Web site.

These questions are difficult to address for any media, but they are particularly challenging for digital because digital media can take many forms and can support various strategic objectives. This puts great pressure on marketing organizations, which must be able to plan and manage multiple program elements. Few have experience doing this at the scale associated with larger spends.

Take an actual client example: The vice president of research, recognizing the significance of the shift to digital, puts additional focus on digital measurement as part of the overall marketing effectiveness effort. He quickly finds that there are 27 distinct digital programs planned across the brands in his company. The goals of these programs haven't been documented in a consistent way, and the criteria for success were rarely articulated. Worse, he discovers that the programs are managed by multiple agencies, Web hosting partners, e-mail providers, and internal corporate groups. There is no central responsibility for data collection or evaluation among these entities and the brand teams don't have the time or expertise to fill the gaps.

The vice president of research at this particular marketer has taken the following steps to try to resolve the issues:

>> For each digital program, the brand team will develop the strategic goals in the context of the brand strategy, putting particular focus on the unique value digital is expected to deliver as part of the overall marketing mix. The data will be documented in a consistent format across brands and programs.

>> The various agencies will identify the critical consumer touch points, user paths, and handoffs between digital channels, and the data required to document them.

>> The brand teams, in partnership with their agencies, will define goals for sales-based return on investment and brand equity and build an assumption-based plan to deliver them. Diagnostic measures tied to the success goals will be identified.

>> For each program, a formal campaign management plan will be put in place. The plan will document how the agency will use the metrics and data to optimize the programs once they are in flight.

>> All digital programs will be included in marketing mix models. The metrics and ROI data from these programs will be analyzed along side of those from traditional marketing programs.

This structured approach gets all the team members aligned to manage the digital programs to their greatest possible effectiveness. It helps the brand team think through where the marketing value is being created, and how to measure it. It creates consistency and comparability across programs so that lessons can be learned and reapplied across brands. And it ensures that the required data is available to obtain a solid read on program ROI.

John Nardone is executive vice president, product development and marketing, for Marketing Management Analytics. (john.nardone@mma.com)