Monday, February 08, 2010

ExactTarget Survey: Lack of Skills Slows Growth of Digital Marketing

Summary: a new survey from ExactTarget shows that digital marketing is growing faster than database marketing or mass media, and that agencies have a harder time adding digital capabilities than their clients. It also suggests that marketers are moving into digital channels even when they can’t measure their value very well. No surprises in any of this, but good to see confirmation of previous research.

I really and truly was going to drop the topic of moving from database to digital marketing, but then I saw a survey last week from email vendor ExactTarget which reinforced several of my key points. (You can buy the complete survey from Econsultancy. A detailed slide show is available here for free, at least as I write this.) Key findings include:

- digital marketing budgets are growing faster than marketing in general (66% plan to increase their digital budget in 2010, vs 46% planning to increase their total marketing budget). Database marketing channels (email, direct mail and telephone) are growing at lower rates (54%, 27% and 26% plan to increase, respectively), while mass media (television, newspapers/magazines and radio) are lagging the most (20%, 17% and 15%).

Note that these are just the percentage of companies planning a budget increase; the actual average increase in digital budget was 17%. The average proportion of budget spent on digital was 24%, which is higher than other figures I’ve seen, suggesting the respondents were more digitally oriented than the industry as a whole.

- lack of skills is the key impediment to digital growth: lack of staff, company culture and lack of digital understanding were three of top four problems (after lack of budget, which was number 1). Inability to measure ROI and lack of business case ranked only ahead of “other”.

What is preventing your company from investing more money in digital marketing?

40% restricted budget for all types of marketing
35% lack of staff to make most of any digital investment
32% company culture
25% lack of understanding about digital
20% reliance on traditional marketing
16% inability to measure return on investment
9% lack of business case / case studies around digital
7% other

- agencies are more constrained than marketers by lack of skills. “Lack of understanding about digital” was cited by 45% of agency respondents, compared with about 13% of client-side marketers.* My interpretation is that clients can always go and hire a digital agency if they need to add the expertise, while the agencies themselves find it much harder to expand their offerings.

In fact, although 35% of both groups apparently cited “lack of staff” as a problem, they may mean different things. Agencies are probably referring to lack of staff with digital marketing skills. Client-side marketers probably mean lack of staff to oversee digital programs executed by an outside agency.

- The fastest-growing digital channels (social media and mobile) are the least measurable. In fact, there’s an almost inverted relationship between growth rates and measurability. This probably reflects that fact the fastest-growing channels are the newest, with least-established measurement methods, rather than a perverse hostility to measurability.

In this context, it’s also worth noting that agencies felt much more hobbled by lack of ROI and business cases than client-side marketers, and that a very-hard-to-believe 65% said their company measures marketing effectiveness based on ROI. These further reinforce the view that marketing measurement isn’t a top priority when moving into new digital channels.

* The published materials show total and agency figures. I've estimated values for client-side marketers based on the numbers of respondents reported for the two groups: 648 client-side, 385 agency/supplier-side. This won’t be precisely correct, since everybody didn’t answer every question. Hence that -3% response to "lack of business case" for client-side.

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