Report

Digital-marketing effectiveness

Email: the workhorse

Our survey asked marketers to rank their most effective digital tactics across the marketing funnel. Email emerged as the digital-marketing workhorse, deemed effective for meeting all objectives. In fact, marketers consistently ranked email as the single-most-effective tactic for awareness, acquisition, conversion, and retention. In particular, email shines for customer retention.

Gigaom Research Digital Marketers Survey, 2Q14, n = 300

Per the following graphic, 56 percent of respondents identified email as being most effective at retention, several points ahead of the second-most-effective tactic (social media marketing).

Gigaom Research Digital Marketers Survey, 2Q14, n = 300

Moreover, marketers told us they embed email as part of a multi-pronged approach. Most marketers get fewer than 25 percent of their new customers from email marketing.

Gigaom Research Digital Marketers Survey, 2Q14, n = 112

A number of factors may influence email’s popularity. Marketers who employ email are tapping into a familiar consumer behavior: Email is the second-most-popular online activity in the United States, behind social networking. Email is cost-effective, measurable, and adaptable. Depending on their target audience, marketers can reach a mass audience yet retain a sense of personalization by repurposing email content. For instance, a retailer with national outlets can adapt a single email promotion for an in-store holiday across multiple markets and customer types by swapping graphics and editing text.

Our survey suggests that marketers with smaller budgets especially appreciate email’s value for achieving the nudge effect: Considerably far more respondents with smaller budgets ranked email as the single-most-popular tactic for achieving brand awareness than did brands with big budgets. What we found was that there are a lot of digital marketers — often with smaller budgets — who use email for everything. While they have every reason to be comfortable with the tool — particularly its measurability and relatively low cost compared with direct mail — they may be missing out on the chance to reinforce campaigns via multiple tactics.

Brands are continuing to learn how to acquire customers by relying on offline and online channels, such as adding prominent opt-in functions on websites. However, brands still have a long way to go to coordinate other marketing channels with email: Fewer than half of major retailers ask for customers’ email addresses at the point of sale.

Social media marketing: buying on faith?

Our study also casts light on the value of social media marketing for brand awareness and customer retention.

Gigaom Research Digital Marketers Survey, 2Q14, n = 300

Marketers ranked social behind email as the most effective tactic for brand awareness and customer retention, but perceptions of social’s efficacy for acquisition and conversion dipped noticeably: Social lagged behind email, SEO, and referral marketing for acquisition and behind email, referral, content marketing, and SEO for conversion.

Our survey also uncovered a paradox. One the one hand, as noted, more marketers plan to spend more on social media marketing than on any other digital tactic. But when we asked marketers to describe their perceptions of social media marketing, more marketers agreed with the statement “It is difficult to prove ROI for social media marketing” than with any other statement.

Gigaom Research Digital Marketers Survey, 2Q14, n = 300

In other words, marketers may be buying on faith with social: investing in social even as they struggle to prove its ROI. And they have a lot of faith in social for awareness-building and customer retention.

A number of factors might be influencing how brands use social media marketing as well as why they are increasing their social spend even though ROI is difficult to prove.

First, there is a natural pressure for brands to use social media just to keep pace with consumer behaviors. Social is the single-most-popular online activity in the United States, with the typical American spending an average of 37 minutes per day on a social network. Facebook alone has more than 1 billion members. For brands, having a social media presence is just table stakes for keeping pace with consumers.

ROI might be difficult to prove, but on the other hand, establishing a presence on social can be done quickly and cost-effectively. A new or established business can use social media to support brand awareness by creating a presence on Facebook, Google+, LinkedIn, and Twitter in a matter of minutes and repurpose existing marketing content to maintain a site cheaply (even if doing so is not necessarily the wisest approach). Updating content on your Facebook Timeline can be done quickly, with zero bureaucracy involved.

Social media gives brands a more direct and interactive channel with their customers, which may explain its popularity as a retention tool. It’s interesting to note that among our survey respondents, the No. 1 characteristic attributed to social was the difficulty of providing ROI but that almost as many respondents also said that social media marketing enables them to engage with their customers on a regular basis. Social Media Today consultant Debra Ellis calls customer retention “the first pillar of social media” because social gives brands a powerful means to deepen relationships in a more personal way. And on a practical level, social has given brands a quick-response mechanism to handle customer queries and complaints, as Comcast has famously illustrated with its successful Comcast Cares customer-service program on Twitter.

It’s quite possible that big spenders are willing to invest in social because even though ROI is difficult to prove, they are more likely to have access to tools such as social listening platforms and analytics that make it possible for them to more-regularly use social for monitoring, engagement, and measurement.

Referral marketing: the dark horse

One digital-marketing tactic emerges as an underused but highly valued way to acquire customers: referral marketing. A small but satisfied segment of marketers are investing in referral marketing, suggesting that savvy marketers can get a leg up on their competitors by taking a closer look at this discipline that’s social in nature but has elements of direct marketing.

Referral marketing is a more systematic way to monetize time-honored word-of-mouth marketing (the latter of which dates back long before digital). Like other social tactics, referral marketing taps into a long-standing human behavior, and, as in the case of social, digital has helped referral take hold. Refer-a-friend programs are now being used in industries ranging from retail to entertainment. Recently even Google launched its own referral-marketing program that pays $15 bonuses to businesses for each user they sign up for the Google Apps for Business.

Our study shows that marketers are getting value from referral, especially for acquisition and conversion. And marketers who use referral give it high marks for rewarding existing customers and generating valuable new customers. It’s extremely effective, generating a higher percentage of new customers for its practitioners than other tactics. A sizable number of marketers also believe referral helps them capitalize on their social follower base and capitalize on their existing email user subscriber base.

Gigaom Research Digital Marketers Survey, 2Q14, n = 300

Gigaom Research Digital Marketers Survey, 2Q14, n = 94

Those findings suggest a number of attributes about referral:

  • Referral is efficient, providing a double reward to a business. When a transaction occurs as a result of a referral, the business gains a new customer and also builds loyalty with an existing customer.
  • Referral enriches social media by complementing social’s awareness and retention value with the elements of acquisition and conversion.
  • Referral can provide more value to marketers when integrated with social and email rather than when used in isolation.

Gigaom Research Digital Marketers Survey, 2Q14, n = 278

However, our study also shows that referral marketing still has a long way to go in order to become mainstream. The majority of marketers do not use referral marketing, and 35 percent have not tried it. Marketers may do well to revisit referral marketing, especially by combining referral with social and email to make referral more effective.

Content marketing: the show horse

As noted earlier, content marketing is not new, but in the digital era, content has become a CMO-level priority. According to Mass Relevance, 95 percent of CMOs surveyed say that content marketing is important to their business in 2014. Our own study shows that marketers are spending on content marketing, too: Content marketing is second only to social media as a popular tactic for digital-marketing spend. As with social, marketers find content marketing especially useful for awareness and retention.

Gigaom Research Digital Marketers Survey, 2Q14, n = 300

It seems fitting that the uptake of content mirrors that of social, according to our survey. First off, the two disciplines are interrelated, with social having emerged as a cost-effective and efficient way for marketers to share branded content. (Think of social as the quick-release publishing platform for content.) Second, in both cases, marketers are emulating a popular consumer behavior. Just as brands have become publishers, so have consumers: More than 76 million blogs exist on WordPress (see disclosure) alone, and new publishing platforms (both visual and text-based) emerge constantly. Tumblr did not even exist seven years ago. Today Tumblr hosts more than 184 million blogs. And by and large, consumers have accepted brands becoming content publishers, too: Seventy-four percent of consumers trust content from businesses that aim to educate readers about a particular topic, and 94 percent of consumers have shared “educational information from a company” with a friend or loved one in the past.

Disclosure: Automattic, the maker of WordPress.com, is backed by True Ventures, a venture capital firm that is an investor in the parent company of Gigaom. 

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