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CMOs aren’t relenting in their shift to digital media: 82% expect to to hike their budgets in the next year, for an overall increase of 49%, according to the recently-released Nielsen CMO Report [download page]. Not surprisingly given recent trends, CMOs aren’t as enthusiastic about traditional media channels, which they don’t seem to find as important or as effective as digital.

CMOs’ Most Important Digital Media Channels

The survey examined the perceived importance of 8 digital media channels.

Among these channels social media emerged on top as the most important, with 79% of respondents rating it either “extremely” (37%) or “very” important (42%).

Coming in a close second among digital channels is search, rated at least very important by 73% of CMOs surveyed. Search was actually rated “extremely” important by a slightly larger share of CMOs (38%) than social (37%), but didn’t get quite as much take-up as a “very” important channel.

Interestingly, online video (63%) was rated at least very important by slightly more respondents than email (59%). This may relate to CMOs’ main goals, which revolve more around acquisition than loyalty.

Other identified channels included mobile video (considered at least “very” important by 56%), online display (55%), mobile display (44%) and OTT-TV/Connected TV (26%).

It’s worth noting that while relatively few CMOs find OTT/connected TV to be an important channel to them now, investment in this area is rising rapidly, and a new study from Steelhouse suggests that it is the fastest-growing video advertising segment.

Indeed, perceptions of low importance may be more due to a relative lack of adoption for the time being, as almost one-third (31%) of CMOs are not yet investing in OTT/connected TV, the highest level by far of any digital channel. Trends in usage of OTT/connected TV suggest that it figures to be a more critical channel in the years to come.

CMOs’ Most Effective Digital Media Channels

Not surprisingly, CMOs’ most important digital channels are also the ones they consider most effective. Fully 69% of CMOs rated both social media and search as either “extremely” (31%) or “very” (38%) effective.

Notably, 6 in 10 CMOs rated mobile as being an “extremely” (27%) or “very” (33%) effective channel for their business. That’s interesting in light of separate data from The CMO Survey, in which CMOs have for some time said that mobile is having little impact on company performance.

Meanwhile, slightly more than half (54%) of CMOs surveyed identify programmatic as being “extremely” or “very” effective, with about half as many (28%) saying the same about OTT/connected TV.

CMOs’ Most Important Traditional Media Channels

Given the way budgets are shifting, it’s probably not too surprising to see traditional media channels fail to match digital in perceived importance.

In fact, TV is the only traditional media channel that a majority (and a slight one at that) find important: 51% rated it “extremely” (30%) or “very” (21%) important.

TV continues to be highly important to advertisers, who consider it an extremely impactful form of advertising, as do consumers.

(Interested in the latest TV trends? Purchase MarketingCharts’ The State of Traditional TV Viewing report for an in-depth look at viewing data.)

Other traditional media channels fail to capture CMOs’ fancy, though. Only 1 in 4 rated print and direct mail as “very” or “extremely” important, with radio (23%) and out-of-home (20%) slightly behind them.

(Download MarketingCharts’ deck, The Benefits of Direct Mail Marketing, for more on that channel’s strengths.)

CMOs’ Most Effective Traditional Media

As expected, TV is also considered the most effective of the traditional media channels identified. (Only three were measured for effectiveness.)

Some 43% of CMOs rated TV “extremely” or “very” effective. While that led all traditional media, it would have ranked behind all digital media save for OTT/connected TV.

Meanwhile, print (21%) and radio (19%) are considered “extremely” or “very” effective by about 1 in 5 CMOs.

It’s worth noting that traditional media’s lower effectiveness ratings are in part due to relative lack of use. For example, 21% of CMOs aren’t using linear TV, so the 43% rating TV as at least very effective actually translates to roughly 54% of linear TV users.

Similarly, given that 27% aren’t using radio, the 19% rating radio as “very” or “extremely” effective works out to 26% of radio users.

That still doesn’t put traditional channels on the same footing as digital in perceived effectiveness, but it narrows the gap a little, as CMOs are much more apt to be using social, search and mobile than they are to be using linear TV, print and radio.

It’s also worth pointing out, as the Nielsen analysts do, that traditional media channels still are widely considered effective, if not extremely so. Fully 62% rated print as at least “somewhat” effective, and 61% said the same about TV.

CMOs: Digital Easier to Measure for ROI Than Traditional

Data from The CMO Survey (a separate piece of ongoing research) indicates that CMOs are only now starting to improve in their ability to quantitatively measure the short- and long-term impact of their spending, though they still struggle to do so.

This latest study from Nielsen confirms that ROI measurement remains a challenge, though perhaps more for traditional than digital media channels.

Overall, just 26% of CMOs said they are “extremely” (4%) or “very” (22%) confident in their ability to accurately quantify digital media ROI, and slightly fewer (23%) expressed that level of confidence in their ability to quantify traditional media ROI.

On the other end of the spectrum, CMOs exhibited a far greater lack of confidence in traditional than digital media measurement. Fully 42% said they are “not at all” (13%) or “not so” confident (29%) in their ability to quantify traditional media ROI, compared to just 26% who said the same about digital media ROI.

In other words, CMOs were almost twice as likely to lack confidence in their traditional media ROI measurement as to have a lot of confidence in it. For digital media, though, CMOs were about as likely to be very confident as to lack confidence.

The greater ability to measure digital ROI – along with digital’s greater perceived effectiveness – is likely playing a significant role in the media budget shift that is favoring digital. Last year, a study from Kantar Millward Brown found that marketers are more likely to consider channels that can be easily measured or demonstrate ROI than any other factor when making media mix decisions. That study also found marketers having an easier time measuring ROI from digital than traditional media channels.

The Upshot? Digital to Outstrip Traditional in Spend

The result of all these trends is that CMOs are quickly shifting to digital over traditional media channels. As noted at the outset of this article, 82% of CMOs are expecting their digital media budgets to increase in the coming 12 months. Only 30% said the same about their traditional media budgets.

In fact, CMOs are 11 times more likely to be cutting their traditional (44%) than digital (4%) media budgets in the coming year, per the report.

Given that digital currently is estimated by CMOs to occupy about an equal share of advertising budgets as traditional media (37.6% and 36.6%, respectively), it seems reasonably to say that digital will soon be ahead.

Other Survey Highlights

  • Only about 1 in 4 CMOs (26%) agree that they are satisfied with their relationships with the “walled gardens” – which include but aren’t limited to Facebook, Google and Amazon.
  • Slightly more than one-third (36%) of CMOs agree that they are able to accurately quantify ROI from walled gardens.
  • Just 1 in 4 CMOs (24%) rate their level of trust in the analytics and measurement outputs from the walled gardens as “high” (21%) or “very high” (3%).
  • Fully 81% of CMOs agree or strongly agree that media owners/publisher partners should be held accountable for campaign performance (ROI) on their properties.

About the Data: The results are based on a Q1 2018 survey of top US marketers at for-profit companies across automotive, consumer packaged goods, retail, telecommunications, technology and travel industries.

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