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Why Digital Kicks
  Traditional Tactics
  in Cost Effectiveness
                  Dr. Augustine Fou
                  Marc...
Offline Tactics WITH per unit costs
 Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions




              ...
Offline Tactics with NO unit costs
 Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions




               ...
Online Tactics with NO unit costs
 Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions




                ...
Comparative Costs
Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions

      $500
                      $45...
Why Digital is SO Efficient
 Digital tactics exclude the cost of distribution and media cost to air ads


     Offline: w/...
Old Ad Man Joke vs New Reality
    “I know I am wasting 50% of my ad
    dollars; I just don’t know which half….”



     ...
Digital is more efficient
Pay for impressions




                              Pay ONLY
                              for...
Ad Spending Has Not Caught Up




March 16, 2012.                 9
Dr. Augustine Fou – Chief Digital Strategist
Dr. Augustine Fou is an industry-recognized thought
leader in digital strateg...
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Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 1 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 2 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 3 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 4 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 5 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 6 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 7 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 8 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 9 Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou Slide 10
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Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou

Marketing Channel Cost Comparison on CPM basis - to reach 1,000 users or impressions.
TV vs digital
radio vs digital
TV vs radio
display ads vs search ads
direct mail vs tv
direct mail vs digital

Why Digital Kicks Traditional Marketing in Cost Effectiveness by Augustine Fou

  1. 1. Why Digital Kicks Traditional Tactics in Cost Effectiveness Dr. Augustine Fou March 16, 2012. March 16, 2012. 1
  2. 2. Offline Tactics WITH per unit costs Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions Source: Datalogix 2010 Direct mail: $400 - $487 cost-per-thousand Catalog: $250 CPM Circular: $100 CPM March 16, 2012. 2
  3. 3. Offline Tactics with NO unit costs Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions Source: Datalogix 2010 Radio: $140 cost-per-thousand Newspaper: $65 CPM Primetime TV: $24 - $30 CPM Cable TV: $10 CPM March 16, 2012. 3
  4. 4. Online Tactics with NO unit costs Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions Source: Datalogix 2010 Online (display): $5 - $10 CPM Online (search): $1 - $3 eCPM March 16, 2012. 4
  5. 5. Comparative Costs Cost per Thousand (CPM) : Cost to reach 1,000 users or impressions $500 $450 pay for $450 $400 mailing $350 costs pay for $300 $250 $250 media $140costs $200 $150 no mailing or $100 $50 $30 $15 media costs $7 $2 $0 Direct Mail Mail Order Drive Time Prime Time Online Online Online Catalog Radio TV Video Ads Display Search Offline: w/ Unit Costs Offline: w/o Unit Costs ONLINE: WINNER March 16, 2012. 5
  6. 6. Why Digital is SO Efficient Digital tactics exclude the cost of distribution and media cost to air ads Offline: w/ Unit Costs (direct mail, catalog, circular) • Pay to distribute each unit (e.g. $0.45 per mailpiece) Offline: w/o Unit Costs (TV, print, radio) • Pay for media to air the ad Online • Pay for cost of impression, pay only for clicks (effective CPM or eCPM) March 16, 2012. 6
  7. 7. Old Ad Man Joke vs New Reality “I know I am wasting 50% of my ad dollars; I just don’t know which half….” “I know which 99% of my ad dollars I am wasting; I will only pay for the 1% that works.” March 16, 2012. 7
  8. 8. Digital is more efficient Pay for impressions Pay ONLY for clicks … pay only for results.
  9. 9. Ad Spending Has Not Caught Up March 16, 2012. 9
  10. 10. Dr. Augustine Fou – Chief Digital Strategist Dr. Augustine Fou is an industry-recognized thought leader in digital strategy, search and social media marketing and former Group Chief Digital Officer of Omnicom's Healthcare Consultancy Group. Dr. Fou has over 16 years of management consulting and digital strategy consulting experience, advising CMOs, marketing executives, and global brands. He pioneered the application of the Unified Marketing™ framework to optimize marketing across both traditional and digital channels and tactics. Dr. Fou is also an Adjunct Professor at NYU in the School for Continuing and Professional Studies and at Rutgers University at the Center for Management Development, where he teaches courses on digital strategy, social media marketing to executives. He is a frequent panelist, moderator, and keynote speaker. Dr. Fou completed his PhD at MIT at the age of 23. He started his career with McKinsey & Company. He writes a monthly column on Integrated Marketing for ClickZ.com, and can be found on Twitter.com @acfou. acfou@mktsci.com 10
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Marketing Channel Cost Comparison on CPM basis - to reach 1,000 users or impressions. TV vs digital radio vs digital TV vs radio display ads vs search ads direct mail vs tv direct mail vs digital

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