strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: January 27, 2014

 
 

How to Choose the Right Digital Marketing Model

Yet another approach to digital marketing is the Demand Generator model. Walmart, for example, is very focused on converting visits to its website, social media properties, and mobile apps into actual sales. To accomplish this, it has developed capabilities in “real-time decision making” and “personalization and targeting.”

The company’s in-house media platform, Walmart Exchange, is a robust ad-serving platform that allows brands to target shoppers precisely, measure the ROI of both online and offline impact, optimize content and assortment of products, and track non-Walmart.com digital ads to see which sites are driving traffic to Walmart.com (and whether users are making purchases). For example, a shopper who visits the website after viewing a targeted display ad embedded with a health-and-beauty-aid coupon might find an assortment of other, related products to consider on the site.

Beyond these next-best-offer and assortment tools, Walmart is also developing relevant content aimed at driving conversion—and pushing its network consumer packaged goods manufacturers to do the same. For example, “how to” videos, ratings, reviews, and listings of foods’ nutritional content can all help drive engagement and conversion on its site. Investments in this kind of optimized content can boost conversion by more than 70 percent.

Perhaps the least typical of the digital marketing models (but no less powerful than the others) is the Product Innovator. Germany-based Henkel, a manufacturer of various household chemical products including detergents, adhesives, and cosmetics, is a clear Product Innovator. The company so strongly emphasizes R&D that about 40 percent of its annual cosmetics sales come from products that were launched within the previous 24 months. On the marketing side, this success is due to a finely honed “innovation” capability as well as a very sophisticated “measurement” capability that continually tracks preset key performance indicators to determine whether to continue a product trial or stop it and redirect resources to more promising projects.

The company encourages employees in the marketing and R&D departments to participate in the innovation process through idea-generation contests and incentives. Marketing employees are also required to work in sales regularly to stay in touch with the market and help identify customer pain points. The payoff is an innovation process that has generated consistent results. For instance, one recent product innovation—a laundry detergent known as MAS Color “con un Toque de Suavidad” (“with a Touch of Softness”)—won the “Best New Product” award in the household care category in Mexico.

Bringing the Capabilities to Life

No matter which marketing model the company selects—and which capabilities the company chooses to emphasize—the CMO must make certain decisions and adapt certain aspects of the marketing organization to bring the digital model to life. For example, the CMO must decide whether the marketing capabilities will be developed internally or outside the company. If the CMO wants the capabilities in-house, the organization will need to ensure that the right skills, processes, technology, governance, and metrics are in place to measure results. This is hard work, and sometimes it’s preferable to leverage outside partners/vendors as the company stitches together the capabilities needed to support the digital marketing model. As part of this “stitching-together” process, marketers are redefining how they work with media partners to create and distribute content, as well as how they manage social media. CMOs are also learning to work more closely with technology providers to understand better how to leverage technology such as data analytics, media mix modeling, content management, and customer relationship management.

Aside from making the inside/outside decision, CMOs must decide how best to manage these capabilities—centrally within the organization or distributed throughout the company at the business unit level. The right approach is usually some combination of the two. The central function naturally houses the design of capabilities, selects and coordinates with outside vendors, and administers those marketing functions with particular scale advantages (e.g., search engine optimization or social listening). At the same time, certain capabilities need to reside at the business unit level if they are to be incorporated into the daily workflow of the business units—and the marketing function overall.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store