Strategy modelling

Modelling Your
Digital Strategy
poldigital.com
By Frederic Moreau, Digital Marketing Agent – May 2013

The target model
Here’s what the model looks like when
completed. It’s theoretical, of course,
as it shows a balanced position, which
is the goal that all businesses wish to
attain.
In my role as a “digital doctor”, my
business “patients” call on my services
either because they’re already dealing
with a problem that has inevitably
tipped the balance, or because they
want to launch a new project using
this model and another one for
defining their digital footprint (read
more on poldigital.com).
The model is built in two steps using
the data specific to your company.
First, the new digital economy triangle,
and then we add your financial data.
2PÖL Digital Inc. - Modelingyour digital strategy - poldigital.com06/06/13

Step 1 – Drawing the new economy triangle
Your current position
PÖL Digital Inc. - Modeling your digital strategy - poldigital.com 3
Your target position
06/06/13

Step 1 – Drawing the new
economy triangle (cont.)
You need to represent three types
of information:
• Data that your clients consume.
For example, if you offer a news
service, the number of articles
published every month is a strong
indicator.
• Audience data, or traffic. For
example, the number of unique
visitors every month.
•Revenues generated by this
activity. That is, how many dollars
are spent by clients consuming
your data.
PÖL Digital Inc. - Modeling your digital strategy - poldigital.com 406/06/13

Once this basic data is defined, then you have
to develop your key indicators:
• Visits generated by content (Data/Traffic)
• Revenues generated by visits
(Revenues/Traffic)
• Revenues generated by content
(Revenues/Data)
The value placed on these indicators will vary
from one industry to another. The process of
identifying discrepancies and defining
improvement goals will also vary on the
company and on its market strategy.
A competitive comparison analysis could be a
useful way to better understand these
strategies. For example, some companies
prefer attracting a large number of visitors
over generating high revenues per visit;
meanwhile, others will focus development on
selling with content, thus reinforcing the
Revenues/Data indicator.
PÖL Digital Inc. - Modelingyour digital strategy - poldigital.com 5
e.g. $1,500/article
e.g. $0.15/UV
e.g. 10,000 UVs/article
06/06/13

Step 1 – Drawing the new economy triangle (cont.)
Nonetheless, certain rules will never be broken:
• Data leads to an audience, which then leads to revenues. That’s the
“Data First” rule.
• In terms of volume, data is greater than traffic, which is greater than
revenues. It is possible for a company to generate millions in sales with a
very limited audience and even less content – like what happens in the art
market, for example – but it’s an exception that only reinforces the rule. That
is, the “More wins” rule.
Using these numbers and indicators, it becomes easier to define
improvement goals and, ultimately, your target position.

Use your target position to draw
the first triangle.
The centre of the triangle
represents the bottom (0) of the
scale that you’ll be defining for
each of the three axes that you’ll
be grading.
Plot points on each of the three
axes to create an equilateral
triangle that represents your
target position.
Target position
10.15K UVs/article/m
06/06/13

Using the same scale, draw your
current position as another
triangle. This triangle will not
have equal sides, as this is your
current reality.
This will help you to better
understand your business
priorities.
Internal communication is
facilitated. Meanwhile
collaborators can more easily
appropriate the challenges that
need to be faced and visualize the
company’s three big operational
objectives in terms of revenues,
traffic, and data.
PÖL Digital Inc. - Modelingyour digital strategy - poldigital.com 8
Current position
06/06/13

Stage 2 – Adding your financial information
As with the new economy triangle, you’ll be illustrating your current position and your
target position, this time using circles to illustrate the three types of data:
• Operational expenditure (OPEX)
• Capital expenditure (CAPEX)
• Profits (EBITDA)
06/06/13

Step 2 – Adding your
financial information (cont.)
The first three lines represent the data for
the triangles you drew in Step 1.
The first action consists of breaking down
your budgets, investments and profits in
a simple table (like this one).
To do so, you must ask yourself a
question about how your budgets and
investments are being distributed in light
of your data, traffic and revenue goals. Is
the budget being effectively used? Is it
enough to help you reach your goals? Will
the forecasted investments help you
obtain a competitive edge, or are you still
just reacting to what your competitors
are doing?
While observing the target situation,
define your budget breakdown by
allocating percentages to each budget
line. Then, you will adjust K$ based on
your reality.
Strategic plan
06/06/13
Current position Target position
K$ FY % FY K$ FY % FY
Data (articles/yearly) 1,956 100% 3,900 100%
Traffic (K UVs/yearly) 27,600 100% 39,600 100%
Revenues (K$/yearly) 3,300 100% 5,400 100%
OPEX 3,105 100% 4,430 100%
Sales 700 22.5% 900 20.3%
Customer service 150 4.8% 400 9.0%
Marketing 400 12.9% 1,000 22.6%
Production 880 28.3% 900 20.3%
IT 600 19.3% 700 15.8%
Finance 150 4.8% 210 4.7%
Admin 150 4.8% 210 4.7%
Legal 75 2.4% 110 2.5%
EBITDA 195 5.9% 970 18.0%
CAPEX 150 4.5% 450 8.3%

Step 2 – Adding your
financial information (cont.)
Now add circles to integrate your
financial data with the triangles.
For your OPEX, use the scale you defined
for the revenues axis. The diameter starts
at the centre and moves towards the
amount that corresponds to your existing
operational budget for your current
position. If you’re in a deficit, your
triangle will be contained within the
OPEX circle. If you’re making a profit, it’s
the other way around.
For your CAPEX, again, use the scale you
have defined for the revenues axis, but
your point zero for the diameter will start
outside the OPEX circle.
Place your profits in the centre of the
triangle, also using the revenue scale. If
you’re making profits, colour the circle
green. If you're in a deficit, colour this
inner circle red.

And, voilà!
Your model is ready! You can now
share it with other decision makers in
your company and make any necessary
adjustments.
I use this model to re-calibrate existing
digital projects and for the strategic
and budgetary planning of new
projects.
It cannot fully reflect all dynamics
within a company, but it does provide
an overview that will enable you to
identify and communicate the main
guidelines of your digital business
strategy.
Current position Target position
K$ FY % FY K$ FY % FY
Data (articles/yearly) 1,956 100% 3,900 100%
Traffic (K UVs/yearly) 27,600 100% 39,600 100%
Revenues (K$/yearly) 3,300 100% 5,400 100%
OPEX 3,105 100% 4,430 100%
Sales 700 22.5% 900 20.3%
Customer service 150 4.8% 400 9.0%
Marketing 400 12.9% 1,000 22.6%
Production 880 28.3% 900 20.3%
IT 600 19.3% 700 15.8%
Finance 150 4.8% 210 4.7%
Admin 150 4.8% 210 4.7%
Legal 75 2.4% 110 2.5%
EBITDA 195 5.9% 970 18.0%
CAPEX 150 4.5% 450 8.3%
Strategic plan

Questions?
Would you like to know more about this model or provide any feedback? Contact me!
fred@poldigital.com
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