I have been busy traveling since I took on my new role in January, and this gave me the excellent opportunity to witness how businesses apply digital strategies in commerce and marketing to drive revenue growth and customer acquisition in Asia, the Middle East, and the United States.
My anecdotal observations suggest that the number of businesses that acknowledged digital as a critical imperative has increased rapidly over the last decade. Indeed, many senior managers recognized that digital will influence their future survival, as disruptive business models such as Uber and Airbnb compete aggressively in the product or service categories of these firms in today’s always-on Internet environment.
However, the adoption of digital strategies in these businesses has been too slow and inadequate to compete effectively with highly agile, technology-driven disrupters in the categories. The threat of survival is real and will require businesses to make three fundamental decisions to remove the inhibitors that impact the pace of adoption in their organizations.
Build Confidence in Digital Commerce Across the Organization
One common challenge faced by these businesses is the growing conflict of digital commerce as a separate transaction channel or as an integrated part of the organization. In most cases, the lack of confidence to deliver its highly measurable outcomes is the primary inhibitor of digital commerce adoption.
Building confidence in digital commerce requires a systematic approach to identify routine and systematic processes that can be substituted with information exchange on the Internet. Hence, I would argue that logistics, product cataloging, and financial transactions are immediate areas where digital commerce initiatives such as content marketing, messaging, and channel mix (e.g. online, mobile, and social) should be applied across all sales channels. More importantly, this implementation should be in phases where expected successes in increasing efficiency and reducing costs will give confidence to shareholders on digital commerce’s contribution to the organization.
A calibrated and phased deployment to achieve quick wins in revenue and cost management will create a perception amongst shareholders that digital commerce it is working, and will inevitably serve as a catalyst for businesses to request for more funding to expand the scale of such initiatives.
Digital Marketing Spend Based on Price Discovery
Another inhibitor to the adoption of digital strategies in businesses is the perceived performance of digital marketing spend to meet its expected revenue objectives. It is sometimes bizarre to find businesses spending their digital marketing budgets in the same manner as the traditional offline world. This means that they identify online publishers or content providers that presumably attract their target customers and allocate their marketing spend based on cost per impression.
This approach is unlikely to answer questions from skeptical shareholders on the efficacy of spending the marketing budget on rates determined by publishers and content providers. Therefore, businesses’ digital marketing spend should be based on rates determined by price discovery mechanisms that are determined by demand and supply decisions of buyers (i.e. businesses) and suppliers (i.e. publishers).
Working with DSPs will be useful for businesses to align their digital marketing spend to market-based pricing mechanisms such as online auctions for media placements. In this case, the prices of specific media placements of participating online publishers are the results of consistent observation on bids made through the Dutch auction process. This observation allows buyers (i.e. advertisers such as businesses) and suppliers (i.e. publishers) to measure price variances from changes in the demand and supply conditions. Such conditions include seasonal demands such as events (e.g. Valentine’s Day) that affect the supply of media placements of online publishers.
What is described above can only be achieved by identifying DSPs that continue to build the scale of participation of buyers and sellers in their auction of digital media placements. Invariably, the relevance of the price discovery process will improve proportionately with the scale of participation by these DSPs. As a result, this process forms a harmonious cycle of pricing insights which businesses will use to manage their digital marketing spend effectively.
Building Digital Leadership Qualities
Clearly, the leader’s capacity to build confidence in the organization to adopt digital commerce and marketing strategies is crucial. Building confidence among internal staff should start with the leader articulating the strategic vision of digital strategies to all staff in the organization. For example, leaders can use town-hall style meetings to address employees on the importance of adopting digital strategies as a natural business process. This communication by the leader crafts the vision the organization is heading toward, which requires the mass adoption of digital commerce and marketing initiatives. The aim is for businesses to engage their staff and make them aware of the importance of digital commerce and marketing in their functional roles, and how they can participate as individual contributors. This will form the starting point for the middle-level leadership to reinforce the understanding of digital commerce and marketing and encourage its use in their course of work.
The common challenge faced by businesses is not the availability or implementation of digital commerce and marketing strategies. Rather, it is the adoption by members in its value chain, which determines the success of the strategy. The fear of adopting digital strategies can be attributed to fear of accepting change from entrenched user habits formed over the years. If this continues, businesses will continue experiencing delays in achieving success in digital commerce and marketing. Invariably, this delay will impact businesses’ capabilities to compete effectively with today’s disruptive environment.
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