The Boston Consulting Group (BCG) on New Digital Marketing

Written by Adelina Chelniciuc on December 21, 2010. Posted in Articles, Strategy

To enrich the picture on new marketing realities that we have tackled in several previous blog posts, we discuss the insights from the Boston Consulting Group (BCG) outlined in the report called The CMO’s Imperative. Tackling New Digital Realities. As its title suggestively indicates, the report presents the main recent developments in the practice of marketing enhanced by the new digital media (such as social media or mobile advertising), based on the results of The BCG Future of Marketing and Advertising Study, 2010. The research was conducted as a combination of quantitative survey of marketing executives (56 respondents), one-to-one interviews (45 conducted) and benchmarking and the report is the second release in BCG’s publication series Marketing in the Digital Economy.

Analyzing the status-quo in the global marketing environment, several aspects have been revealed (BCG, 2010), these also being the premises that drive the CMOs’ decisions and strategies:

The new digital media enhances a new type of communication with the customers, that shifts from the centrally created, custom-crafted broadcast messages to highly interactive dialogue;
The same digital media also comes with an enormous volume of marketing vehicles and tactics, as shown below:

In this context, it is quite obvious that companies will increase their spending on new digital media, also focusing more on internal spending (on people and technology) to support their digital media efforts and communication, rather than on external spending on media purchases. More than 90% of the respondents plan to increase their spending on social media, Internet and mobile advertising over the next 3 years. The arguments rely on the benefits associated with these new digital media techniques (BCG, 2010):

Scale – delivering sufficient reach within the target audience;
A better targeting (enabling context-driven or location driven targeting, using far more variables than the simple demographics);
Measurement and better modeling of the Return on Marketing Investment.

It was also found that companies have been extremely quick in adapting new digital media tools such as social media, blogs or viral videos. Platforms like Facebook (with 500 million users) and Twitter (about 100 million) have been mentioned by almost all companies surveyed as being used (BCG, 2010). An interesting situation is with mobile advertising, which despite being largely used in Japan or South Korea, in US and Europe is considered by marketers as the medium “whose success is always around the corner, yet never quite arrives”. Thus, the research revealed that mobile advertising has accounted for less that 2% in the marketing budget and has been the first victim of budget cuts (BCG, 2010).

Although the benefits of digital marketing are quite obvious for nowadays’ marketers, several limitations still remain. It is still hard to excel at planning and budgeting, as the relative effectiveness of marketing options is difficult to assess. Moreover, it is hard to decide which digital marketing activities to outsource and which to manage internally, to achieve the best combination of the two in terms of effort and outcomes. However, to overcome these limitations, the BCG study comes with a top-ten recommendations list, among which (BCG, 2010):

Articulate an integrated marketing strategy;
Set minimum digital investment and incentives for experimentation among marketers;
Use an integrated model to asses ROMI across all marketing vehicles.

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