Recent developments and the ongoing economic recovery have led to a real shift in the boardroom mindset. CEO's and MD's across all industries have realised that Digital Marketing is where the marketing industry as a whole and consumer reach in specific are heading. With budgets under careful scrutiny, being able to monitor results from advertising spend has become increasingly important.  Long gone are the days of frivolous spending with little regard for ROI and measurable results. With Finance Directors demanding justification for every penny spent, the accountability of digital marketing has become an attractive proposition.

According to Forrester Research, Digital Marketing expenditure is on the rise, with Search taking the biggest piece of the pie.

Image1: Interactive marketing spend projections for 2008-2014, US only

So, how does this affect your business?

Mainly, it means that there are fantastic growth opportunities out there, and that to capitalise on them, you need to fully understand what it is you want to achieve from your digital marketing campaigns.

The right tools for the right job.
When you're in the process of planning your digital marketing campaign, there are several things that need to be taken into account, including:

1.       What is an acceptable cost per acquisition for your business?

2.       How important is brand recognition to the campaign?

3.       What is the ultimate goal i.e. sales, downloads, traffic, data capture?

4.       What is the perceived risk factor of your offering? (Is it a £20 CD or a £1,000 holiday?)

Once you've determined this, you need to match your budget to the right marketing channel.
All of them have their pro's and con's when taken individually but working together, you can create a long term strategy that can yield great results for your business.

Let's look at three examples:

SEO (Search Engine Optimisation).
This is a key area for any business. Although there are generally heavier up front costs, the long term value is not to be underestimated. Think about it: what do you do when you are looking for something, anything, online? You use a search engine!  And when you consider the fact that 83% of people using search engines do not look past the first page of results, the importance of making sure your site has high rankings for keywords relevant to your business becomes patently obvious.

So, SEO should be at the core of your online marketing efforts, and other channels should be used tactically to support your search marketing activity.

PPC (Pay Per Click)
This method of reaching customers via search engines is tried and tested. With Google, Yahoo and MSN all offering similar models, you can reach a wide audience through pay-for-position marketing, only paying when someone clicks on your listing.

The advantage here is that you can be found for literally thousands of search terms at the flick of a switch, and campaigns can be turned on and off depending on what your are trying to achieve and the limit of your budgets. Having the ability to test variations on your ads and conduct day-part testing (time of day / day of week) to achieve the best ROI also has its advantages.

The disadvantage of this channel, however, is that once you've spent your budget, your ads no longer appear. So, while  this is a great way of delivering traffic to your site quickly, like turning on a tap,  it requires careful management and competition levels can sometimes mean that trying to compete with big brands with huge budgets is not the most effective way of managing your resources.

Online Display (Banner Advertising)
Over the years, this digital marketing channel has received negative press. Over-delivery to individual users, intrusive banner ads covering primary site content and constant bombardment of flashy ads have made audiences numb to what brands are trying to say.

However, when used properly, well targeted online display ads can still be an effective way of promoting an offer, engaging with an audience and raising brand awareness.

Studies have also showed that using a combination of display advertising alongside PPC can deliver up to a 22% uplift in click-through rates compared to PPC alone.  (Source: Atlas Institute Study, 2009)

The trick to this channel is to use it appropriately and make sure target markets do not feel bombarded by your ads. The more targeted a campaign is, the higher its chances of success will be. Also, it is important to use banner ads as part of the overall marketing mix, complementing your overall online efforts rather than using it in isolation.

Before opting for online display, bear in mind that this is generally a more expensive channel, with costs based on buying inventory on a CPM (cost per thousand impressions) model. It is also worth noting that industry click-through rates vary depending on your market and industry.

The good news is that online display allows you the flexibility to be creative, developing smart, engaging ads with calls to action and interactive elements that mean users can really get a feeling for your brand and its proposition.

Pulling it all together
Although we've only touched upon three digital marketing channels on this occasion, the general principle remains the same. Whether your strategy involves SEO, PPC, Online display, email, mobile or affiliates, you should be aware of how each of these channels perform, not only in relation to what they deliver in their own right, but how they complement each other and work towards delivering an overall positive ROI.

Finally, it is critical to keep in mind that without setting benchmarks and being able to measure progress ,all marketing efforts online and offline, are futile. By making sure every element is tagged and tracked, you can start to measure performance against your key performance indicators. Ask yourself the questions that will help you measure progress:  How much traffic did you get? How many sales? Were they repeating customers or new ones? Which channel delivered the first click and which one delivered the conversion? In other words, what is the overall cost per influence of each of the tools you're using to turn traffic into customers?

The key to all of this is to track, test, measure and roll out whilst being prepared to cut what is not delivering against your targets. It's not enough to have a presence in the digital marketing arena, you need to know that your efforts are yielding a positive ROI and that means understanding your metrics and what they mean to your business.