How to Make Performance Optimization a Reality in 2016

It's been another exciting year of growth and disruption in digital marketing. Online ad spending in the U.S. grew another $5 billion, and new entrants continue to fuel change, highlighted by Instagram's addition of 100 million users. In 2015, even GE got into the game, naming its first chief digital officer (CDO) and tasking a new CMO with branding the conglomerate a "digital industrial company."

These conditions wreak havoc on marketing executives, who are forced to wrestle with new digital tactics while keeping legacy activities humming. This is why I believe senior marketers will make performance management a priority in 2016. After racing to build out digital operations, which now often account for 25% or more of marketing budgets, the time is right to focus energies inward and on ROI optimization. The following are three tactics to help you get there.

Make talent management a core competency. Recruiting digital professionals is challenging. A combination of two factors is driving this talent shortage: Digital marketing is a growth industry, and the traditional skills necessary to be an effective marketer are becoming less relevant.

The remedies available to address this problem aren't groundbreaking-foster a desirable work environment, offer abundant training, and move top performers along quickly-except that most corporations haven't historically had to focus much on talent management in the marketing function. Companies need to adjust to accommodate the new digital reality.

Get Google religion. For two reasons, Google's free marketing stack should play a central role in most marketing operations. First, Google is at the epicenter of the digital ecosystem, and it's critical to know what the company thinks about your web properties. These tools provide that insight. Second, Google is aggressively investing in this stack, making dozens of new features and new functionality available each year and encroaching into many areas of the marketing technology landscape, especially display, mobile, and analytics.

The fact that these tools are free and getting better each day-serving as the gateway to buying Google ads-is both good news and bad news. It's good because there's no reason to not have them running, even if only parallel to other analytics platforms. It's bad because the tools have become complex and difficult to use (effectively, enterprise-class software) and now require pricey specialists to work. Ultimately, though, interacting with Google regularly is a digital marketing cost of doing business.

Establish performance benchmarks and focus on measurable results. Analyzing digital marketing performance is an art form unto itself. With reams of marketing data now readily available, the challenge is not in data acquisition, but in determining what's relevant, how it should be used, and with whom it should be shared.

In July 2015, Procter & Gamble Co. announced it had saved 15% on marketing-related expenses during the fiscal year, to the tune of a whopping $300 million, citing a focus on online activities as a major contributor. Before an organization can see this kind of success, it must first be able to identify the underperforming tactics, and that means reporting systems need to be configured properly and benchmarks need to be established. For better or worse, digital marketing is high-profile and easily accessible to all levels of the company, and it's up to the top marketing executive to control the reporting message or risk being controlled by it.

To be sure, digital marketing spending in 2016 and beyond will continue to increase. And I'm an advocate of fighting for big budget increases during planning sessions, especially because marketing is taking on more responsibilities from IT and sales. At the same time, market conditions suggest now is the opportune time to focus on performance optimization. What this tactic might lack in sizzle-looking inward is never as exciting as buying a new system or launching a new campaign-could more than make up for its bottom-line ROI contributions.   

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