Many South Africa marketing executives are ignorant or intimidated about how online advertising provides detailed data of an audience – so, they stick with outmoded methods, says an industry insider.
“I believe it’s the ‘tried and tested’ versus the ‘new and unknown’. A lot of the digital channels are relatively new and even though they are measurable down to the nth degree, a lot of marketers and media peeps haven’t yet bought into this measurability,” Andre Steenekamp, CEO of 25AM, told Fin24.
The company is a Cape Town-based digital agency and has Steenekamp decades’ worth of experience in the marketing industry.
International trends indicate that online marketing has experienced healthy growth.
According to the Interactive Advertising Bureau, US internet ad revenues hit $13.3bn (R165.5bn) in the first three months of 2015, representing growth of 16%.
But while the growth appears healthy, marketing executives are stuck in a dated paradigm where 10% of budgets are reserved for online advertising.
“The 10% factor. Currently there is an allocation of spend to digital that doesn’t originate out of any science, or even art. Someone once (quite recently, because for a while it was much lower) decided that 10% of marketing spend should be allocated to digital,” said Steenekamp.
He argued that 10% in online marketing of a massive budget could deliver a decent return of investment, especially when clients have unrealistic expectations.
“To undertake a full set of creative assets, plus media buys across display, performance and social media for six months with R500 000 is just not going to cut it. Oh, and make it go viral.”
Marketers will ultimately follow audiences, especially as social media becomes more influential and traditional TV viewing begins to decline as is happening in the UK.
Facebook has doubled its share of the $140bn online advertising market to 8% in 2014, according to research firm eMarketer, serving notice to internet giant Google, which commands around 33% of the market.
But on mobile phones, the social media company with more than 1.4 billion users draws 17.4% of ads, up from just 5.9% in 2012 as mobile is a “key driver” of revenue, according to Facebook’s finance chief David Wehner.
“I believe budget allocation decisions should happen at strategy level and these decisions should be based on what is best to meet the client’s return on marketing investment. If the strategist, or strategists in a cross functional team, are measured on outcomes, then they will make the budget decisions accordingly,” Steenekamp said of a common sense approach to ad budgets.