Challenges and Solutions for Marketing in a Digital Era

The new digital era comes with a lot of challenges for marketers, since a lot of digital marketing includes new technologies. An example of this is that more than 50% of the users on different social media follow brands and companies. Managers react to that and invest in social media by creating for example brand pages. These brand pages have a positive effect on worth of mouth advertisement and loyalty. Unfortunately social media also creates difficulties, since managers do no longer control everything that is used in the marketing campaign. People can more and more react in both positive and negative way. Therefore social media creates more empowered customers, which will increase customer engagement.

Marketing tools now and in the future

Different marketing tools are used now, and some are used more than others. Right now both the companies homepage and e-mail communication will be used the most, where as many other channels, like Mobile applications, natural search, and paid banner ads are only used relatively little. Social media sites are now somewhere in the middle.

The use of these channels will shift over time. Within the next two to four years, e-mail communication and the company’s homepage will only be used moderately as a companies digital media tool. Additionally, social media and mobile applications will increase enormously, and will be the center of all digital marketing tools. At the same time the tools that are used only little now will mostly only be used little then. Very small shifts can be identified for those.

Tensions in marketing

Within this digital era, different marketing tensions may be identified, which can be placed in to 3 categories:

Business strategy and customer insights.
Go-to-market operations and execution
Organization and capabilities.

The analyzed tensions will be discussed below and afterwards the importance will be brought to light.

Business models in the digital revolution

A business model describes how a company creates value that it will provide for the customer and in that way creates economic profits. When changing these models this also affects value creation, value appropriation and its underlying strategies.

Even though most of the companies’ sales are generated for only 5% or less on the Internet, digital marketing is a big and increasing force in transforming business models.

Due to the increasing effects and importance, digital marketing tools and technologies must be better integrated within a company’s strategy and business model.

Customer insights

The digital marketing world also created deeper customer insights, which have become a big challenge but also create huge possibilities. With the use of big data it is possible to follow customers during their customer journey. Additionally, the efficient tracking of these customers is a key value in optimizing advertisement campaigns. Those companies that have these big data and know how to deal with this are said to outperform their competitors. Despite this increase in the relevance of these big data, it also causes problems, since it is hard to cope with them in the right way. Problems such as their size, lack of structure and missing data are difficult for companies to cope with.

Creativity and innovation

A result of using this big data is that creativity and innovation may be edged, where this might not always be the desirable result. This is because more decisions are more based on facts than on breaking innovations and out-of-the-box thinking. This might cause creative and innovative people to step out of those companies and for example start for themselves.

But is has been proven that although creativity and innovation are reduced, this does not proof that there are no innovations anymore. Since big data may also be an important source in creating innovations. Problems that came up by using big data can now be used in finding solution through innovating ideas.

Brand value and social media

As already said before, within social media it is hard to control the influences that people receive, since people can also affect each other by sharing their experiences with the firm or product. This results in differences between types of social media. Resulting in:

Customer-initiated social media: reviews, blogs, ratings
Firm-initiated social media: brand communities, ads

The danger considering the first is that people can quickly become brand-destroyers instead of brand-creators when publicizing negative things. Especially for stronger brand this is a big down side. When you already have a strong brand, the danger of someone destroying it is bigger than the quite small possibility that a person actually increases brand awareness and value.

Online targeting

When targeting potential costumers online it is important to create different tools to address different groups of customer. Where most people for a long time thought that old people where online less than younger people, they have become approximately similar, and they are still the fastest growing group. Though it must be said that older people have more difficulty using the online channels and see more barriers.

Old consumers may be best addressed through a mix of both online and offline advertisements.

Price transparency

Price transparency has increased, and the results have become more and more visible. Prices of insurance companies that are available on comparison webpages have decreased, but at the same times the prices that are not visible on those sites have staid the same. Though the results are clear, firms do not consider this an important challenge.

These increases in transparency mostly create possibilities for those firms that have succeeded in the recreation of their business models as mentioned above, so that they can create the best value to their customers. Especially in the acquisition of new customer this will help them more.

Automated interactions

Interactions between companies and their customers are automated more and more. This brings opportunities for cost savings, but at the same time creates risks to costumer’s satisfaction. This mostly results from people that feel like they are forced in to using these new channels, where they are used to doing it the other way and feeling more comfortable with doing so. But on the contrary, retail bankers have shown that there are many good results and increase like retentions, product penetrations, customer lifetime value and profit per customer.

Online metrics

The biggest problem with online metrics is that it is hard to quantify the financial impact on the business; it is hard to understand what exactly is measured, that they are hard to compare with traditional metrics and they do not say anything about relevant behavioral aspects of the customer. This is especially the case for social media.

A new proposition is using ‘mindset’ metrics, also defined as consumer metrics. They can be used to compare the effectiveness of both traditional and digital channels and also create a metric that make it possible to compare them to financial outcomes. Mostly used is the last click method, but this represents to little about the customers compete journey and thus is less relevant.

Talent gaps

The unlimited possibilities that firms have using digital marketing are impossible to address all, since it has become clear that there are to little people capable of coping with it. The best solutions for these problems are outsourcing these tasks to partners who do now how to handle it and have the resource to do so. Another way is to include these capabilities as a requirement for all new hires. Additionally it is a possibility to hire special people to do these tasks or create a specific department for it.

This also influences business schools that currently focus on qualitative reasoning, with limited focus on quantitative decision making.

Organizational changes

Since digital marketing has become more and more important and present, it is needed to design organization in a different way. (Digital) marketing should be integrated completely and managed across functional boarders.

All challenges mentioned above may be formed in to four major marketing challenges, namely: