Are you investing enough in digital?

ALS home page featuring Ice Bucket Challenge

ALS Association home page

No, this is NOT another “ice bucket challenge” blog post. That’s been covered, and that story isn’t even new. It just validates what Heather Fignar and I, and many others, have been saying for years: give people a reason to have fun, express their creativity, employ social media and mobile technology, integrate it across all channels and all parts of your organization (especially media relations) and you have a good chance at making a splash, (pun intended) if not some real money.

No, this is about meaningful, ongoing investment in digital advertising, and why your nonprofit is probably woefully behind the times. So far behind, that I had to go to big box retail to show you the way. That’s right… a company selling hammers, power saws, kitchen cabinets, and 2″x4″s is kicking your butt in digital revenue.

Home Depot is investing 36% of its total ad budget into digital media, especially email messaging and social media. Print only gets 10%. Digital’s share is increasing. “We like the ROI” says their Chief Financial Officer.

The company says its continued transition to online sales and digital marketing are also key, according to Craig Menear, President, U.S. Retail.

“We’ve shifted to more targeted personalized messaging to become more relevant to customers, and as a result, costs attributable to print advertising are down 60% since 2010, and have been shifted to more efficient advertising.”

So how much does Home Depot sell online? Less than three percent of its sales originate at its new website. What? How can it make money by investing 36% of its ad budget (translation: fundraising budget) in a medium that generates less then three percent of its revenue? Because one doesn’t allocate one’s investment in growth based on the past; one invests based on the future, and Home Depot is betting on digital to drive future sales.

Also, Home Depot knows that the value of its digital investment goes way beyond the amount of orders actually placed online. It knows that handymen and handywomen scope out new product ideas, watch how-to videos, read emails with special offers, and then go into the store to do business “the old-fashioned” way.

Lest you think this is a new trend, an article from 2011 lays out the plan. Home Depot had just embarked on a $1.1 Billion investment in its new website, despite then-current online sales of just one percent of total retail. They knew, according to industry research, that “around 48% of retail sales will be influenced by the Internet in 2011 and projects this to rise to 53% by 2014.”

Sadly, many healthcare nonprofits I know budget their digital investment as if it were part of their continuing, proven, direct mail budget, expecting it to return $4 or $5 in revenue this year from every dollar invested. Then, they don’t even do a good job of measuring the impact of that paltry investment beyond the online donation page.

 

 

 

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One thought on “Are you investing enough in digital?

  1. Yes, Yes, Yes!!!! Rick you are spot on and Home Depot is a fantastic example of changing the game because customers are evolving online. Their “Pick up in the store” button is an incredible example of understanding just how people were changing how they invest their time and money. They realized there is a bridge between shopping in the store and shopping online and its called “personalization, convenience, and immediacy”. When folks tell me that Direct Mail is driving their revenue and online is still smaller in comparison I tell them “Great! So use that money to invest in online/multi-channel so you can stay ahead of your customers’ evolution” just like Home Depot.

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