A FIELD OF DREAMS? RESULTS OF A LANDMARK STUDY
It’s becoming a digital-first world. But digital lags others methods of reaching donors, according to results of a study of media buying habits by nonprofits. While nonprofit marketers, advocates and fundraisers plan to spend more on digital, it is still a fraction of more traditional media.
Overall media spending by larger nonprofits increased by just 3 percent year-over-year with the digital media spend increasing by 120 percent, representing just 7.4 percent of all media spending. For smaller organizations, overall media spending increased by nearly 20 percent during the same period with digital media spending increasing by 60 percent, representing 30 percent of all media spending.
These are among the results of a study of digital media use by nonprofits conducted during June 2019 by Campbell Rinker on behalf of data-driven provider Wiland in cooperation with The Non- Profit Times. Two, separate groups of 5,000 surveys were sent to readers of The NonProfit Times known to work at a nonprofit. They were selected at random and invited via email to participate online.
Paid online search was the number one digital marketing spend followed by social media, email, online display or programmatic network buys and the all-encompassing “other” coming in last.
About half of the nonprofits answering the study earned less than $2 million in total revenue annually. About one in three earned from $2 million to $10 million and approximately one-quarter earned more than $10 million in total revenue. The sample is nationally-projectable.
The study results were presented during the recent Bridge To Integrated Marketing Conference in National Harbor, Md., in a session titled “A Field of Dreams? Digital Media Spending in the Nonprofit Sector Results of a Landmark Study.”
When it comes to digital, throwing money at it isn’t going to work. “A large number of organizations mentioned that they don’t know where to start or don’t have the staff experience to do more online — 34 percent of smaller organizations and surprisingly 19 percent of larger organizations,” said Roger Hiyama, senior vice president client services, at Wiland.
“I was surprised that their overall budgets were increasing by about 20 percent year over year. Most marketing/fundraising budgets are stagnant,” said Hiyama. “However, I was not surprised by the relative growth in digital media spending for the smaller nonprofits. For one thing, the spending for digital media is small so that any increase could represent a high increase in percentage terms. In addition, I believe that smaller groups tend to be locally or regionally focused and can geographically target their digital spending more efficiently,” he explained.
Responsibility for digital marketing is most likely to rest with the marketing communications department. The second most likely place it would fall is development, fundraising, advancement or membership. Roughly one third of organizations split digital marketing responsibility across multiple groups, often making return on investment (ROI) a challenge.
And, the spending did not include the cost of the in-house employees assigned to digital work, the difference between cost accounting and financial accounting. Some 87 percent of organizations with $2 million or less in revenue use an outside agency, which goes to 92 percent at organizations with more than $2 million in revenue.
Respondents rarely pursue a single objective with their digital media spending, with an average of 2.3 goals. The most common goals were fundraising and branding/education (72 percent overall for each). Larger organizations tend to focus first on branding/education before fundraising, while smaller organizations are more apt to pursue fundraising first. Advocacy was cited as a third-level goal.
Approximately 45 percent of respondents said “Growing digital fundraising is a key initiative of our organization” was either somewhat or completely accurate. However, only 20 percent anticipated increasing their digital media spend by more than 10 percent during 2020.
For organizations with more than $2 million in total revenue, the largest share of online display advertising goes to pure acquisition. Larger organizations put more into remarketing display ads to website visitors, while smaller nonprofits put more into co-targeting. While both large and small organizations tend to pursue very different sourcing methods for pure acquisition, the larger groups seem to do their own work while the smaller nonprofits seem to rely more on support from their ad platform.
When asked which method of attribution is used to attribute donors and revenue to a source channel, 79 percent of smaller organizations and 60 percent of larger organizations reported that they don’t use any attribution method. Among larger nonprofits, 21 percent said they used an attribution window.
“I was surprised that digital media spending jumped from 2018 to 2019 by so much but it’s clearly still lagging behind where it would drive more website traffic and overall digital revenues,” said Hiyama. “Surprisingly, however, with over 60 percent of larger organizations and 79 percent of smaller organizations not using any method of revenue attribution, it may be difficult to justify significant spending shifts from traditional media to digital media.”
The mix of digital budget that has shifted dramatically toward display ads, email and social media. “The percentage of digital spending on paid search advertising is the smallest category of spending for smaller organizations but the largest percentage of media spend for the larger organizations,” said Hiyama.
Traditional media dwarfs digital media in budgets, such as direct mail, event, print, broadcast, telemarketing and even face-to-face, according to the data. In larger organizations that differential was in the hundreds of thousands of dollars.
The reason for the differential appears to be attribution from where the money arrived. “It’s the lack of measurable revenue attribution of the digital media spending. If you can’t measure the revenue impact of your media spend, it’s unlikely that you’ll ever shift budget dollars,” said Hiyama. “It’s almost a self fulfilling prophecy.”
Organizations must find attribution methods that at least give them some insight into the direct and non-direct impacts of their spending. These methods of attribution tracking must include the “obvious donation page tracking and cookie-based first click or last click attribution tracking but it should also include a ‘match-back’ attribution process to track cross-channel activity,” he explained.
“In other words, being able to ‘match-back’ those prospects who were mailed an acquisition mail piece to identify those new-to-file donors who made a website donation during the first 30 days after the mailing was sent,” he said. “Or, conversely, being able to look at direct mail donations that may have occurred within 14 days of a prospect being served a display ad.”
The mix of digital budget that has shifted dramatically toward display ads, email and social media was very interesting. The percentage of digital spending on paid search advertising is the smallest category of spending for smaller organizations but the largest percentage of media spend for the larger organizations.
There are three primary ways of sourcing an audience via display advertising. The most common method is by creating a “look-alike” audience by uploading a file to the advertising platform, which in turn develops a look-alike audience for targeting. A second method of sourcing is to use one of the “on-demand” or “predetermined” audiences that exist on the various ad platforms. For example, within the Live Ramp Data Store, there are thousands of audiences available on a paid usage basis.
The third method of sourcing is a “custom modeling” approach where an advertiser can work with a provider to build a custom audience for their sole fee-based usage.
Hiyama explained that “Pure Acquisition” is a term that’s commonly used to identify digital acquisition advertising targeted to individuals who are not current or lapsed customers of the advertiser, which included nonprofits showcasing advocacy or fundraising.
Most marketers want to create different campaigns for website remarketing, customer marketing and co-targeting, where persons receiving a direct mail are also be co-targeted with a simultaneous digital ad. The Return On Advertising Spend (ROAS) for the various campaign types varies dramatically and allows the marketer to get a better read on the various audiences being targeted.
The Google Grants program can be a key to pushing up digital traffic without an increased spend. The grant is a free, monthly grant of $10,000 that can go as high as $40,000 per month. It is Google’s corporate “do-good” with certain adword spending limitations. The increased website traffic also allows nonprofits to drop “cookies” on the browsers of the visiting user which then in turn allows the nonprofits to implement website remarketing display ads.
Paid search drives website visitors which in turn creates opportunities for website remarketing using display ads.
The ROAS for website remarketing is usually in the 6:1 to 10:1 range, said Hiyama.
There are obstacles to moving more budget to digital, according to the respondents. There are institutional obstacles where the person doing the work doesn’t control that part of the budget. There are also financial obstacles in that a budget could be stagnant, year-over-year.
And, of course, there is the ability to prove it works, the attribution.
“I truly believe there is a fear obstacle,” said Hiyama. Marketers know the direct mail metrics well but are concerned that reducing the spend in something that works would be very risky.
“In a more perfect world, attribution measurement would be less fuzzy. More definitive reporting would lead to more objective decision-making. Unfortunately for many it’s still a guessing game on actual performance,” said Hiyama.
To receive a complete set of the data, please go to https://info.wiland.com/npdigital-media-survey.
