Commentary

Why Digital Marketing Fails

by Joe Marchese , February 23, 2010

Digital marketing efforts are playing against a stacked deck for two simple reasons. The first: digital's seemingly omnipresent NBDB Syndrome. NBDB stands for "Never been done before," which is where so many discussions in digital marketing start and end.

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 1/100^th 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?

This post in 140 characters or less: Why digital marketing fails http://bit.ly/5PPZbV (by @joemarchese)

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8 comments about "Why Digital Marketing Fails".

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Mark McLaughlin, February 23, 2010 at 12:26 p.m.
Well said.
I used to open meetings with senior clients by saying; "I don't have any new cool ideas to show you but I have 3 ideas that we have done 100 times or more for other clients with similar business objectives and they worked 98% of the time. Are you interested in seeing these ideas?"
Worked every time - but don't try that opening at the digital agency.
Client's want scalable, repeatable ideas that are grounded in certainty. Somehow, the digital media buyers who represent these clients in the marketplace feel extraordinary pressure to demonstrate originality and "creativity" in order to justify themselves. I never could figure out how this gap between senior marketers on the client side and digital buyers on the agency side was created but it happened all the time.
Reply

Jonathan Mirow from BroadbandVideo, Inc., February 23, 2010 at 12:45 p.m.

"Never been done before," which is where so many discussions in digital marketing start and end. - True, most advertisers are seriously chicken-shit - as are most major US corporations. They say "we want out-of-the-box", "we want originality" - but if you actually give them any of that they simply freak out and retreat to the comfortable. Look, it takes huge stones (ladies can grow them too) to stand up in front of a bunch of suits and say "there's some new stuff you should try if you want to get any real impact or traction in the new media space" - but the sad fact on the face of the matter is that until sombody ELSE does it first, most dinosaurs are simply happy to plod off to extinction and hope they retire before the brown fecal matter hits the rapidly revolving blades so they can say "it didn't happen on my watch". I've personally been watching this movie for years - and it's a sad ending. That's why I now do whatever the hell I want with wild abandon, because if I spend my life waiting for people to say "yes" I'll do just that - spend my life waiting. Joe - you're clearly a smart guy - lose the twitter stuff, it's embarrasing.

Ira Kalb from Kalb & Associates, February 23, 2010 at 12:50 p.m.

You make some very good points.

As with any media, scalability can be achieved with great content. In the case of digital marketing, scalability can be achieved via social networking channels. The problem is that too many marketers have not yet learned how to create content in such a way as to have control over the word-of-mouth pyramid that results.

Walter Sabo from SABO media, February 23, 2010 at 12:58 p.m.

Hitviews online video webstars generate results that are repeatable, scalable and do move the needle. Our clients will confirm that. We have found, as others have mentioned, that content is the key. A good show sells.

We have also found that our success comes directly at the client level relationship or with visionary PR firms such as Ruder and Finn and Edelman.

Your complaints, all true, tends to vanish when dealing with clients directly.

Jeff Einstein from The Brothers Einstein, February 23, 2010 at 1:28 p.m.

I would suggest to Joe and others that digital marketing fails for a much more fundamental reason, namely: no one wants more ads, "relevant" or otherwise, and everyone is equipped to avoid them.

Further, the failure to scale online has very little to do with the diminutive size of online ad budgets, as Joe asserts. In fact, it's the other way around: the budgets are small because we long ago decided to exchange our ability to reach an online audience for the ability to target them instead (and just because we target prospects doesn't mean we reach them).

The current advertising-as-intermediary model online doesn't scale because it's patently unscalable. Think about it: we begin with advertising, a product no one wants (except those who produce, buy, sell and measure it) and everyone is equipped to avoid. Then we take this product that no one wants and everyone is equipped to avoid and we make it available by design to smaller and smaller audiences across a medium that simply can’t and won’t tolerate it in the first place. Then we double down when it doesn’t work. Albert Einstein would call it insanity, but Lewis Carroll would be proud.

Everyone in this industry seems to think that scale will ensue and profits flow when we finally get the technology right. But the technology is incidental and will only accelerate our foolishness. Scale has less to to do with technology and more to do with someone far more precious: common sense.

Common sense would require us to stop trying to sell something that no one wants. Common sense suggests that in an on-demand world -- and all commercial media have always been on-demand -- we don't reach our audiences at all; they reach us. Common sense suggests that audiences aggregate in exactly the same self-selecting way and for exactly the same reasons today as they did eight decades ago. Common sense would conclude that it's simply not our job to target them because they'll gladly target us if we dangle the right ad-free bait.

Anyone who wants to talk seriously about online branding and reach should give me a call at 347-561-4465.

Alex V. from N/A, February 23, 2010 at 4:25 p.m.

@Jeff

"I would suggest to Joe and others that digital marketing fails for a much more fundamental reason, namely: no one wants more ads, "relevant" or otherwise, and everyone is equipped to avoid them."

I disagree. While people do not want to be bombarded with ads, they do understand the need for them. It goes far beyond making the ads "relevant", but rather making them engaging, part of the content, and so much more. Don't let creative thinking scare you away. You go on to contradict yourself and state that digital marketing won't work cause no one wants it, yet then say advertising in general is a product no one wants. So is advertising a dead realm? I highly doubt this since you ask people to call you at the end of your post to discuss it. Or perhaps the $400 billion a year spent on it is null in your mind?

"Common sense would require us to stop trying to sell something that no one wants. Common sense suggests that in an on-demand world -- and all commercial media have always been on-demand -- we don't reach our audiences at all; they reach us. Common sense suggests that audiences aggregate in exactly the same self-selecting way and for exactly the same reasons today as they did eight decades ago. Common sense would conclude that it's simply not our job to target them because they'll gladly target us if we dangle the right ad-free bait."

Common sense would also tell you advertising is exactly about selling something no one wants. Or better yet, may not need, or simply just needs to be aware of. Common sense would also tell you no one wants TV ads, but the audience is there the same way they are there online. Now if you wanted to discuss HOW or WHY they are there that would be different. But your line about audiences reaching us is exactly right. Which is why rich content online plays such a key role. Dangle it in front of them, if it's good they will bite, if it's bad they will not. This is universal across nearly all advertising fronts.

Mike Mcgrath from RealXstream PTY LTD, February 23, 2010 at 9:33 p.m.

Joe, Can you elaborate on this section "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".

This would represent $100,000.00 per customer experience. (or $100,000,000.00 CPM) Obviosuly ridiculous, though I appreciate the point your trying to make.

Just out of interest can you provide more reastic numbers for where you think reasonable ROI might begin in terms of scale for the right powerful media experience... For example: 10 million people for $1 million dollars?

As a subscriber of your posts I would really like to hear your guess...

Mike

Joe Marchese, February 26, 2010 at 1:43 p.m.

Hey Mike - I am sure with a little bit of research we could get some numbers, but I know they vary widely. The real point was to put in context the in ability to deliver ROI without massive distribution. What might be more interesting is just to figure out how many people they would have to show the asset to in order to make a reasonable return on production investment.

for example distributing the cost of production of a $1 million spot over 10 million people would could be thought of as .10 cents cost per viewer, which is still a $100 CPM.