Defining 'digital' as the collection of habits and expectations of today's consumers -- and what that means to marketers.
The word "digital" has been widely used interchangeably with the word "online" or with various digital technologies (e.g., smart phones) and online video or online channels (e.g., social networks). But when it's used in these ways, "digital" leads marketers to focus on the technology, device, or channel, instead of what is most important or useful for the target customer.
For example, marketers wanting to go digital in 1995 built Web sites. Today, they build iPhone apps. These efforts work to a greater or lesser extent.
We propose a new definition of "digital" as not a technology, device, or channel, but instead as "the collection of habits and expectations of modern users." An example of a habit: most people Google things online, whether they're advanced or novice users. An example of an expectation: these users want the right answer right away.
This definition helps us prioritize marketing tactics and also cuts out ones that won't work any more.
From Broadcast to Narrowcast to Pointcast
Some macro trends have brought us to where we are today. Media has evolved from one-way media (TV, print, radio) to two-way media (Internet) to many-way media (social, mobile).
When advertisers only had one-way media at their disposal, they blasted out a single broadcast message to a large quantity of people. Targeting made it slightly better by cutting out the obvious areas of waste (e.g., marketing shaving products at times when few men are watching).
In the first half of the two-way media era, banner ads were still very much like ads pushed at people. But tracking of CTRs (define) offered more rapid feedback, indicating whether the narrowcast message was even working. But the holy grail of "pointcasting" couldn't be achieved by one-way media -- or even two-way media -- because it was, and still is, impossible to deliver an individual message to an individual person, either due to cost or simply the lack of sufficient information about the individual to target so perfectly.
Branding Is Dead
However, consumer habits have also evolved. Many people actively search for things online. And the moment they type in a search term or phrase, we know exactly what they're looking for at that exact moment in time.
Search ads, which are served based on the keyword typed, make targeting and guesswork irrelevant. We know what the individual is looking for, regardless of any demographic, psychographic, or behavioral data, such as a grandmother who loves Harleys and needs to buy parts for her bike. She will search for it when she needs it.
Most people's first impressions of a brand are what they find in search results or what they read from other people in reviews. Hence, branding as we know it is dead.
The corresponding change in business model from CPM (define) to CPC (define) (where advertisers only pay when they get a click) meant that the 99 percent of the waste is cut out of the system instantly -- assuming a generous 1 percent CTR for banner ads. Advertisers no longer needed to pay for the 99 percent of the impressions that didn't generate any return.
Talk about a drastic change for an industry where the standing joke is, "I know I'm wasting half of my ad dollars, I just don't know which half." Now, it's more like, "I know I'm wasting 99 percent of my ad dollars; I know which 99 percent it is and I have now cut it out entirely."
Targeting Is Dying
As consumer habits change to "pulling" for information when they want or need it, marketers' tactics must also change. Tactics that fall under the umbrella of "push" marketing become less relevant because fewer modern users will tolerate being beaten over the head with ad messages (some 3,000 per day, estimates one study) no matter how targeted the advertiser thinks it is. Consumers have technologies (DVRs) and habits of effectively ignoring most ads.
Marketing tactics can also be mapped against the purchase funnel, which typically includes the stages of: awareness, consideration, choice, purchase, and loyalty/advocacy. Traditional broadcast tactics, such as TV, print, and radio, are usually very effective at the awareness stage of the purchase funnel because they reach a lot of people with the same message at the same time.
As we progress further down the funnel to the consideration and choice stages, modern user habits come into play more strongly. When considering a digital camera or a minivan, consumers are now in the habit of going online to look up more information. They're also impatient and don't want to pick through millions of search results to figure out which one is relevant. Also, they may initiate their search on a mobile device (e.g., while in a consumer electronics store, looking up product reviews, or comparing prices).
After the purchase, if consumers hate the product or service, they're increasingly likely to write an online review. Or if they love it, they'll rave about it. Digital tools enable and further facilitate such behavior (e.g., posting a Yelp review using a BlackBerry while dining at restaurant that was a real awesome discovery).
Social Media Isn't Media
Understanding "digital" -- and today's consumer habits and expectations -- will help marketers understand that trying to use social networks and social actions as media won't work. Conversations can't be bought. And if they are bought, the community will find out and retaliate.
Further, a fan page on Facebook with no one to interact with fans will not meet modern users expectations. A Twitter page that's not constantly refreshed with content will also fail.
Two companies that "get digital" very well are Netflix and JetBlue. Netflix has customer service reps on its Facebook fan page to resolve customer issues and thank fans for new ideas and suggestions. JetBlue has two representatives on duty on Twitter at all times and they provide updates (e.g. Boston airport delayed due to snow) and chat with followers.
The New Definition of 'Digital' and ROI
The new definition of digital helps filter and prioritize marketing tactics and select the ones that will yield the greatest business impact for the dollars spent.
If you believe that today's consumer will Google for information, would you pour all your money into TV ads and not have a corresponding Web site with information they can find? Would you spend a lot of money on a Web site that was beautifully designed in all Flash and thus invisible to most search engines? If you believe that consumers will use their mobile devices to search, would you have a high bandwidth site that isn't viewable on a mobile device or one that is only Flash (iPhones still can't view Flash)?
Start with a true understanding of consumer habits and expectations -- digital -- and you will quickly find yourself cutting or placing a lower priority on marketing tactics that are one-way, or shout messages at consumers disrespectfully, or hit a ton of people many times (reach and frequency). Instead, you will gravitate toward techniques that cultivate genuine and open dialogue with customers, where brands humbly listen and learn, and then respond with new features and innovations continuously to better match the needs of the customer. In doing so, the ROI (define) will follow.
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Dr. Augustine Fou is the senior digital strategy advisor to CMOs, marketing executives, and global brands. Dr. Fou has over 15 years of Internet strategy consulting experience and is an expert in social media marketing strategy, data/analytics, and consumer insights, with specific knowledge in the consumer packaged goods, financial services/credit cards, food/beverage, retail/apparel, and pharmaceutical/healthcare sectors.
He is a frequent panelist, moderator, and keynote speaker at industry conferences. Dr. Fou is also an Adjunct Professor at NYU in the School for Continuing and Professional Studies and at Rutgers University at the Center for Management Development, where he teaches executive courses on digital strategy and integrated marketing.
Dr. Fou completed his PhD at MIT at the age of 23. He started his career with McKinsey & Company and previously served as SVP, digital strategy lead, McCann/MRM Worldwide and group chief digital officer of Omnicom's Healthcare Consultancy Group (HCG). He writes a blog "Rants, Raves about Digital Marketing" and can be found on Twitter at @acfou.
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