In 2024, as new marketing funnels are introduced along with new technologies, the effectiveness of traditional marketing and its ROI is in question. The concern of marketing ROI for many small to medium businesses is crucial as their limited marketing budget must yield sizeable returns. What is traditional and digital marketing?
The Rise of Digital Marketing in 2024
Advanced Analytics and Data-Driven Strategies
Unlike traditional marketing, digital marketing is highly responsive with its ability to create insightful data that allows marketers to make iterative decisions quickly. Marketers leverage advanced analytics that indicates the effectiveness of their marketing often in real-time. Tools such as Google Analytics, Semrush, and many more allow aggregated anonymized data to reveal the performance of the marketing strategy within days or even hours. Leading causes for digital marketing to outpace traditional marketing includes
- Artificial Intelligence (AI): Generative AI can perform data analysis from the data provided by the digital marketing funnels. The results can then be used to help make insightful decisions to increase the performance of the marketing efforts.
- Real-Time Analytics: Data can be observed on a timeline. What time, when, and sometimes even where your target audience is actively interacting with your marketing can be observed. Using this information allows businesses to determine when to open their doors, which ad creative to push on social media, and understand what segment of the population is interested in their services or products.
- Customer Segmentation: Often times many businesses are not fully aware of who their target audience is especially when their business is online. Marketing tools help businesses understand their target audience as well as the behavior of their customers. Data rich information from social media platforms such as Instagram can help businesses understand their target audience’s demographic - age groups, genders, and interests. Often times this information is provided to you for free!
Did You Know? Companies that use AI are seeing significant increases in marketing ROI. According to Forbes, AI is transforming how marketers understand and engage with consumers.
Cost-Effectiveness and Scalability
Another way digital marketing has an advantage over traditional marketing is the flexibility derived from real-time data.
- Variable Budgeting: Campaigns can start with small investment and scale as they dynamically yield ROI. Unlike traditional marketing where investment typically requires a large sum of money to initiate such as T.V ads and postal advertising, digital marketing allow marketers to test their campaign with a budget as little as $10.
- Pay Per Click (PPC) Models: Businesses are charged only when consumers click on your ad. This type of advertising allows you to test your funnel since most traffic from PPC are likely to be within your target audience.
- Lower Overheads: Digital marketing eliminates many costs associated with traditional media production and distribution. Content created on iPhone can be +95% cheaper than creating a T.V ad. With little cost, more time and money can be invested into strategy and scaling the marketing campaign through other channels.
Engagement Through Interactivity
Digital channels foster bi-directional communication - consumers directly comment and engage with brands and businesses.
- Social Media Interaction: Brand building through social media platforms can be achieved through audience engagement. Consumers can directly comment, like, and share the content that is created and builds a loyal following. Unlike traditional marketing such as billboards and pamphlets, digital marketing can build an avid community.
- Interactive Content: Filters, polls, and interactive elements on social media platforms not only increase the engagement and exposure of your brand but also provide consumer data. What people like and dislike about your brand can be observed through interactions. From qualitative data (comments) to quantitative data (likes, views, shares), digital marketing provides effective measurements and understanding of consumer sentiment and behavior.
- Personalized Email Marketing: While email marketing behaves similarly to traditional marketing, it can be personalized based on the responsiveness of users. Unlike postal ads, email marketing allows marketers to understand the segmented behavior of groups with shared interests or characteristics. Metrics such as open rates, read time, and click-through rates allow businesses to create personalized email marketing campaigns and create content that resonates with the many target audience niches.
The Declining ROI of Traditional Marketing
Limited Targeting Capabilities
Traditional marketing often casts a wide net, sometimes based on outdated data.
- Broad Audience Reach: Traditional marketing is expensive and has a wide reach such as TV ads where any and all people are targeted, or postal ads where a zipcode of residents receive the mail. While these strategies can be effective for some businesses, much of the time and resources are wasted on consumers who are not part of your target audience. This can cause ad fatigue when repeated or exposed too many times and can hurt your brand reputation.
- One-Size-Fits-All Approach: Younger generations like Gen Z and Millennials are accustomed to the personalized and authentic-feel connection with brands. Traditional marketing is challenged by this demographic’s behavior and sentiment as broadly targeted marketing fails to resonate.
Challenges in Measuring Effectiveness
Marketing efforts need to be deployed, measured, and iterated to improve effectiveness.
- Difficult Attribution: Without feedback from visitors traditional marketing falls short of assessing where their leads and sales came from. Attribution allows marketers to optimize their marketing campaigns effectively, but in traditional marketing, data is often uncollected or unable to be collected.
- Delayed Feedback: The data that can be obtained from traditional marketing sources are lagging indicators. For example, making decisions based on 6 month old data is not competitive and the thesis of such a campaign can become unreliable given the ever-dynamic conditions of the market.
- Costly Mistakes: Course correction on a TV campaign or a 10,000 postal ad is much more expensive and difficult than a digitized reel on Instagram. Physical marketing collateral especially is costly to produce. On the other hand, digital marketers can pivot their marketing campaigns - adjust keyword clusters, advertising budget, etc. There are many levers of control in digital marketing to avoid costly mistakes.
Current Trends Impacting Marketing ROI
Short-Form Video Dominance
Social platforms like TikTok, Instagram Reels, and YouTube Shorts are leading the way:
- High Engagement Rates: Content that is short, straight to the point, and relatable drives engagement and discourse. Providing as much value in as little amount of time keeps users liking, commenting, and engaging with the content they see online even those that are promotional and marketing oriented.
- Viral Potential: Unlike TV ads where sharing is inaccessible, great marketing content can go viral. However, this doesn’t mean that your target audience will be exposed. It’s instead, an opportunity for your brand and industry to convert people into the interest of your product or service.
- Brand Storytelling: What is your business about and what is the best way to communicate it? Storytelling is a difficult endeavor, especially for brands trying to sell to consumers. Brand storytelling is easier through digital marketing because it is cheap, iterative, and reversible. Unlike traditional marketing where specific ads and campaigns exist in public for a long period of time, everything in digital marketing expires faster in consumers’ minds. This is not a disadvantage, but an opportunity for brands to continuously craft their brand’s narrative. It is spoken through numerous reels, posts, comments, collaborations, and interactions that build a brand’s story.
Conclusion
Digital marketing continues to outperform traditional marketing in terms of ROI, driven by advanced analytics, cost-effectiveness, and higher engagement levels. In Part 2, Social Habit will dive deeper into what the future of digital marketing will look like and where traditional marketing can stand out even in a digitally dominated marketing environment. If you enjoyed our content, please sign up to our newsletter and if you would like Social Habit to assist your marketing efforts contact us today!