Mastering Digital Marketing Structure and Strategy: Transforming Multi-Channel Marketing


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Wonder where we got the idea for our 2013 Digital Marketing Consortium? Our partners in this study love the results but want more.

Digital Marketing technologies are transforming the commercial marketplace -- challenging companies to develop new marketing skills that employ a broad range of new tools and techniques. When managed well, Digital Marketing technologies can be tremendously effective. When managed poorly, they can damage customer goodwill and create unnecessary expense.

Best Practices, LLC conducted this study to explore key trends, success factors, and lessons learned for structuring Digital Marketing groups. The study also distills winning strategies for Digital Marketing activity management, staffing, and budget allocation to help executives manage their service costs and better serve their business units and their products.

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Mastering Digital Marketing Structure and Strategy: Transforming Multi-Channel Marketing

  1. 1. Mastering Digital MarketingStructure & Strategy:Transforming Multi-Channel MarketingBest Practices, LLC Strategic Benchmarking Research
  2. 2. BEST PRACTICTable of Contents I. Executive Summary Research Overview Participating Companies Key Findings & Insights Strategic Path Forward Toward DM Success II. Analyzing Current Digital Marketing Structures III. Evaluating Digital Marketing Structures & Strategies IV. Using a Specialized Center of Excellence for Digital Marketing V. Current Digital Marketing Staffing Levels VI. Current Digital Marketing Investment Levels & Trends VII. Structuring for Different Market Regions & Product Lifecycle Stages About Best Practices, LLC
  3. 3. BEST PRACTIC31. Analyze a deep range of current DMstructures while probing theprevalence, strengths, and weaknesses ofeach.2. Spotlight opportunities to improve structureand cost-effectiveness of DM resources basedon current trends within the healthcareindustry and among innovative non-healthcareorganizations as well.Research Objectives & MethodologyResearch Objectives:• Examine how leading Digital Marketing groups:– Structure their Digital Marketing resources to most effectively support businessunits and drive revenue– Measure the effectiveness of various Digital Marketing tools– Allocate budgets to various Digital Marketing activities and staff levels– Plan to utilize the Digital Marketing group to impact the organization in the futureThis study explores key trends, success factors, and lessons learned for structuring DigitalMarketing groups. The study also distills winning strategies for Digital Marketing activitymanagement, staffing, and budget allocation to help executives manage their service costs andbetter serve their business units and their products.Field Research & Insight Development:Engaged 44 Digital Marketing executives andmanagers from 40 companies in a rapidturnaround field survey.Analyzed qualitative findings and insightsfrom within the study.Client Objective:
  4. 4. BEST PRACTICData Segments Examined in this StudyHealthcare Segment – Abbreviated as HS and depicted in blue font, the healthcare segment comprises 23 totalcompanies which serve the medical device, pharmaceutical, and biotechnology industries. The companies in thissegment must navigate a more restrictive Regulatory climate than many of their cross-industry peers. Forexample, when asked to identify key drawbacks to a using a decentralized approach to Digital Marketing, a full 50% ofthe HS cited regulatory and compliance issues compared to just 29% of the companies outside of healthcare (click linkto view data).Non-Healthcare Segment – Abbreviated as NHS and depicted in green font, the non-healthcare segment represents17 total organizations across other industries such as Financial Services, Technology, Electronics, Retail, and others.4While the majority of data presented in this study reflects input from 44 representatives of 40different companies across all sectors and industries, some data has been segmented in thefollowing ways to provide deeper, more relevant insights:Data Segments in the Study:Elite Performing Segment(EPS)Criteria Companies RepresentedThis segment examines thedata and insights contributedby 8 specially selectedorganizations in this study(across all industries), basedon the following noteworthycharacteristics:- Significant ongoing investment in Digital Marketing staffand budget- Balance efficiency and innovation through hybrid structuresoften using Center of Excellence- Comprehensive use of Digital Marketing metrics to employmultiple dashboards to track performance and driveimprovement- Integrated view of managing internal and externalresources− Bayer Healthcare− CSC− Dell, Inc.− Emirates Airlines− GE Healthcare− Merial− Thermo Fisher Scientific− Volkswagen of America
  5. 5. BEST PRACTICES,®Universe of Learning: Companies Participating in Study5This research emerges from survey data gathered from 44 Digital Marketing and othercommercial executives and managers at 40 leading global companies. The benchmark classin this study together represents 8 global economic sectors overall, including a rich healthcaresegment composed of 23 medical device, pharmaceutical and biotech firms.
  6. 6. BEST PRACTIC6Nearly 60% of Respondents at CMO, VP, or Director Level• Chief Marketing Officer• President• VP, Brand Marketing• VP, Commercial E-Business• VP, Digital Strategy• VP, Marketing (2)• Head, eBusiness• Head, E-Strategies• Global Lead, Digital & Innovation• Director, Digital Marketing (5)• Director, E-Commerce• Director, Digital Media & Syndication• Director, Marketing (4)• Associate Director, eMarketing• Associate Director, Marketing (2)• Assistant Director, HCP Multi-channelStrategyResearch Participant Job Titles Include:Study analysis drew upon the deep experience and insights of senior group of executives.Almost 60% of benchmark participants hold executive positions at the levels ofCMO, President, VP, or Director. The balance of participants were front-line managersworking actively in Digital Marketing.• Global Manager, CRM & eTools• General Manager, Digital Marketing• General Manager, Marketing• Senior Manager, Customer Effectiveness• Senior Manager, Customer Experience• Senior Manager, eServices• Senior Product Manager• Corporate Brand Manager• Manager, Business Intelligence• Manager, Digital & Multi-Channel• Manager, Digital Media• Manager, Interactive Marketing• Manager, Marketing (3)• Manager, Product & Digital Marketing• Digital Strategist• Digital Marketing Specialist• Commercial Analyst
  7. 7. BEST PRACTICES,®7Research Probes Healthcare, Financial & Other Industries(n=44)Q1. Participating Companies by Industry:Electronics2% Financial services11%Healthcare59%Manufacturing7%Retail5%Technology11%Other5%More than 90% of the companies that participated in this research generate above $1billion annually. While the majority were from the healthcare industry, the financialservices and technology industries – two of which heavily depend on digital marketing –were also well-represented.
  8. 8. BEST PRACTICES,®Most DM Structures Are Hybrid w/ Trends to CentralizeThe following key findings around Digital Marketing structure emerged from this research:A Majority of Companies Use a Hybrid Digital Marketing Structure in the US: Some 55% of benchmarkcompanies use a hybrid model for U.S. Digital Marketing. 43% use a hybrid structure that joins a Center ofExcellence with individual business units, while another 12% employ a hybrid structure between a centralizedMarketing group and individual business units.A Completely Centralized or, especially, Decentralized Structure Does Not Serve the Fast-ChangingDigital Marketing Space Well: Only 19% of companies use a completely centralized Digital Marketingstructure, while just 7% use a completely decentralized approach.Within the Hybrid Structure Paradigm, DM Groups Are Trending toward Greater Centralization: A clearmajority of companies (61%) indicated that their DM operations have become either somewhat or significantlymore centralized in the past two years. The main drivers behind this trend include cost (i.e., maximizingimpact of investments, reducing redundancy, surviving budget cuts), competitive advantages, and changes inorganizational structure. By contrast, only 7% of study organizations reported becoming even somewhatmore decentralized in that same period of time.Healthcare Sector Likely to Shift toward Greater Centralization of Resources: The non-healthcaresegment is already significantly more centralized across all global regions and markets than the healthcaresector. And given the non-healthcare segment has demonstrated greater innovation and longer-terminvestment than the healthcare segment, healthcare is likely to follow if, for no other reason, to better addressregulatory pressures. A CoE is ideally suited to a leading role in this approach.8I. Analyzing Digital Marketing Structures & Trends:
  9. 9. BEST PRACTICES,®9Centralized Structures Most Highly Effective for DM ActivitiesThe chart below provides a window into which structures are most effective for each DMactivity. The data notably spotlight that centralized and hybrid approaches are clearly seenas more effective for managing DM activities than are decentralized ones.Centralized CoE Decentralized Hybrid A Hybrid BBlogs 40% 0% 11% 11% 50%Corp. Strategy 53% 20% 0% 0% 33%Digital Analytics 27% 25% 0% 0% 0%Bus. Unit Strategy 42% 20% 0% 0% 17%Email Marketing 33% 100% 18% 20% 20%Mobile Technology 29% 0% 0% 0% 25%Online ContentDevelopment 64% 0% 8% 10% 17%Online Videos 42% 0% 0% 0% 29%Press Releases 53% 60% 0% 0% 25%SEO 56% 40% 14% 14% 33%Social Media 50% 0% 0% 0% 29%Webcasts 56% 33% 8% 10% 0%Percentage of Respondents Rating Each Structure “Highly Effective” for Each Category:
  10. 10. BEST PRACTICES,®ReputationImpactResponse RateLeadsGeneratedMeasurable Analytics Key to Digital Marketing Success“Hobbled by nascent technologies,inconsistent metrics, and a reliance onoutdated models, marketers are failingto tap the digital world’s full power.Unless this problem is addressed, theinability to make accuratemeasurements of digital advertising’seffectiveness across channels andconsumer touch points will continue topromote the misallocation of budgetsand to impede the [healthcare]industry’s growth.”-McKinsey QuarterlyPlanning and performance measurement are essential to the success of Digital Marketinginitiatives. Those who track the greatest number of Digital Marketing metrics are morelikely to find metrics they use highly effective.Source:“Continued analysis and optimization of programs isessential to program success.” – Interviewed ExecutivePerformance Metrics and Process InsightsImproved DM
  11. 11. BEST PRACTICES,®11Outsourcing Is a Cost Mgmt OpportunityQ. What percentage of your total Digital Marketing FTEs are insourced, offshored, and outsourced?(n=35)Most companies in the study have outsourced at least some percentage of their DigitalMarketing FTEs. Innovative organizations are outsourcing up to ¼ of their resources forDigital Marketing as a means of remaining competitive yet cost-effective.100%66%75%29%47%28%10% 0%75th Percentile Mean Median 25th Percentile% Insourced % Outsourced65%26%MeanElite Performing Segment:(n=8)*Research Note:Offshoring is rare. Only 20% of companiesoffshored digital marketing, and most did notdo so at a high rate.
  12. 12. BEST PRACTICES,®12Companies Hoping To Compete On This Front Must Invest AdequateResources into Their DM Budgets(n=32)Q. Please note how your Digital Marketing budget has changed in the past 24 months(n=34)Organizations expecting to compete using Digital Marketing will have to make adequateinvestment. Nearly 75% of all respondents have increased their Digital Marketing budgetsover the past two years. Moreover, half of all budgets have grown more than 10%.47%32%16%5%50%14%14%22%More than10%Growth50%0-10%Growth23%No Change15%0-10%Decrease12%Past 24 MonthsHealthcareNon-Healthcare
  13. 13. BEST PRACTICES,®13More Evolved DM Groups in Other Industries AchieveGreater Centralization (and Cost Efficiency)(n=42)Q. Which Digital Marketing structure does your organization use in each of the following regionsand markets?Digital Marketing services are centralized within both healthcare organizations and non-healthcareorganizations; however, non-healthcare have evolved more rapidly towards centralized forms. Forhealthcare, which here and elsewhere was observed to lag behind key indicators of innovation, a centralizedapproach to Digital Marketing represents a key leverage point for greater operational efficiency.33%36% 36%29% 29%9%5%11% 12%16%North AmericaCentralized Marketing GroupWestern Europe Asia-PacificHigh-Growth Emerging Markets (Brazil, China, India, etc.)Rest of WorldNon-Healthcare HealthcareCentralized Marketing Group
  14. 14. BEST PRACTICES,®14Best Practices, LLC6350 Quadrangle Drive, Suite 200Chapel Hill, NC Best Practices, LLCBest Practices, LLC is a research and consulting firm that conducts work based on thesimple yet profound principle that organizations can chart a course to superior economicperformance by studying the best business practices, operating tactics, and winningstrategies of world-class companies.Link for Report: Mastering Digital Marketing Structure & Strategy