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strategy and business
 / Summer 2014 / Issue 75(originally published by Booz & Company)


How to Choose the Right Digital Marketing Model

By curating the passenger’s journey in this manner, Virgin hopes to create a community and deliver an experience that goes beyond the flight itself to reinforce the airline’s brand image of adventure and fun. Virgin’s corporate culture is a significant asset in this endeavor—its highly engaged employees embrace the idea of cultivating positive experiences for customers. (That has helped Virgin America become the fastest-growing airline in the United States.) Critically, Virgin’s marketing investments are intended to support this culture, while also empowering employees to innovate and continue improving the customer experience.

By curating the passenger’s journey, Virgin hopes to create a community and deliver an experience that goes beyond the flight itself.

And then there is Walmart, a prototypical Demand Generator. For example, the company is 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 digital ads to see which sites are driving traffic to (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 offers 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 the company’s 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. Henkel, a manufacturer of various household chemical products including detergents, adhesives, and cosmetics, based in Germany, 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 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 a company selects—and which capabilities a 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, and governance are in place, along with metrics to measure results. This is hard work, and sometimes it’s preferable to leverage outside partners and 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.

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