Strategic thinking

The most dangerous strategy is to jump a chasm in two leaps.

(Benjamin Disraeli)

Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.

(Miyamoto Musashi)

Simplicity is the ultimate sophistication.

(Leonardo da Vinci)

This chapter is about

l What is a digital marketing strategy and why do I need one?

l How do I know if digital marketing is right for my business?

l How do I formulate a digital marketing strategy?

l How do I convince decision makers that now is the time to invest in digital marketing?

l Are my customers ready for digital marketing?

Why you need a digital marketing strategy

Why do you need a digital marketing strategy? The simple answer: because without one you’ll miss opportunities and lose business. Formulating a digital marketing strategy will help you to make informed decisions about your foray into the digital marketing arena and ensure that your efforts are focused on the elements of digital marketing that are most relevant to your business. It’s a crucial ﬁrst step towards understanding how the constantly evolving digital marketplace relates to you and how it affects the relationship between your business or brand and your customers and prospects.

It’s often stated that the internet puts consumers in control as never before. But it’s also important to remember that the internet also delivers an unprecedented suite of tools, techniques and tactics that allow marketers to reach out and engage with those same consumers. The marketing landscape has never been more challenging, dynamic and diverse.

And therein lies the crux of our need for a cohesive digital marketing strategy. If you’re going to harness the power of digital marketing to drive your online business to dizzying new heights, you need a thorough understanding of your market, how your customers are using digital technology, and how your business can best utilize that same technology to build enduring and mutually rewarding relationships with them.

As digital channels continue to broaden the scope available to us as marketers, so they add to the potential complexity of any digital

marketing campaign. Having a clearly deﬁned strategy will help to keep you focused, ensure that your marketing activities are always aligned with your business goals and, crucially, ensure that you’re targeting the right people.

Your business and digital marketing

Whether or not your business is suited to digital marketing depends very much on the nature of that business, where it is now, and where you want it to go in the future. If, for example, you’re a dairy farmer in rural Ireland, have a ﬁxed contract to supply milk to the local cooperative, and have little, if any, scope or ambition to diversify and grow your business year on year, then digital marketing probably isn’t for you. Likewise, if you’re a local butcher with an established client base in a thriving market town in the English Peak District, and simply want to maintain the status quo, then again you’ll probably do just ﬁne without digital marketing.

If however you’re a Peak District butcher looking to diversify your product offering, broaden the scope of your business and start selling your quality organic produce to restaurants and hotels around the country, well, then, welcome to the world of digital marketing.

In truth there are very few businesses today that can’t beneﬁt from at least some degree of digital marketing – even if it’s just providing a basic online brochure telling people what you do, and sending out the occasional update to existing customers via an e-mail newsletter or RSS (Really Simple Syndication – a way to retrieve updated posts or articles from a website automatically) feed.

Digital marketing – yes or no

There are really only two key questions you need to answer when it comes to deciding whether or not your business needs a digital marketing strategy.

Table 2.1 Are your customers online?

Demographic of internet users

Below is the percentage of each group who use the internet, according to our October–December 2007 survey. As an example, 74% of adult women use the internet.

		Use the internet
Total adults		75%
Women		74
Men		76
	Age
18–29		92%
30–49		85
50–64		72
65+		37
	Race/ethnicity
White, non-Hispanic		76%
Black, non-Hispanic		56
English-speaking Hispanic		79
	Geography
Urban		77%
Suburban		77
Rural		64
	Household income
Less than $30,000/yr		61%
$30,000–$49,999		78
$50,000–$74,999		90
$75,000+		93

Educational attainment

Less than high school 38%

High school 67

Some college 84

College + 93

N=2,054 adults, 18 and older. Margin of error is ±2% for results based on the full sample and ±3% for results based on internet users.

Source: Pew Internet and American Life Project, Tracking Survey, 24 October – 12 December 2007, showing the proportion of US adults online and their demo- graphic make-up (www.pewinternet.org/trends.asp, accessed 5 June 2008).

First, is my audience online or is it going to be online? If your customers use digital technology to research and/or purchase the products and services you provide, then you absolutely need to embrace digital marketing now to engage with them and retain them.

Second, are my products, services or brands suited to digital marketing? This can be a tricky one – but the answer is usually yes. Typically it doesn’t matter what your product, service or brand is: as long as you’ve established that there’s a viable online audience for it, then you should be promoting it online.

Deﬁning your digital marketing strategy

Once you’ve decided that you do, in fact, need to pursue some form of digital marketing, the next step is actually to sit down and deﬁne your strategy. Unfortunately there is no ‘one size ﬁts all’ strategic panacea here. We don’t have a magic recipe to ensure your digital marketing success, and neither does anybody else (despite some of the online hyperbole you may read on the subject). Basically every business needs to ‘bake’ its own unique strategy based on its own particular set of circumstances. While the available ingredients are the same (and we’ll cover the major ones later in the book), the resulting strategies can be radically different.

Different products, different markets, different needs – different solutions. What it ultimately boils down to is this: the best people to deﬁne your digital marketing strategy, curiously enough, are the people who best know your business.

Laying strong digital foundations

The good news is that you’ve almost certainly already started the process of deﬁning your digital marketing strategy. Before even picking up this book you’ve probably been thinking about digital marketing in the context of your business, about what your competitors are doing online and why, about how your customers and prospects are integrating digital technology into their lives, and about how you can best exploit these new and exciting digital channels to foster longer, more productive relationships with them. These are the components that will form the foundation of your digital marketing strategy:

l Know your business

l Know the competition

l Know your customers

l Know what you want to achieve

l Know how you’re doing

The process of formally deﬁning your digital marketing strategy forces you to sit down and analyse the market in which you’re operating with a critical eye, and to really think about the different components of your business and how digital marketing can help you to achieve your business goals.

Don’t get too bogged down in the technical details – remember, digital marketing is about people communicating with other people; the technology is just the bit in the middle that helps it to happen. Your strategy should provide you with a high-level framework – a bird’s-eye view of the digital marketing landscape with your business centre stage; the details will come later.

Understanding the digital consumer

There is a notion that pervades marketing circles today, a notion of mysterious ethereal creatures who exist in a hyper-connected, multifaceted cyber-world of their own. They are an enigma: they speak a different language, communicate in ways we don’t understand, and they’re turning the world of marketing on its head. These are the ephemeral, wraithlike ‘digital consumers’, who slip effortlessly through the marketer’s grasp. Digital consumers are different, we’re told – but are they really?

The digital consumer revealed

Making the web their own

Anonymity

Key traits of the online consumer

l Digital consumers are increasingly comfortable with the medium

l They want it all, and they want it now

l They’re in control.

l They’re ﬁckleacross

l They’re vocal

The rise of the digital native

It’s 7 am. Janet wakes up to the sound of her iPod, sitting in its cradle across the room, playing a random song from an album she set to download overnight. As she gets out of bed her mobile trills: a text has arrived from her college friend Simon. It’s about last night’s party.

Janet stabs at the mobile keypad with one hand, deftly ﬁring off a reply, while her other hand opens up her laptop, logs her on to her various social networking accounts and ﬁres up her e-mail. A cursory glance at the mini-feeds on her social network sites shows her that there’s nothing major going on amongst her circle of friends, so she quickly checks her e-mail while simultaneously opening up her feed-reader and scanning what’s new from her favourite news sites, blogs and other locations around the web. In the background her iPod picks another song at random from her music collection and continues to play.

As the 20 or so messages sent to her overnight jostle for space in her e-mail inbox, Janet’s mobile trills again – it’s Simon, replying to her message and arranging to meet her before lectures start. She checks the clock widget on her desktop sidebar and ﬁres off a quick conﬁrmation – she’ll meet him outside the library in an hour and a half. A quick scan of her incoming mail reveals most of it to be spam that’s slipped through the net, but one from her friend Amy catches her eye. She reads it, and is about to reply when she notices that Amy is signed in to her IM account. She sends her an instant message instead.

They chat for a few minutes, mainly about last night’s party and what to do after college today. Janet checks the weather in another sidebar widget – there’s rain forecast for later. They agree on the

Using inﬂuencers to help spread the word

There is one particular category of users online that warrants a special mention when it comes to deﬁning your digital marketing strategy. Dubbed ‘inﬂuencers’, these early adopters are the online opinion leaders. Through blogs, podcasts, forums and social networks they harness the power of the web to extol the virtues of products and brands that they like, and equally to denigrate those they ﬁnd unsatisfactory.

Why are inﬂuencers important to you as a marketer? Because they have the virtual ear of the online masses. People read and listen to what they have to say; they value their opinion and trust their judgement. These online inﬂuencers have already won the pivotal battle for the hearts and minds of online consumers. Engage positively with them, and you essentially recruit a team of powerful online advocates who can have a potentially massive impact on a much wider group of consumers. This is the online equivalent of ‘word-of-mouth’ marketing, on steroids. Of course, give them a negative experience and, well, you can guess the rest.

But how exactly will you recognize these online inﬂuencers? A December 2006 report by DoubleClick (‘Inﬂuencing the Inﬂuencers: how online advertising and media impact word of mouth’) deﬁned inﬂuencers as people who ‘strongly agreed’ to three or more of the following statements:

l They consider themselves expert in certain areas (such as their work, hobbies or interests).

l People often ask their advice about purchases in areas where they are knowledgeable.

l When they encounter a new product they like they tend to recommend it to friends.

l They have a large social circle and often refer people to one another based on their interests.

l They are active online, using blogs, social networking sites, e-mail, discussion groups, online community boards, etc to connect with their peers.

Identifying the inﬂuencers within your market sector, analysing their behaviour and tailoring part of your digital campaign to target this small but inﬂuential group can result in disproportionate knock-on beneﬁts. Don’t neglect your core market, of course – but certainly consider targeting inﬂuencers as part of your overall digital marketing strategy.

Mind your Ps

You might be asking yourself how all this newfangled digital ‘stuff’ ﬁts into the traditional marketing mix: the venerable four Ps of Product, Price, Promotion and Place. Well, it breaks down something like this.

Place

Let’s start with the obvious one: it’s the internet. It’s the one billion plus people around the world who have decided its better to be connected

– whether it’s accessed through a computer, a mobile device, IPTV or whatever else might come along. That’s really it.

Price

Pricing is critical online. You have to be competitive: this is the internet, and pricing is transparent. You don’t necessarily have to be the cheapest

– but to compete you need to make sure your overall value proposition to the customer is compelling. Overprice your product and a host of price comparison sites will soon highlight the fact, as will the countless peer-review communities where consumers actively debate the relative merits (or otherwise) of everything from ﬁnancial products to wedding stationery.

Figure 2.1 Moneysupermarket.com, billed as ‘the UK’s leading ﬁnance price comparison website and a leading UK travel price comparison website’

Product

This is what you have to offer – your unique value proposition to your customers. A good product, of course, is the cornerstone of all successful marketing, but it’s particularly crucial in the digital arena. A product that delivers tangible beneﬁts and ﬁlls a real need in the marketplace

– something that leaves the customer with a genuine perception of value

– gives marketers the scope they need to do their job effectively. When you’re promoting something viable, it’s much easier to engage with consumers and to convince them to buy.

Conversely, the best marketing minds in the world will struggle to promote a product that doesn’t deliver the goods. And this is where the all-pervading, viral nature of the internet can really come back to bite you. If you promote a product online and that product doesn’t deliver, you’d better be prepared for the backlash.

Digital consumers are no wallﬂowers – they are vociferous and well connected. They won’t keep the shortcomings of your product or business to themselves – they’ll shout about it from the tallest building in cyberspace, and others will quickly pick up the cry. Once that happens you can pretty much shelve your marketing ambitions and go back to the drawing board.

So it’s important to make sure your product and the entire customer value chain associated with it are right from the start. You need a solid foundation if you’re going to build a sustainable online business, and that all starts with a sound product.

Promotion

Promotion is everything you do, online and ofﬂine, to get your product in front of your prospects, acquire new customers and retain existing ones. Examining those options will form the bulk of the rest of this book: in the following chapters we’ll discuss the major forms of online promotion available now, and will go on to look at emerging and future trends. Here we summarize the main elements to whet your appetite:

l Your website: Your website is the hub of your digital world – and perhaps the most important element in your whole digital marketing strategy. It’s a vital piece of online real estate to which all of your other online activity will direct your prospects. A lot of the digital marketing techniques discussed in this book are about generating trafﬁc to your website – but trafﬁc in itself is worthless. To become valuable, trafﬁc must be converted – and that’s essentially what your website should be: a conversion engine for the trafﬁc being directed to it.

l Search engine optimization (SEO): Part and parcel of the website is SEO, or the process of aligning content on your website to what your prospects are actively searching for, and presenting it in a manner that makes it accessible to both people and search engines. The organic or natural search results (the results in the middle of the search engine results page) are the place to be if you want to increase targeted trafﬁc to your website.

l Pay-per-click search advertising (PPC): Pay-per-click advertising offers you a way to buy your way on to the search results pages for chosen keywords or key phrases. Depending on your business and what keywords you want to rank for, this can be an extremely effective way of generating search engine trafﬁc quickly, although as the medium continues to gain in popularity more competitive keywords are becoming prohibitively expensive for smaller businesses.

l Afﬁliate marketing and strategic partnerships: how to partner with other organizations and websites in mutually beneﬁcial relationships to promote your products or services.

l Online public relations: using online channels like press releases, article syndication and blogs to create a positive perception of your brand and/or position you as an authority in your particular ﬁeld.

l Social networking: a relatively new marketing opportunity, but one that can potentially offer highly targeted advertising to niche social groups based on proﬁle information they volunteer through sites like Bebo, Facebook, MySpace and others.

l E-mail marketing: the granddaddy of internet marketing, suffering something of a crisis in the wake of perpetual spam bombardment, but still an important tool in the digital marketer’s arsenal, particularly when it comes to maintaining ongoing relationships with existing customers and prospects who’ve ‘opted in’ to receive information.

l Customer relationship management: Retaining existing customers and building mutually rewarding relationships with them are another important element of digital marketing. Digital technology makes developing an enduring connection with your customers more straightforward and effective than ever before.

Eyes on the prize

Another crucially important area of your digital marketing strategy is setting realistic goals. Your strategy should explicitly deﬁne the business goals you want your digital marketing efforts to help you achieve. As with any other journey, you can only plan an effective route if you have a clear, unambiguous destination in mind from the start. Or, to put it another way, you might be the world’s best archer – but if nobody gives you a target to aim at what good will it do you?

To measure your progress towards those goals, you also need to set milestones along the way, consistently measuring your achievements, and steering your digital campaign towards your ultimate destination. Here again the digital realm offers a raft of tools and techniques to help marketers reap a better return from their investment.

We’ll be examining the topic of web metrics and website intelligence in Chapter 5, but the crucial thing to remember here is that digital marketing is an iterative process of continuous improvement and reﬁnement. You can monitor and analyse the effectiveness of your digital marketing campaigns in practically real time. You can measure everything and even run alternative ads and strategies side by side to see what works best before committing to a given course: test, reﬁne, retest and then decide where to make your investment based on real data from real customers.

Tracking accountability

When a computer or mobile phone – in fact let’s call it a digital media device – hits a site, a record is created in the web server’s log ﬁle based on the unique IP address of that user, and the user’s navigation through the site is tracked. Software on the web server also sends a small, unobtrusive ﬁle to the user’s browser known as a ‘cookie’, which essentially allows the web server to recognize the same user when he or she comes back to the site again.

Based on information in the log ﬁle, marketers can tell a surprising amount about the user’s activity on the site:

l We know the broad geographical location based on the digits in the IP address.

l We know when the user arrived and from where.

l We know what type of browser and operating system the person is using.

So far we know very little but we can already start to be more accountable. For example, we can now order our advertising and marketing messages to be delivered only to people with a Mac who live in Ireland and don’t like working before lunchtime but are seriously interested in sports.

Now let’s make things a little more interesting. By adding speciﬁc ‘page tags’ to our website (with the help of a website developer, webmaster and analytics partner) we can start to do some very clever things – following website visitors to the purchase point and beyond.

For example, say we choose to run a banner ad campaign. We can detect not only the people who click on the banner and go through the site to become purchasers, but also those people who do not click on the banner but then go ahead and buy the product anyway a few weeks later. This is really exciting stuff for marketers because ultimately it dispenses with our whole fascination with the value of the click-through.

Not long ago digital marketing metrics were all about clicks, clicks, clicks. Today, while clicks remain an important guideline, ultimately they are about as useful as saying 230 people noticed my ad today, isn’t that great? Well, in a word, no. Today’s online marketing investment is about tangible returns; it’s about conversion and ROI; ultimately it is about the accountability of the brand, the price, the ad campaign and the job of the marketer.

Which scenario would you rather: a warm post-campaign glow when the research company pats you on the back and says well done for achieving a 10 per cent increase in brand recall among 18- to 24-year-olds, or 1,293 enquiries about your product and the names and addresses (e-mail, of course) of the 233 new customers who now own your product?

Online marketing is very like direct marketing in that regard. You invest, you sell, you weigh up your ROI, you learn, you adapt and you move on. Except that online the process is much accelerated. Yes, of course there’s still value in brand-based advertising. The drum- playing gorilla who makes you want to eat Dairy Milk, or the girl on the bench who makes you want to whistle the Nokia tune and give her your Coca-Cola: it’s all good brand-building stuff and the kind of advertising that’s sure to remain with us. The big problem with it is its lack of accountability.

The truth is that digital is simply more accountable. You have far more control and can make far more informed decisions based on the feedback and information the technology provides. It’s easy to control the pace and ﬂow of your marketing budget, to turn it up or down and to channel it in different directions.

If you are selling holidays, for example, you already know enough about your customers to realize that certain times of the year (holiday season) are less effective for advertising than others (freezing winter days). But how cool would it be if you could target your holiday advertising so that your ads start to run when the temperature drops below 10 degrees in a particular region? What about being able to advertise your currency exchange services based on the performance of the markets? Well, in the digital world you can do that. The potential is boundless.

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Digital Marketing - unit 1A