Digital Marketing: Focus on What It Does, and Not What It Is

Digital marketing is a broad field, and its nomenclature continues to widen with increasing pace. This expansion is driven by creativity, innovation, and technology that leads to new digital services, which are invariably targeted at the marketing or communication discipline. Facebook and Twitter are established firms; Yahoo, the venerable giant; Google, the 800-pound gorilla; Foursquare and Groupon, the mavericks. The list goes on.

Clients are spoilt for choice when faced with an increasingly fragmented digital marketing industry with firms providing either focused niche services (e.g. location-based check-ins on Foursquares) or integrated digital services such as search, display, mobile (e.g. Google). How should a client determine the appropriate tools to meet its marketing objectives?

There is no silver bullet or “one-sized fit all” digital marketing solution that will maximize the marketing budget’s effectiveness. Neither does selecting what is the latest and most-talked-about marketing technologies give clients the “cover” should it fail to meet its performance metrics. Therefore, I recommend that clients focus on what the digital marketing tool will deliver ultimately, rather than the tool itself.

What Are the Core Competencies?

First, have the client go back to basics and review all its assets and capabilities that can be leveraged to create value for their customer. While all assets and capabilities can be considered as important for clients, it is a combination of a few that are rare, hard to duplicate, and non-substitutable that clients use to create unique and sustainable value for their customers. Broadly known as core competencies, such resources are identified by clients to be the key competitive advantage to create sustainable value for customers.

For example, the core competencies of a coffee shop could be the variety of coffee or store ambience. Yet, some coffee shops may choose to focus on distribution speed and fast turnaround as its unique and hard-to-duplicate value for customers. One could argue that the first example is best communicated through social networks and digital video that illustrates the visceral elements of the coffee shop. Similarly, the latter example could be best communicated through location-based messaging (e.g. Bluetooth, SMS, or push messages) where the customers identified by their proximity to the coffee shop are influenced by the message to make a spontaneous purchase decision. This spontaneous decision, when matched with the speed and quick turnaround time for fulfillment, reinforces the unique core competency of the coffee shop. As a result, there is a validation process that substantiates the selection of appropriate digital marketing tools.

Link to Bottom Line

Next, the client must have a “helicopter view” of the different operating segments that contribute to the final product or service for their target audience. These operating segments are naturally cost centers that add to the cost structure of the final product or service. Invariably, the premise of any economically driven enterprise is to ensure that the firm successfully delivers a valuable product or service to their target audience that is greater that the collective costs associated with the creation of that value.

As such, the breakdown of operating activities that led to the final product or service gives firms the opportunity to evaluate the associated costs for each segment and identify possible improvements that will add further value to the final customer without incurring additional costs. For instance, search marketing (e.g. Google, Yahoo, Bing, etc.) has allowed many small and medium-sized enterprises to reach customers that were previously unavailable due to geographical and budgetary constraints. Such improvements help these enterprises to lower the marketing costs previously required to reach an enlarged target market, thereby increasing the value behind sales and distribution. This is one example of how clients can isolate the primary and support activities that lead to the production of the final product or service and investigate how they can make possible improvements on these identified activities so as to increase the value to the target customer.

Outsource if It’s Best Done by Others

Hence, clients that take a structured and comprehensive review of its resource and capabilities will give their senior management the data to identify and decide on key attributes which they believe will be core competencies. Accordingly, attributes that could be best communicated by third parties such as social networks, demand-side platform (DSP) owners, or mobile ad networks are outsourced to firms that demonstrate core competencies in those areas. It is argued that this approach will align the enterprise’s resources to activities that are considered core competencies and increase the value of the final product or service to the clients’ target customers.

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