1/28/2014

How to Choose the Right Digital Marketing Model

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Published: January 27, 2014

Marketing, Media & Sales

How to Choose the Right Digital Marketing Model

Four clear paths for winning overand retainingcustomers in the digital era.
by Matt Egol, Michael Peterson, and Stefan Stroh

http://www.strategy-business.com/article/00241?pg=all

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How to Choose the Right Digital Marketing Model

Look at v irtually any consum er industry and y oull see how changes in digital technology are fundam entally altering the way that consum ers engage with brands before, during, and after a purchase. Consum ers today expect to browse, research, solicit feedback, ev aluate, and push the buy button at their own pace, and at the tim e and placeand v ia the platform of their choosing. Consum ers also continue to engage with brands online after a purchase and to share experiences with one another. Much of this consum er journey is bey ond the direct control of com panies, and m arketing organizations are sprinting m erely to keep pace. The good news for chief m arketing officers (CMOs) is that digital m arketing can offer detailed data on and analy sis of consum er behav ior, as well as precise results about a m arketing program s effectiv eness, with a degree of detail and precision that prev ious generations of CMOs could hardly fathom . The challenge is that these new technologies and consum er behav iors are raising the requirem ents for what will succeed in the m arket. Building powerful consum er experiences requires brands to operate outside their com fort zone; for exam ple, they m ust work with m uch shorter cy cle tim es, with m ore rapid and frequent iterations, and through a broader v endor ecosy stem than the traditional adv ertising agency process. In addition, consum ers increasingly dem and m arketing m essages and offers that are highly personalized, relev ant, and targeted. Miss the m ark, and y ou risk losing them forev er. In that regard, digital m arketing offers both greater rewards (in term s of higher engagem ent and ROI) and greater risk (due to the execution com plexity and the need for behav ioral changes across the organization). In this env ironm ent, CMOs know they need new capabilities to succeed. In a recent surv ey of m ore than 3 00 CMOs in the U.S. that Booz & Com pany conducted with the Association of National Adv ertisers and Korn/Ferry , 7 2 percent said that building capabilities in the area of digital m arketing is v ital. The difficulty is that theres no one set of capabilities that applies univ ersally . Com panies m ust identify what kind of m arketing organization they need to m ake their strategy a success, choose a digital m arketing m odel based on their strategic objectiv es, and then focus on dev eloping a handful of m arketing capabilities that will allow them to bring that m odel to life and consistently excel.

Fo u r Ne w Dig it a l Ma r ke t in g Mo d e ls
Booz & Com pany has identified four equally successful digital m arketing m odels: Digital Branders, Custom er Experience Designers, Dem and Generators, and Product Innov ators. A com pany s focus for m arketing inv estm ent m ight hav e elem ents of each, but odds are that one of these m odels represents the right m arketing organization for y our com pany . Di g i t a l Br a n der s are m ost often consum er products com panies or other m arketers that focus on building and renewing brand equity and deeper consum er engagem ent. These com panies are shifting their inv estm ent from traditional linear adv ertising toward m ore im m ersiv e digital m ultim edia experiences that can connect consum ers to the brand in new way s. They are reim agining how they engage consum ers with the prim ary goal of recruiting new consum ers to the brand and driv ing loy alty through m ultiple experiences with the brand. C u st om er Ex per i en c e Desi g n er s use custom er data and insights to create a superior end-to-end brand experience for their custom ers. Ty pically , these com panies (such as financial-serv ices com panies, airlines, hotels, and retailers) build their business m odels around custom er serv ice. By reinv enting how they interact with custom ers, and wowing them at m ultiple touch points, these com panies hope to create an ongoing dialogue and build a loy al custom er base. Dem a n d G en er a t or s (ty pically retailers) focus on driv ing online traffic and conv erting as m any sales as possible across channels to m axim ize m arketing efficiency and grow their share of wallet. All elem ents of the digital m arketing strategy website design, search engine optim ization, m obile connected apps, and engagem ent in social com m unitiesare tailored to boost sales and increase loy alty . Although Dem and Generators also need to lev erage content to driv e engagem ent, they are m ore focused on driv ing v olum e and efficiency than on curating the deep, em otional branded experiences that Digital Branders pursue. Pr odu c t In n ov a t or s use digital m arketing to help the organization identify , dev elop, and roll out new digital products and serv ices. These com panies em ploy digital interactions with consum ers prim arily to rapidly gather insights that can help shape the innov ation pipeline. By helping nurture new sources of rev enue, the m arketing group directly increases the v alue of the com pany .

Th e Me n u o f Ca p a b ilit ie s
These digital m arketing m odels are not industry -specific. In fact, com panies in the sam e industry can choose different digital m arketing strategies with which to go to m arket. For exam ple, in the telecom m unications industry , Vodafone aligns m ost closely with the Digital Brander m odel, Verizon functions as a Custom er Experience Designer, KPN/E-Plus is a Dem and Generator, and Orange is a Product Innov ator. Each of these com panies has focused on a different set of capabilities to bring its digital m arketing strategies to life, and each capability entails building the right com bination of processes, tools, knowledge, skills, and organization. There are eight basic m arketing capabilities, which are m ore or less relev ant depending on which of the four digital m arketing m odels a com pany applies. (Of these eight, the first four focus on building insights and the last four focus on activ ation based on those insights. Leading com panies are ty pically strong on both insights and activ ation, as m easured on Booz & Com pany s Digital Custom er Centricity Profiler.)

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How to Choose the Right Digital Marketing Model

1 . S eg m en t a t i on a n d n eeds a ssessm en t , or the use of digital research tools to analy ze transactions, identify custom er pain points, and interpret non-transaction data (e.g., social m edia). By better understanding how specific subsets of custom ers assess, purchase, and use products, the com pany can m ore directly target adv ertising, prom otions, and content along the path to purchase. 2 . Mea su r em en t , or the dev elopm ent of consistent m etrics across the full path to purchase (i.e., at hom e, on the go, in stores). This capability also includes m etrics for consum er engagem ent across paid m edia (e.g., adv ertising), owned m edia (such as the com pany website), earned m edia (cov erage in other publications), or shared m edia (e.g., consum er stories on Facebook or YouTube). Im plem ented correctly , these m etrics can help quantify ROI across the digital m arketing program . 3 . Rea l -t i m e dec i si on m a k i n g , such as regular m onitoring of social sentim ent and brand health that enables adjustm ents during m arketing cam paigns or across owned m edia or in-store m erchandising to im prov e effectiv eness. 4 . Per son a l i za t i on a n d t a r g et i n g , or the creation of a singular v iew of the consum er across sales channels and digital touch points through the integration of m ultiple data sourceshousehold data, shopping behav ior, m obile data, and Web analy tics. Com panies can also augm ent this custom er profile with social m edia data to im prov e target m arketing and specific offers. 5. Opt i m i zi n g c on t en t , or the dissem ination of branded content through m ultiple direct-to-consum er platform s (e.g., websites, m obile, social m edia) that are easy to search and nav igate. Optim ized content helps the com pany engage consum ers and driv e registration and sales across a v ariety of form ats, so that it can better prov ide relev ant products and serv ices to those consum ers for specific occasions or phases of life. 6 . In n ov a t i on , such as the lev eraging of social m edia for richer consum er insights that fuel innov ation and product dev elopm ent. Besides im prov ing the product itself, these insights and innov ations can enhance the custom ers experience with the product. 7 . S oc i a l i n fl u en c e a n d a dv oc a c y , or the prov oking of consum er engagem ent to create and share content, while also m ining this social sentim ent to further im prov e consum er engagem ent. Com panies with strong social influence and adv ocacy can encourage consum ers to create and share content about the brand within their social networks, and then use the resulting insights to optim ize their m arketing com m unications and other aspects of the experience. 8. Om n i c h a n n el ex per i en c e , or the im plem entation of m arketing program s across channels. This capability also entails inv esting in technology , analy tics, and talent to support seam less m obile, social, and e-com m erce experiences, allowing consum ers to engage with the com pany wherev er and whenev er they want. Om nichannel experiences also include integrated m arketing program s with third parties, along with broader m edia and trade-prom otion strategies.

Bu ild in g t h e Rig h t Ca p a b ilit ie s

Its v irtually im possible to be great at all of the key digital m arketing capabilities wev e identified. Thats why each com pany m ust focus only on the capabilities that align best with its digital m arketing m odel. In other words, there is a link that connects the com pany s strategy , the digital m arketing m odel it needs, and the m arketing organization and m arketing capabilities required to succeed with that m odel. The capabilities necessary to succeed as a Digital Brander will be different from those required by a Dem and Generator. This is not an ironclad relationshipthere are m ultiple paths to success, and ev en com panies pursuing the sam e Dem and Generator m odel, for instance, m ay choose to em phasize different capabilities. But in general, certain m odels require that the com pany hav e a specific set of supporting capabilities ( see Exhibit ).

Dig it a l Ma r ke t in g Mo d e ls in Pr a c t ic e
Coca-Cola is a perfect exam ple of a Digital Brander. Teens and y oung adults are its biggest consum er segm ents, and to keep its brand strong with these consum ers, Coca-Cola is hy per-focused on finding way s to em bed itself in popular culture. With this in m ind, the com pany has inv ested in differentiated capabilities including optim izing content and social influence and adv ocacy . This m eans that Coca-Cola identifies experiences that are consistent with its brand, creates content around those experiences, and then encourages its com m unity of users to share additional content (aka experiences) that they create through social engagem ent. Although not all of this content goes v iral in the com m unities Coca-Cola is targeting, the com pany is far m ore successful than others, thanks to the dev elopm ent of these specific capabilities. For exam ple, in one recent prom otion, Coca-Cola dev eloped unique v ending m achines equipped with v ideo display s that allowed consum ers in two cities (Lahore, Pakistan, and Delhi, India) to interact. Because of political and religious differences, the two groups know v ery little about each other, but the v ideo projectan update of the com pany s fam ous Id like to buy the world a Coke cam paignwas aim ed at connecting them through a shared experience. The cam paign generated trem endous buzz for Coke, and was heav ily shared on social m edia, in part because it was so em otionally resonant. Another exam ple of seeding content into popular culture was a Coke Zero contest on social m edia for m y fav orite

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dance m ov es. The winning dance went v iral across the globe, with the Coke Zero brand integrated into the content throughout. Coca-Cola was recognized as the m arketer of the y ear at Cannes in 2 01 3 , in large part due to its innov ativ e approach to m arketing through shared content. Virgins airline operations, on the other hand, are a good exam ple of a Custom er Experience Designer. Like m any other airlines, Virgin wants to av oid being seen by passengers as sim ply a utility . Instead, it wants to create a m ore custom er-centric branded experience that starts before the custom er buy s a ticket, continues during the flight, and

How to Choose the Right Digital Marketing Model

extends after the trip is ov er. With this in m ind, Virgin has focused attention on building a segm entation and needs assessm ent capability and an om nichannel experience creation capability . In practice, this m eans the airline uses purchasing and behav ioral data to segm ent custom ers, identify needs and pain points, and create a personalized experience across all channelswhether custom ers are at hom e on the com puter, on a m obile phone, using in-flight screens, or interacting with Virgin staff m em bers. For exam ple, Virgin is inv esting in a m ore interactiv e and personalized in-flight experience that is tailored to different segm ents of trav elers. A frequent trav eler to London m ight get specialized content after takeoff, like the latest rev iews of restaurants around Piccadilly . Passengers will also be able to interact with a concierge serv ice while on the flight and with other passengers v ia Chatter, a social m edia m essaging platform from Salesforce.com . The entertainm ent options and other aspects of the experience will also be personalized on the basis of a user profile built ov er tim e (through factors such as the v ideos custom ers opted to watch, the m eals and drinks they purchased, and other personalized elem ents). By curating the passengers journey in this m anner, Virgin hopes to create a com m unity and deliv er an experience that goes bey ond the flight itself to reinforce the airlines brand im age of adv enture and fun. Virgins corporate culture is a significant asset in this endeav orits highly engaged em ploy ees em brace the idea of cultiv ating positiv e experiences for custom ers. (That has helped Virgin Am erica becom e the fastest-growing airline in the United States.) Critically , Virgins m arketing inv estm ents are intended to support this culture, while also em powering em ploy ees to innov ate and continue im prov ing the custom er experience. Yet another approach to digital m arketing is the Dem and Generator m odel. Walm art, for exam ple, is v ery focused on conv erting v isits to its website, social m edia properties, and m obile apps into actual sales. To accom plish this, it has dev eloped capabilities in real-tim e decision m aking and personalization and targeting. The com pany s in-house m edia platform , Walm art Exchange, is a robust ad-serv ing platform that allows brands to target shoppers precisely , m easure the ROI of both online and offline im pact, optim ize content and assortm ent of products, and track non-Walm art.com digital ads to see which sites are driv ing traffic to Walm art.com (and whether users are m aking purchases). For exam ple, a shopper who v isits the website after v iewing a targeted display ad em bedded with a health-and-beauty -aid coupon m ight find an assortm ent of other, related products to consider on the site. Bey ond these next-best-offer and assortm ent tools, Walm art is also dev eloping relev ant content aim ed at driv ing conv ersionand pushing its network consum er packaged goods m anufacturers to do the sam e. For exam ple, how to v ideos, ratings, rev iews, and listings of foods nutritional content can all help driv e engagem ent and conv ersion on its site. Inv estm ents in this kind of optim ized content can boost conv ersion by m ore than 7 0 percent. Perhaps the least ty pical of the digital m arketing m odels (but no less powerful than the others) is the Product Innov ator. Germ any -based Henkel, a m anufacturer of v arious household chem ical products including detergents, adhesiv es, and cosm etics, is a clear Product Innov ator. The com pany so strongly em phasizes R&D that about 4 0 percent of its annual cosm etics sales com e from products that were launched within the prev ious 2 4 m onths. On the m arketing side, this success is due to a finely honed innov ation capability as well as a v ery sophisticated m easurem ent capability that continually tracks preset key perform ance indicators to determ ine whether to continue a product trial or stop it and redirect resources to m ore prom ising projects. The com pany encourages em ploy ees in the m arketing and R&D departm ents to participate in the innov ation process through idea-generation contests and incentiv es. Marketing em ploy ees are also required to work in sales regularly to stay in touch with the m arket and help identify custom er pain points. The pay off is an innov ation process that has generated consistent results. For instance, one recent product innov ationa laundry detergent known as MAS Color con un Toque de Suav idad (with a Touch of Softness)won the Best New Product award in the household care category in Mexico.

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Br in g in g t h e Ca p a b ilit ie s t o Life

How to Choose the Right Digital Marketing Model

No m atter which m arketing m odel the com pany selectsand which capabilities the com pany chooses to em phasize the CMO m ust m ake certain decisions and adapt certain aspects of the m arketing organization to bring the digital m odel to life. For exam ple, the CMO m ust decide whether the m arketing capabilities will be dev eloped internally or outside the com pany . If the CMO wants the capabilities in-house, the organization will need to ensure that the right skills, processes, technology , gov ernance, and m etrics are in place to m easure results. This is hard work, and som etim es its preferable to lev erage outside partners/v endors as the com pany stitches together the capabilities needed to support the digital m arketing m odel. As part of this stitching-together process, m arketers are redefining how they work with m edia partners to create and distribute content, as well as how they m anage social m edia. CMOs are also learning to work m ore closely with technology prov iders to understand better how to lev erage technology such as data analy tics, m edia m ix m odeling, content m anagem ent, and custom er relationship m anagem ent. Aside from m aking the inside/outside decision, CMOs m ust decide how best to m anage these capabilitiescentrally within the organization or distributed throughout the com pany at the business unit lev el. The right approach is usually som e com bination of the two. The central function naturally houses the design of capabilities, selects and coordinates with outside v endors, and adm inisters those m arketing functions with particular scale adv antages (e.g., search engine optim ization or social listening). At the sam e tim e, certain capabilities need to reside at the business unit lev el if they are to be incorporated into the daily workflow of the business unitsand the m arketing function ov erall. For exam ple, Procter & Gam ble inv ests in scale m arketing program s through center-led team s. Som e of these scale program ssuch as BrandSav er, e-Store, and Trem orhav e their own general m anager and P&Ls. The com pany also em beds specialized talent in the div isions and custom er team s as a way to further integrate planning and execution processes. LOral, by com parison, takes a m ore decentralized approach, building capabilities prim arily at the lev el of div isions and custom er team s. The com pany is willing to sacrifice scale to push talent closer to its brands, with fewer capabilities built and gov erned centrally . This decentralized structure is in keeping with the culture of greater com petitiv eness am ong brand team s at the com pany . To bring the digital m arketing m odel to life, the CMO m ust also think carefully about which behav iors to encourage and which to discourageand how to nudge em ploy ees to adjust their behav ior accordingly . This kind of cultural ev olution is not easy and requires that leaders m ake use of all form al and inform al organizational lev ers at their disposal. Form al lev ers include organizational structure, decision rights, discrete career m odels, and financial incentiv es. Inform al lev ers include networks of relationships across organizational boundaries, shared v ision and objectiv es, indiv idual goals, and com m on sources of pride. Finally , the CMO m ust decide on a road m ap and sequencing of efforts. Odds are that som e capabilities will take longer to build than others; its im portant to incorporate this v ariation into expectations and create stepping-stones by which the m arketing organization can pursue capability goals ov er the next 1 2 , 2 4 , and 3 6 m onths.

Th e Jo u r n e y St a r t s No w
Much of today s custom er journey occurs in the digital realm a place bey ond the direct control of com panies, but highly sensitiv e to efforts to prov oke and am plify social engagem ent. As a result, m arketers need to adopt digital m arketing m odels to better engage custom ers before, during, and after the purchase. They need to pull consum ers into an ongoing conv ersation about the com pany s products and serv ices. There is no one right way to accom plish this engagem ent, and there are m any possible pathway s to success. But its critical that m arketing organizations begin the digital journey as soon as possible to keep pace with shifting consum er expectations and behav iors.
AUTHOR PROFILES:
Matt Egol is a partner with Booz & Company and the chief strategy and marketing officer for Booz Digital. He leads the firms work in shopper marketing, and specializes in strategy and capability development for consumer brand markets, marketing services firms, and media companies. Michael Peterson is a Booz & Company partner based in Dsseldorf. He specializes in corporate strategy and business model transformation for communications companies, and in convergence and customer-facing processes in the broader media and telecommunications environment. Stefan Stroh is a partner with Booz & Company and Booz Digital based in Frankfurt. He focuses on digital strategy and transformation programs, working with companies in the travel and transport, high-tech, and consumer products sectors. Also contributing to this article were Booz & Company principal Sebastian Blum and senior associate Paolo Castano.

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