4 Digital Principles

The 4 Elements
The 4 Elements

Here are a couple basic digital principles I try implementing whenever I head a digital group.

1.  Strategy integration

This is a concentrated effort to involve digital at the brand strategy and messaging level. A simple multichannel plan detailing what the optimal channels are and messages to reach the target audience is usually enough to provide some perspective and understanding.

2. Marketing automation

We ask : how can we leverage technology and automated processes to build efficiencies and eliminate redundancies and errors? This might include project management softwares and reporting, campaign tracking or implementation of holistic technology frameworks.

3. Analytics and performance

This one is a no brainer. Most agencies have some sort of analytics and performance KPIs. The emphasis should be put on creating top level dashboards, finding direct causation between the low level analytics and business KPIs and, of course, in building process cycle that will allow agile optimizations.

4. Actionable Innovation

Innovation is one of those words that doesn’t mean anything anymore. Whenever talking about innovation we should always ask “So what?”. What will the business impact be? How much will it cost? What is the ROI? Is this really innovative? Does it generate a competitive edge?

In order for an agency to thrive and be innovative, a simple innovation framework is usually implemented.

i. opportunity identified
ii. alignment with brand objectives
iii. detailed landscape and technology assessment
iv. innovative opportunity business model
v. integration with client workstreams

These principles are usually used as a soundboard to ensure we’re always on the right track.

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The 1001 Meanings of Digital Strategy

Conquering the known world
Conquering the known world [From the awesome http://www.ancient.eu ]
We’ve heard it over and over again. Everybody and their brother is a strategist (the digital ones are the worst. just kidding, the social media ones are the worst :)).  Usually in the business world when one doesn’t understand a competency he or she will add “strategy” after it.

Digital strategy can be interpreted in a myriad of ways.  Taking it from the top we have the digital business strategy.

A business model is just a mechanism that defines how a business can live and thrive. When we’re considering digital as an element of that business model we’re dealing with digital business strategy (the IT function is usually very involved at this level).

Digital Business Strategy answers questions like:  Can we use digital and technologies to optimize the business model? How does digital impact different business practices (sales, marketing, hr, production, etc)? 
In terms of KPIs: increase in sales, decrease of marketing and HR costs, optimized production, etc.

Digital marketing / brand / product strategy is somewhere below this. The marketing function supports sales, business positioning, and other good things.

Digital marketing strategy answers questions like: How can digital marketing improve the business marketing function? Integration with the multichannel marketing? Consumer engagement models? What digital marketing programs can be implemented? How do they relate with current marketing programs? 
In terms of KPIs: increase in consumer reach, brand equity, sales, community size, community engagement %, etc. These should be tied into the digital business strategy KPIs. 

What about digital strategy?

At this level we find the most common usage of digital strategy. Often is it brand related and specific to a program, project or campaign.  Here, the brand/creative/multichannel strategies are already defined and/or planned. The remaining questions have to do with the digital execution of the multichannel plan and it is very tactic specific.
For instance we can ask: How can digital support the multichannel plan? What are the few principles that will drive our digital tactical planning? Which are the best platforms to leverage? How much weight should we give to specific digital channels?
The KPIs are pretty much the standard digital KPIs: reach, engagement, channel or platform usage, etc. The details of these KPIs are provided by the supporting tactics.

Hope this helps clarify some misconceptions.

And of course, no strategy is worth the paper it’s written on, unless it is supported by a consistent tactical planning that ties in its KPIs with the business and brand’s objectives.

Digital Business Strategy vs Digital Strategy

Hiding things
Hiding things

Here is a good Linkedin conversation about Digital Business Strategy and Digital Strategy.

My take on the issue: Digital Strategy is just a tactic of Digital Business Strategy.

Digital Business Strategy answers questions like:
Can, and how, Digital optimize the business model?
How does Digital impact different business practices (sales, marketing, hr, production, etc)?
In terms of KPIs: increase in sales, decrease of marketing and HR costs, optimized production, etc.

Digital Marketing Strategy answers questions like:
How can Digital marketing improve the business marketing function? What are the channels?
Consumer engagement models?
What digital marketing programs can be implemented?
How do they relate with current marketing programs?
How can we market the product on the Digital space? etc.
In terms of KPIs: increase in consumer reach, brand equity, sales, community size, community engagement %, etc.

How Deep Is Your Love? or About Building Advertising Business Cases

Sometimes communicating is repeating. So here we go again trying to make an argument for building business cases in advertising. (You might know that I’m a big fan of P. Drucker’s down to earth and common sense business approach.)

MEASURE IN ORDER TO MANAGE

Any business operation must be measurable. Including advertising. But I’m not talking about putting numbers on a pretty dashboard.  Those actionable KPIs must always be the result of a specific business case.

A business case is a simple walk-though justification of the business objective that generated the advertising operation.

As a digital business planner you need to learn to help your clients to derive the right KPIs from their business objective. This is why it is imperative that you start by defining the right business case. (You can see an example of a business case here.)

CLEAR BUSINESS OBJECTIVES

Some business objectives are easier to measure than others. (more on business objectives here)

For instance: increasing sales, increasing the customer satisfaction can easily be supported by very simple KPIs (e.g. from 12% to 18%, etc).

However, some advertising objectives sound as if they came from a graduate level social engineering course: e.g. Changing consumer behaviour

Whenever faced with these kinds of demands, we can always translate them into a specific business objective. Exactly how do we want to change the consumer behaviour? By how much? etc.

After analysis, you should be able to define the value to be created by the specific business objective. The business case will present a path to profitability if that business objective is attained.

EXAMPLE: A CLEAR BUSINESS OBJECTIVE

Business objective: Increase from 7% to 14% the use of a smartphone while watching TV.

Reasoning for the business case: By increasing by 100% our customers’ use of smartphones while watching TV we can increase their engagement with the brand by 10% and also the download of our custom TV watching app by 200%.
The 10% engagement increase will generate $X in customer loyalty and decrease in attrition rate by 3%,  +4% social media equity and +5% in customer recommendations, etc. This will result in a cumulative revenue increase of $YM over the next 3 years.

You always need to know why you are doing a specific operation and analyze all the pertinent details.

Once the Business Objective is set up we follow the previously discussed process:

Business Objective -> Business Case -> KPIs / Metrics -> Program Maturity Model -> Prerequisite Programs -> Planning

So the conclusion to take away as an advertising planner is that you should always be able to justify your advertising initiative with a business case. And that business case has to support the business objective.

Next I’ll talk about Data and Digital Strategy.

I’mma Let You Finish: A Digital Business Planner Sequence

Magic mirror on the wall who's the digital plannerest of them all
Magic mirror on the wall who’s the digital plannerest of them all

Digital Business Planning Review

So far I’ve been trying to make the following points:

  1. The digital / social media planner and strategist role must have a very strong business component (metrics, analytics, and general business model understanding).
  2. Any strategy must support a business objective with clear KPIs
  3. Plan for one business objective at a time
  4. The above KPIs must result from a business case
  5. The execution of a business objective is subject to a series of prerequisite strategic programs

Simple Sequence

Business Objective -> Business Case -> KPIs / Metrics -> Program Maturity Model -> Prerequisite Programs -> Planning

Case Study

From the previous example:

Business Objective

Increase the Customer Recommendations by 20% in the next 12 months.

Business Case

Customer base: 600 000
Customer annual value: $1 000 (Annual revenue $600 000 000)
Customer annual net profit: $200 (Annual profit $120 000 000) (20%)
Customer annual churn: 30%
Current recommendation rate: 20%
Recommendation conversion rate: 50%
On average a customer recommends 2 people.

A 20% increase in recommendations (from 20% to 24%) = 4% increase in total recommendations at a 30% churn rate, both cumulative over 3 years = 53.5K customer years

So the increase program will generate in net profit of $10.7M over 3 years.

Determine a budget based on previous programs. Say $1.7M over one year.

KPI / Metrics

Increase by 24K new consumer recommendations for a $1.7M budget.

Program Maturity Model

Determine the maturity level by assessing the quality of current digital programs.

Let’s assume the client program review reveals the following programs maturity:

Digital business model and objectives – Level Advanced (needed Advanced)
Digital analytics & monitoring – Level Basic (needed Advanced)
Digital and social media framework strategy and implementation – Level Advanced (needed Advanced)
Social media policies & governance – Level Advanced (needed Advanced)
Community building and engagement – Level Basic 8% (needed Advanced 12-15%)
Social CRM – Level None (needed Basic)

Prerequisite Programs

Based on previous analysis here are the necessary programs needed to execute the business objective in a single strategy.

  • Implement a more advanced digital analytics & monitoring solution
  • Increase the community engagement from 8% to 12%.
  • Implement a Social CRM

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Now you’re ready to do the planning. And you have 3 new programs to implement…. And only $1.7M… Get ready to build more business cases and negotiate.

You cannot commit to the required business objective with deficient prerequisite programs. 

More soon. Would love to hear from you, does this make sense to you?