Recognize the Importance of Digital Marketing

[Pages:7]Gartner for Marketing Leaders

Recognize the Importance of Digital Marketing

Laura McLellan

Vice President, Gartner Research Gartner for Marketing Leaders

Lead Author

Laura McLellan Vice President, Gartner Research Gartner for Marketing Leaders

Laura McLellan serves CMOs and other marketing executives, sharing how digital strategies are being integrated with traditional marketing. With an extensive background in marketing and information technology services, she helps CMOs understand how companies are using digital marketing technology and marketing services to improve business results.

Top 5 Issues That I Help Clients Address: ? How should the CMO adjust the vision and strategy of marketing to embrace

digital marketing? ? How much is being spent on digital marketing, by whom and on what? ? How should the CIO and CMO work together in digital marketing and other

technology-related areas? ? How should the marketing organization be structured to embrace traditional

and digital marketing? ? How is the role of the CMO expanding?

Additional Analysts

Jennifer S. Beck Vice President, Distinguished Analyst and Gartner Fellow Gartner Research Gartner for Marketing Leaders

Richard Fouts Vice President Gartner Research Gartner for Marketing Leaders

Julie Hopkins Director Gartner Research Gartner for Marketing Leaders

Michael McGuire Vice President Gartner Research Gartner for Marketing Leaders

Andrew Frank Vice President Gartner Research Gartner for Marketing Leaders

Adam Sarner Director Gartner Research Gartner for Marketing Leaders

Bill Gassman Director Gartner Research Gartner for Marketing Leaders

Jake Sorofman Director Gartner Research Gartner for Marketing Leaders

Yvonne Genovese Managing Vice President Gartner Research Gartner for Marketing Leaders

Allen Weiner Vice President Gartner Research Gartner for Marketing Leaders

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Recognize the Importance of Digital Marketing

Published: 22 August 2012

Analyst(s): Laura McLellan

Many CMOs are well along the path to integrating digital marketing techniques and technologies into their organizations. Gartner provides validation from marketing leaders that investments in digital marketing do pay off.

Analysis

Digital marketing techniques and underlying technologies are having a profound impact in marketing investment priorities, budgets, organizational structure, skills and processes. Digital:

Forces organizations to rethink their relationship with customers at every stage of the buying process, from research to transactions.

Promotes a marketing-led cross-organizational dialogue and efforts to improve customer experiences.

Drives marketers to rethink what technologies their organization requires, those it desires and how to best acquire and manage them.

When digital technologies facilitate breakthrough enhancements to marketing processes and customer experiences, marketers, their organizations and customers win. Yet far too many digital marketing activities are one-off or stand-alone initiatives that are not part of a comprehensive strategy and are not measured against business goals. The purpose of this research is to share a broader view of digital marketing's importance.

What Drives Digital Marketing Investments Today (and It's Not ROI)

A majority of marketers that we interviewed, 54%, invest in digital marketing because they believe it's key to their competitiveness. But they are not certain of the return on their investment. For that survey, which took place in April 2012, we interviewed 98 marketing executives in companies with revenue greater than $1 billion, and who had or were considering a digital marketing function. We asked the executives: "Thinking about digital or interactive marketing, its potential impact, and the investment required to participate in the space, which statement best describes your organization's position?"

Figure 1 shows that another 42% of companies did see the ROI and were investing for the same reason -- to gain an early advantage. Only 4% of companies did not know if there was strategic value, but were investing to test the impact.

Figure 1. Position on Investment and Impact of Digital Marketing

4%

We believe that digital or interactive marketing is important, but we do not know whether there is strategic value and are putting a toe in the water to gauge its impact and ROI.

54%

The ROI of digital or interactive marketing is cloudy, but we are investing because we believe it is strategic to our competitiveness.

Source: Gartner (August 2012)

42%

Digital or interactive marketing is strategic to our competitiveness, we understand the ROI and we are investing to get early advantage.

What Will Drive Digital Marketing Investments Tomorrow

Figure 2 shows that 75% of respondents believe digital marketing will be very or extremely important to the overall success of their organization -- not just marketing, but their company -- one year from now and even more believe the same to be true two years from now. We asked marketing executives: "How important is the use of digital or interactive marketing to the overall success of your organization today, 12 months from now and 24 months from now, on a scale of 1 to 7, where 1 is not at all important and 7 is extremely important?"

Percentage of Respondents

Figure 2. Sizing Up Digital Marketing's Importance to an Organization's Success

Very or Extremely important

75%

89%

48%

Today

Source: Gartner (August 2012)

In 12 months

In 24 months

What Activities Digital Marketing Helps to Succeed

Then, we asked marketing executives: "Rate how important your organization's digital or interactive marketing strategy is to the success of each of the following, on a scale of 1 to 7, where 1 is not at all important and 7 is extremely important?"

The top answer? Brand building and differentiation, as shown in Figure 3. Next on the list: customer communication, which is becoming a real-time activity. Understanding customer satisfaction ranked high, too.

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Figure 3. Where Digital Marketing Helps You Succeed

Brand building and differentiation

Consumer communication

Understanding customer satisfaction with your product

Shop-ability: Improving the ability for the shopper to find and select your product

Gathering product or services innovation insights

B2C sales relationships (brand to consumer)

Services associated with your product to drive differentiation

B2B sales relationships

Not at all

important 1

2

3

Source: Gartner (August 2012)

Mean 5.9

5.5

5.5

5.0

5.0

4.9

4.8

4.4

Extremely

4

5

6

7 important

Digital Technologies and Services That Contribute to Success

In May 2012, Gartner conducted additional research -- this time, it was a Web-based survey with 251 marketing executives who support marketing in U.S. and European companies, and were buyers or influenced the purchase of digital marketing applications technology and services.

We posed the question, "Which of your organization's 2012 marketing strategies are most important to its success?" to only the marketing executives.

Figure 4 shows the top five responses, which include: strengthening the brand across all channels (29% of respondents) and improving the customer experience (25%). The next two responses are a mix of techniques and results -- better using marketing technology and services, and accelerating speed through real-time analytics and rapid response. For more information about the requirement for marketing to act in real-time, see the Recommended Reading section.

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Figure 4. 2012 Marketing Strategies Most Important to Success

Strengthen brand across all channels

29%

18%

11% 57%

Improve the customer experience

25%

16%

14% 55%

Better utilize marketing technology/services

11%

15%

12% 38%

Accelerate speed (real-time analysis & rapid response)

11%

13%

10% 34%

Embrace social media

3%

9%

18%

Result

Technique

Source: Gartner (August 2012)

Most important

30%

2nd most

3rd most

The results from our two surveys show how brand building and improving customer experiences are highly important to two different groups of marketers, underscoring the impact that digital marketing has on these marketing objectives.

Where Increased Investment in Digital Marketing Technologies Are Planned

For our May 2012 survey, we asked the 251 marketing executives plus another 261 IT managers who support marketing: "What are your company plans for investing in the following digital marketing areas over the next 12 months?"

Mobile and tablet applications ranked highest for first-time investments as Figure 5 shows.

In addition, the majority of those participating in the May 2012 survey said they will increase their investments in social media, mobile applications, CRM and customer analytics over the coming 12 months.

For the most part, companies anticipate making only small cuts in marketing technology investments. Spending on email marketing and dashboards are two areas that are more likely than others.

Some significant differences exist between U.S. and Europe, by company revenue size, and by marketing versus IT respondent. Look for upcoming research with more details from this Gartner

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survey of 512 marketing and IT managers (80% B2B and B2C end-user companies and 20% hightech providers).

Figure 5. Planned Digital Marketing Investments, Next 12 Months

RANKED BY PLAN TO INCREASE

Social media 11%

Mobile applications 15%

CRM 7%

Customer analytics 6%

Tablet applications

18%

Content management 7%

Collaboration tools 10%

Predictive analytics 11%

Campaign management 8%

Search engine optimization 9%

Email marketing 9%

Single view of customer 11%

Score cards or dashboards 10%

Reputation management 8%

61% 58%

54% 51%

48% 47% 45% 43% 42% 42% 40% 36% 33% 32%

% Currently Investing

18% 3 7% 93%

17% 2 8% 92%

32%

3 4% 96%

35%

3 5% 95%

20% 3 11% 89%

38%

2 5% 95%

35%

2 8% 92%

32%

3 11% 89%

38% 36%

4% 8% 4% 8%

92% 92%

35%

8% 8% 92%

36%

3% 14% 86%

40%

6% 11% 89%

41%

4% 15% 85%

Source: Gartner (August 2012)

1st time investment

Increase

No change

Decrease

No plans to invest

Conclusion

CMOs and digital marketing leaders who want to learn how their efforts compare with those of their peers can look to upcoming research from Gartner for Marketing Leaders. We'll track digital marketing spending and impact. Extracts such as the one contained in this note will be offered on a regular basis; longer analysis with findings and recommendations will also be shared. If you would like to learn about the differences in responses by respondent demographics on all research results, we invite you to contact to the author.

What to Do Next

Allocate a percentage of your budget for emerging digital marketing technologies and techniques -- and don't be afraid of failure -- within limits.

Build in processes to test and measure digital marketing results -- from pilots and ongoing operations -- so that you'll have supporting data if you need to kill a project or justify additional funding.

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Communicate the importance and success of digital marketing in four ways:

One that mirrors your CEO and board of directors' top priorities, such as business growth, customer attraction and retention, and increased competitiveness.

One that crosses functional boundaries and addresses sales, marketing and customer service at minimum, possibly lines of business and other functions such as product development and HR.

One that maps to key elements of your marketing investment strategy, such as brand strength, sales campaigns and customer experience.

One that focuses on marketing tactics.

Recommended Reading

"Three Ways to Adapt to a World That Rewards Speed"

"Using Digital Marketing to Differentiate Yourself from Competitors"

"Ensure Emerging Trends and Technologies Advance Your Marketing Strategy"

Evidence This note is based on two Gartner primary research projects. In April, 2012, we conducted phone interviews with 98 marketing executives in U.S.-based companies with revenue greater than $1 billion, who had or were considering a digital marketing function. In May 2012, we conducted a Web-based survey of 512 executives (divided between marketing and IT managers), in the U.S. and European companies who were buyers or influenced the purchase of digital marketing applications technology and services.

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Why Gartner?

Gartner helps companies improve their business results through the use of technology. Our independent research and advice is trusted by business and technology leaders in 13,000 organizations around the world.

Our experienced research analysts talk to marketers every day -- from those just entering the digital realm to the innovation trailblazers. These interactions capture real challenges, best practices and what is critical for success.

Gartner provides marketers with the research, data, tools and expert advice to rapidly deploy, optimize and measure digital technologies and coordinate diverse marketing programs into a strategy that drives results.

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