State of Digital Marketing in Australia: coming of age or barely keeping up?
Digital marketing may be coming of age but, in a climate of rapid change, are Australian marketers keeping up? In conjunction with Econsultancy, we look at learnings from the 2013 ‘State of Digital Marketing in Australia’ report.
Digital marketing has come a long way in the past year, since Marketing last partnered with Econsultancy to investigate the state of the market. Back then, company culture, insufficient budget and skills, and a lack of belief and support from senior management conspired to hamper digital’s progress. Fast forward a year and the picture is very different. Digital is becoming mature, with greater accountability, greater senior buy-in, less focus on ‘shiny’ new toys, and the adoption of technology to aid execution and measurement.
In its second year, Marketing and community-based publisher Econsultancy’s ‘State of Digital Marketing in Australia’ report interviewed almost 500 marketers and marketing service suppliers in November and December last year. The picture of the industry captured shows a maturing grasp on digital, but many barriers still blocking the adoption of best practice across the board.
Maybe we’re not all that
During the course of 2012, a number of marketers came to a realisation – a jarring ‘we’re not as good as we thought we were’ realisation. Perceived levels of knowledge of digital marketing dropped during this time, with noticeably less rating their understanding as ‘excellent’ under the realisation that it was only ‘good’ or ‘OK’ at best. 66% of the sample fall into this category, while 25% acknowledged their understanding was poor. Supply-side respondents were more critical of their client-side peers, with 66% rating marketers’ knowledge as ‘good’ or ‘OK’, and 32% as poor.
As digital becomes more measurable, accountable and benchmarked, many have recognised they may not be as fantastic as they once thought, director of research and education at Econsultancy, Jake Hird, explains. “Digital is becoming inherently more complex… it’s the step beyond using digital as a channel to integrating it into the business.”
From the agency perspective, the level of proficiency is mixed. In some instances marketers are doing a good job, while in other instances they’re not, with measurement posing a particularly challenge, according to Luke Atkinson, deputy head of planning at Leo Burnett. “They’ve become more proficient at executing things, but there is a lot of uncertainty among senior marketeers about whether what they’re doing is actually making a difference.”
Managing director of digital ad agency Amnesia Razorfish, Doug Chapman, agrees there are a number of Australian marketers doing a great job, but thinks more sit at the poor end of the scale. “I’m still stunned and surprised sometimes when I go into fairly senior people in blue chip companies who say ‘I don’t really get digital’ and ‘we’re about to start getting into the digital space’,” Chapman says.
The natural evolution of digital within a business usually begins with outsourcing, followed by the employment of a digital manager, creation of a digital team and the formation into a multichannel operation, notes David Blakers of business communication group Salmat. “A lot of our client programs have started to evolve structurally,” Blakers says. “The larger ones have organised into a multichannel team, upon growing awareness of not treating digital marketing as a silo.” Around one-third of Salmat’s clients, which predominantly hail from the mid to enterprise end of town, operate multichannel teams, and Blakers expects another third to do so by the end of this year.
Test and learn
Last year, a reluctance to give untried methods a go proved a major barrier to digital’s uptake. Some apprehension still exists, but it’s less of a stumbling block than it was before. “In some of the individual elements of digital, like search or SEO or mobile or Facebook, you’ll find clients that go ‘that’s a bit new for us’,” Chapman says. “But generally most people accept digital is part of mainstream; it’s the fastest growing sector, has strong ROI benefits and some are beginning to understand the measurement because there are better systems coming out now to access the data that they’ve only ever dreamt of before.”
Blakers believes the market is realising there is advantage in being early adopters. “Some of our clients that adopted early relative to their peer in industry verticals that are experiencing negative growth are experiencing double-digit positive growth. They generally attribute that to being a first mover.”
However, managing director of SapientNitro, Paul Bennett, believes there is still a reluctance among Australian marketers to test and learn. “There is a test and learn methodology that is being applied in other parts of the world that we still are not very good at as a country in marketing in Australia,” Bennett observes. “There are pockets that are good, but most people are reticent to test and learn; they want to do and see success straight away. There is still, although it’s becoming less, no willingness to fail.”
While the curve of investment is slowing down slightly, digital spend is set to continue to increase. 68% of marketers plan to increase their digital marketing budget in 2013, compared to only 9% who plan to increase traditional marketing budgets. Overall marketing budgets are expected to increase by 28% during the next 12 months, while digital budgets are expected to increase by 20%.
Down from an increase of 26% last year, it appears the urgency to invest in digital has decreased. “Last year, the research we did really demonstrated that digital was very much at the top of the agenda, and I think people were trying to play catch-up to a certain extent, and investing very, very heavily into it,” Hird says. “This year there is less urgency.”
Marketers alluded to plans to adopt a more structured, more cross-channel and more measured approach this year. There appears to be a wake-up to being more accountable with 93% of client-side respondents expecting their activity to be more measurable during 2013.
In terms of the channels being used, there is still a reliance on the fundamentals, with email, search and social being used by upwards of three-quarters of the market. “If they work, why reinvent the wheel?” Hird says is the mentality for many. These three fundamental are also the areas most marketers plan to increase spend in over the year ahead, with off-site social media, such as Facebook and Twitter, set to attract the highest levels of increase, flagged for a boost by 67% of the market. Supply-side respondents foresee the increase in off-site social to be even greater, at 76%.
However, there are also signs of emerging techniques coming to the fore. Video advertising follows closely on the heels of the tried and tested, with 56% of marketers planning to up spend in 2013 and 72% of suppliers expecting their clients to boost its use. Chapman thinks the market has reached a tipping point for video. “Some of the numbers I’ve seen on take up on rich media and video are quite stunning… a lot of people are moving into that space very rapidly.”
With only two in five marketers utilising mobile marketing, mobile is symptomatic of Bennett’s fear of failure theory. Blakers however believes forwardthinking businesses are starting to provision for the trial of new techniques. “A lot are starting to have an innovation fund allocated to trailing new technologies, testing and learning and they’re not afraid to get it wrong,” he says. But many still are not. To those who aren’t, Atkinson suggests adopting a 70:20:10 spending split to build test and learn into a program, so that 70% of spend is attributed to tried and tested revenue drivers, 20% to interesting experiments that are a fairly safe bet and 10% to push the boundaries and do new things.
Money, skills and culture
When asked to nominate the greatest barriers preventing their organisations from investing more money in digital marketing, restrictions on the overall marketing budget were named by one in two marketers – a large jump on last year’s result.
“Marketing dollars are a scarce resource,” Blakers comments hinting that some apprehension still exists around digital. “A lot are cautious with how they allocate [budget] across emerging channels and emerging marketing techniques.”
Bennett agrees risk mitigation limits digital investment. “It’s a question of risk… if we know some things still work reasonably well, and everybody has a finite budget, finite resources to be able to allocate to getting an outcome, the path with less risk wins out.”
Much has been made of a skills shortage across the industry, but only around one in three nominated a lack of staff as a barrier, while 28% highlighted a lack of understanding or education as an issue. However, the industry appears in agreeance that the skills gap is real, both across agency and client side, and in Australia and markets around the globe. “Digital is reshaping markets faster than the workforces of those markets can reshape their skills,” Chapman observes.
The shortage appears to centre around a couple of key areas, namely strategy, creative and analytics. “Finding an A-grade strategist in digital is very difficult… guys that know how to deliver commercial return,” Atkinson says.
Chapman agrees, saying, “good quality, strategically sound, clients service people are almost impossible to find in the digital space”. But he acknowledges that it has become easier to find paid search, SEO and front end developer talent in the last three years.
Bennett adds gaps in user experience design, analytics and optimisation, and technical implementation of business transformation projects to the list.
Company culture still exists as a challenge for two in five marketers, but a shift in the mindset of CEOs has been observed across the market. The bottom-up environment to secure senior buy-in has shifted, with the impetus to adopt digital now coming, more often than not, from the top.
“I regularly go to meetings where the marketing director is saying my CEO wants to see a digital road map or a digital strategy and we feel like we haven’t really addressed this yet and our above-the-line agency isn’t really helping,” Chapman reveals. “There has been a big shift in the last 12 to 18 months.”
Jim Stengel, marketing author and former CMO of P&G, believes 2013 will be ‘The Year of The Drop’ – the year ‘digital’ is dropped from ‘digital marketing’ as it becomes integrated into all facets of life. While this may not be practical when it comes to conceptualising day-to-day implementation, the idea speaks to a key insight into digital’s use. Often it’s thought of as a channel rather than infrastructure that bridges channels, creating isolated rather than connected experiences. “We are entering an era of integration and simplification as people/consumers want coherence, impact, joy, and help from people running brands,” Stengel says.
On balance, Australia’s marketers are doing digital a whole lot better than they have in the past. But there are many who are still not up to pace in a rapidly-changing sector where all marketers need to keep themselves up to speed.
The 2013 ‘State of Digital Marketing in Australia’ report is available now. You can save 25% just for being a Marketing reader – find out more here and use code ECMM13 to get the discount.