NEW YORK: Brand owners must respond to the digital "imperative" by adopting a more nuanced approach to planning, management and handling agencies, the Boston Consulting Group has argued.
The firm interviewed
around 100 senior executives, and discovered only 25% still set communications budgets via a sales-to-growth ratio, but 45% now work "from scratch", reflecting the downturn and rise of new media.
"We found this encouraging, as it avoids perpetuating suboptimal spending patterns simply through status quo budgeting," BCG said.
But balancing responsibility for developing and coordinating campaigns has not witnessed equally positive trends.
"The nature of digital marketing itself is more global than traditional marketing has been, since activities on such as Facebook and Google can be viewed by internet users in any country," BCG suggested.
At present, 87% of organisations run campaign development at the brand or divisional level, reaching 84% for promotions and event marketing.
Point-of-sale, demographic-specific initiatives, targeting "influencers", sampling and coupons schemes, and traditional mass marketing creative content all bettered 70%.
Social media management registered 68%, while direct marketing, sales force management, and traditional media planning and buying were handled in this way by two-thirds of contributors.
Corporate website management and design were the highest-scoring sectors concerning centralisation, delivering 57% and 50% respectively.
As a "rule of thumb", BCG said strategic activities should remain at the operational tier, but executional duties like establishing standards and sending email blasts must be centralised.
Turning to planning, 41% of businesses agreed their POS procedures were "very effective", falling to 34% for cable TV, and 31% for direct marketing, national broadcast TV and local/national spot television.
PR, magazines, radio, outdoor and trade shows were afforded the same rating by roughly a quarter of the panel.
However, measured internet ads, like paid search, posted 13%, social media hit 9% and mobile yielded just 5%.
BCG identified 27 companies representing successful digital early-adopters, boasting above-average social media, web and mobile budgets, with a willingness to further boost such outlay.
This group had median revenues of $30.8bn, and largely comprised financial companies, telcos, retailers and airlines.
By contrast, the 24 "traditionalists", slower to implement such moves, typically came from brand-building categories like food, beverages, beauty and consumer durables, claiming annual sales of $22.2bn.
A 52% majority of the first cohort believed they had the "tools to make tradeoffs effectively across media" and 37% said their agencies were "helpful" in achieving this goal.
A 39% share "mandated" a minimum investment in digital marketing, 35% incorporated this area into performance objectives, and 61% of individuals said new media communications were important to their career.
Each of these totals surpassed those from traditionalists by at least 10%, peaking at 23% regarding making tradeoffs between competing channels.
Some 75% of "traditionalists" solely used third-parties, like agencies, or had a hybrid approach when producing creative for measured internet ads, compared with 81% of "digitals".
Figures stood at 81% and 88% respectively concerning planning and buying in the same field, and reached 50% and 67% in turn for social media management, a key point of difference.
Elsewhere, only 31% of firms thought their agencies were "helpful" in making tradeoffs between digital and traditional media.
"We expect more companies in the future to move toward working with a mix that includes a traditional holding-company, specialised digital agencies and PR agencies," BCG said.
"The most successful companies will ensure that these collaborations result in truly integrated campaigns by briefing all agencies together and providing the right monetary incentives for them to work with one another."
Data sourced from Boston Consulting Group; additional content by Warc staff