Beware The Digital Disconnect
Giulia Lina Callegari and Henry Middleditchon 16 July, 2014 at 06:07
“We are like puzzle pieces who are perfectly suited to make a giant picture together, but we are assembling ourselves in the dark.” Vironika Tugaleva
There’s no doubt that ‘digital’ has changed the way we do business. Smartphones and social networks have transformed how consumers live, communicate, search for information and shop. But there’s a disconnect between the speed at which consumers are adopting new technologies, channels and devices and the rate at which businesses are adapting to keep up.
The latest study from Deloitte in the US says digital interactions influence 36 cents of every dollar spent in the retail store, an eye-watering $1.1 trillion. By the end of 2014, that number will climb to 50%, or $1.5 trillion of total store sales. And yet, many companies are still using marketing strategies and route-to-market channels from pre-digital times.
Russell Reynolds Associates and OgilvyOne carried out a collaborative project to ask APAC market and industry leaders to explain their position, approach and implementation of digital. The questions provided insight into topics ranging from advertising, CRM, social and eCommerce to resources, integration and governance.
The data and insights gathered, alongside global research from IBM, Deloitte Digital and McKinsey, is helping us to explore and understand this digital disconnect.
1)Many Uncertain Returns
A 2014 OgilvyOne & RRA ‘Digital Disconnect Survey’ across APAC revealed that 65% of brands have no clear ROI framework for social activities and only 6.9% are confident that big data and analytics can help ROI.
Whilst measuring ROI is fundamental, there’s a danger of clouding the bigger picture. Big data and social shouldn’t be undertaken tactically – but as part of a greater business or marketing strategy, contributing to a greater ROI metric. What’s more, when the issue is that brands are one step behind the consumer, better understanding the consumer through social and big data will close the gap and ensure survival.
2) The Ins and Outs of Online to Offline Integration.
Budgets are being moved into digital from traditional media, but increasing only the paid media component in digital isn’t the answer. Marketers should focus on building their owned media assets to build stronger bonds with consumers.
Amid the subtleties and quirks of consumer behaviour, there’s one obvious development: the merging of online and offline. Digital has become firmly embedded in the consumer journey, before, and after the point of purchase. Brand strategy needs to react and yet, 76% of respondents to the Digital Disconnect Survey spend less than 20% of their budget on digital; only 5% say they’ve achieved full integration between online and offline channels. Internally, the greatest challenge is getting everyone on the same page.
3) Creating Content that Connects
Content marketing is now a well-established buzzword and brands know they must do it; great videos, articles and news aren’t enough. Time, effort and resources are being wasted by failing to produce relevant content for targeted consumers.
To up their game, brands should be leveraging search intent modelling and consumer research, while understanding the consumer journey through digital. Only then will relevant content reach attentive consumers.
4) Talent Shows
The other issue companies face is how they manage the brave new world of online and offline content and connections. Most marketing departments are built around old world channels and campaigns. Organisations that can rapidly change to focus on relationship and brand building, will have a significant competitive advantage. In addition, senior leaders need to learn about the new platforms and listen to a new generation of digital native marketers.
A lack of talent was mentioned by 85% of respondents to the 2014 Digital Disconnect Survey as being the greatest barrier in the way of a robust digital strategy. The CEO of a major hotel franchise noted, “Digital talent leaves the company because they get tired of saying the same thing over and over again and management doesn’t listen.”
Given that 65% are dissatisfied by their current digital efforts, retaining talent is crucial especially when considering how digital has spawned new branches of business such as budget airlines and AirBnB.
5) Every Cloud has a Silver Lining
McKinsey have reported digital advertising is likely to be the fastest growing category over the next five years with a projected 14.7% CACR to 2017. Asia has one of the highest y-o-y increases in internet media spend, second only to South America. But investing in digital simply isn’t enough. Brands must integrate digital if they want to connect with the modern consumer.
Note from authors: special credit to Henry Adams for his excellent editing skills on this piece.