GUEST BLOG: Gauging the return on investment available from marketing

12th February 2019
Stuart O'Brien

According to figures published by Google in its Car Purchasing UK Report in April 2018, £115.9 million was invested in direct mail and online display by UK car dealers during 2016 alone.

While automotive manufacturers often have a substantial marketing budget available to them though, this is not always a luxury to firms when they are looking at their marketing campaigns.

Due to digital visibility not usually coming cheap due to the increased interest in online platforms, VW service providers Vindis takes a look at whether such investments are indeed worth the cost…

The automotive industry

Within Google’s Drive To Decide Report, which was created in association with TNS, a discussion took place about how the auto shopper of today is more digitally savvy than previous generations. In fact, over 82% of the UK population aged 18 and over have access to the internet for personal reasons, 85% use smartphones and 65% choose a smartphone as their preferred device to access the internet. These figures show that for car dealers to keep their head in the game, a digital transition is vital.

Research online will also be carried out by 90% of auto shoppers, the same report goes on to reveal. 51% of buyers starting their auto research online, with 41% of those using a search engine. To capture those shoppers beginning their research online, car dealers must think in terms of the customer’s micro moments of influence, which could include online display ads – one marketing method that currently occupies a significant proportion of car dealers’ marketing budgets.

Of the entire UK Digital Ad Spending Growth throughout 2017, eMarketer claims that the automotive industry accounted for 11% of the total. This placed the industry in second place behind the retail sector. The automotive industry is forecast to see a further 9.5% increase in ad spending in 2018.

As many car purchases still occur on the forecourt though, what effect is online having on influencing the decisions of auto shoppers? 41% of shoppers who research online find their smartphone research ‘very valuable’. 60% said they were influenced by what they saw in the media, of which 22% were influenced by marketing promotions – proving online investment is working.

Across the automotive sector, traditional methods of TV and radio continue to be the most invested forms of marketing. In the last past five years though, it is digital that has made the biggest jump from fifth most popular method to third, seeing an increase of 10.6% in expenditure.

The healthcare industry

An entirely different set of rules are followed for marketing when it comes to the healthcare sector. This is generally because it is restricted by heavy regulations. The same ROI methods that have been adopted by other sectors simply don’t work for the healthcare market. Despite nearly 74% of all healthcare marketing emails remaining unopened, you’ll be surprised to learn that email marketing is essential for the healthcare industry’s marketing strategy.

Email is used by approximately 2.5 million people as a primary form of communication. The use of email has also increased in value and usage over the past few years. This means email marketing is targeting a large audience. For this reason, 62% of physicians and other healthcare providers prefer communication via email – and now that smartphone devices allow users to check their emails on their device, email marketing puts companies at the fingertips of their audience.

Those in the healthcare industry should see online marketing as another platform that will make for worthwhile investment as well. This is especially the case when you consider that one in 20 Google searches are for health-related content. This could be attributed to the fact that many people turn to a search engine for medical answer before calling the GP.

According to data from the Pew Research Center, a search engine will be the starting point of 77% of all health enquiries. What’s more, 72% of total internet users say they’ve looked online for health information within the past year. Furthermore, 52% of smartphone users have used their device to look up the medical information they require. Statistics estimate that marketing spend for online marketing accounts for 35% of the overall budget.

Don’t forget the appeal of social media marketing either. Whilst the healthcare industry is restricted to how they market their services and products, that doesn’t mean social media should be neglected. In fact, an effective social media campaign could be a crucial investment for organisations, with 41% of people choosing a healthcare provider based on their social media reputation! And the reason? The success of social campaigns is usually attributed to the fact audiences can engage with the content on familiar platforms.

The fashion industry

The success of many fashion retailers will depend on their investment online. This point is underlined by the fact online sales in the fashion industry reached £16.2 billion in 2017! This figure is expected to continue to grow by a huge 79% by 2022. So where are fashion retailers investing their marketing budgets? Has online marketing become a priority?

Almost a quarter of all purchases in December 2017 were tied to ecommerce. This is according to the British Retail Consortium, as online brands such as ASOS and Boohoo continue to embrace the online shopping phenomenon. ASOS experienced an 18% UK sales growth in the final four months of 2017, whilst Boohoo saw a 31% increase in sales throughout the same period.

Next, Marks and Spencer, and John Lewis are just three of the well-known brands in the industry to have invested millions into their operations and marketing efforts online. Such tactics aimed to capture the online shopper and drive digital sales. John Lewis announced that 40% of its Christmas sales came from online shoppers, and whilst Next struggled to keep up with the sales growth of its competitors, it has announced it will invest £10 million into its online marketing and operations.

It also seems that many shoppers aren’t willing or interested to head to the high-street in order to shop. Instead, they like the idea of being able to conveniently shop from the comfort of their home, or via their smartphone devices whilst on the move.

In research carried out by the PMYB Influencer Marketing Agency, 59% of fashion marketers increased the budget they had available for influencer marketing last year. In fact, 75% of global fashion brands collaborate with social media influencers as part of their marketing strategy and more than a third of marketers believe influencer marketing to be more successful than traditional methods of advertising in 2017 – as 22% of customers are said to be acquired through influencer marketing.

The utilities industry

Comparison websites are now being used by so many consumers when they are trying to find the right utilities supplier for their needs. These websites could be the key to many suppliers acquiring and retaining customers.

Comparison websites often spend millions on TV marketing campaigns, which are then watched by so much of the nation. Therefore, it has become vital for many utility suppliers to be listed on comparison websites and offer a very competitive price, in order to stay in the game.

Compare the Market, MoneySupermarket, Go Compare and Confused.com are currently the four largest comparison websites. These companies are also among the top 100 highest spending advertisers in the UK, but does that marketing investment reflect on utility suppliers?

The difference between a high rate of customer retention for one supplier and a high rate of customer acquisition for another supplier can be determined through comparison websites. If you don’t beat your competitors, then what is to stop your existing and potential new customers choosing your competitors over you?

Instead of customer acquisition, British Gas has altered its marketing goals towards customer retention. Whilst the company recognise that this approach to marketing will be a slower process to yield measurable results, they firmly believe that retention will in turn lead to acquisition. The Gas company hope that by marketing a wider range of tailored products and services to their existing customers, they will be able to improve customer retention.

A loyalty scheme offering discounted energy and services has received a £100 million investment. This scheme focuses on the value of a customer, their behaviour and spending habits over time to discover what they are looking for in the company. The utilities sector is incredibly competitive, so it is vital that companies invest in their existing customers before looking for new customers.

Digital should be a key focus for those in the utilities sector too. 40% of all searches in Q3 2017 were carried out on mobile, and a further 45% of all ad impressions were via mobile too – according to Google’s Public Utilities Report in December 2017. As mobile usage continues to soar, companies need to consider content created specifically for mobile users as they account for a large proportion of the market now.

Concluding thoughts

Online marketing investment should be seen as very important for some industries, such as the fashion and automotive sectors. With a clear increase in online demand in both sectors that is changing the purchase process, some game players could find themselves out of the game before it has even begun if they neglect digital.

The picture grows even more for sectors such as the utilities industry. Whilst TV and digital appear to remain the main sales driving forces, it’s more than just creating your own marketing campaign when comparison sites need to be considered. Without the correct marketing, advertising or listing on comparison sites, you could fall behind.

The average firm is expected to allocate a minimum of 41% of their marketing budget to online strategies during 2018. This is according to webstrategies.com, with this figure expected to grow to 45% by 2020 too. Social media advertising investments is expected to represent 25% of total online spending and search engine banner ads are also expected to grow significantly too – all presumably as a result of more mobile and online usage.

Where do you stand when it comes to investment into marketing strategies? If mobile and online usage continues to grow year on year at the rate it has done in the past few years, we forecast the investment to be not only worthwhile but essential.