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Consumers Are Shifting to Digital Fast, but Few Companies Are Keeping Pace

A New Report from BCG Explains How Brands Can Make the Shift to Digital More Quickly 

BOSTON—In the US, spending on digital advertising in 2017 is on track to surpass spending on television advertising. Globally, certain markets devote more than 40% of their media advertising budget to digital marketing, according to media company Magna. We are rapidly reaching the point when companies will spend more on social, search, online video, and display advertising than they will on traditional platforms.

But supersizing the digital-marketing budget is not enough, according to The Digital Marketing Revolution Has Only Just Begun, a report issued today by The Boston Consulting Group (BCG) and Facebook. The most successful companies are leveraging data to radically personalize the consumer experience.

“Most traditional marketing techniques that marketers were trained to use, like broad segmentation of customers and marketing funnels, have no place in digital marketing,” said Marc Schuuring, a BCG partner and coauthor of the report. “These methods may have served marketers well ten or more years ago, but today’s marketers need to be much more data driven.”

The Era of Personalization

Consumers are increasingly impatient with traditional marketing methods. More than 25% of all smartphone users have installed ad blockers, according to eMarketer, and that figure is climbing rapidly. When selecting new products and services, consumers rely more than ever on advocacy from people they know and trust. As consumers are becoming more digitally savvy and increasingly impatient with intrusive or irrelevant marketing messages, personalization is a key differentiator.

New advertising technologies in the marketplace are also allowing for much more personalized and targeted advertising. Ad properties that allow for video insertion are rapidly replacing flat display ads. Data and analytics encourage test-and-learn experimentation and ad purchasing through automated platforms and auctions. All told, personalized advertising could constitute 80% of digital marketing budgets within three to five years (and will increasingly penetrate traditional media as well).

The most advanced digital marketers are analyzing abundant consumer data—media data, customer relationship management data, app usage data, and more—to better understand where individual consumers are in their journey, what they’re looking at, when they’re looking, where they’re located, and how they’re responding to specific advertising messages. 

How Brands Can Make the Shift to Digital More Quickly

To gauge the transformative potential of digital marketing, BCG and Facebook worked with  leading consumer goods companies to apply cutting-edge marketing techniques to specific business challenges. These companies capitalized on three forces that have fundamentally changed the way marketing can be done:

  • Access to abundant, real-time data to inform their campaigns
  • Ability to engage in long-term, omnichannel relationships with consumers (as opposed to one-way, scattershot interactions)
  • Flexibility to deploy multiple concepts and gather real-time feedback from customers

The companies all posted extremely impressive results. “For the initial pilots we conducted, companies reported a variety of positive results, including a 30% increase in marketing ROI, a dramatic reduction in acquisition costs, and quantifiable gains in app usage and customer engagement,” said Diederik Vismans, a BCG principal and coauthor of the report. “When done right, digital marketing can be a game-changer in powering business growth.”

A copy of the report can be downloaded here.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

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The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 85 offices in 48 countries.

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