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discussion paper #1/2015

LAYING THE FOUNDATION FOR SUCCESSFUL DIGITAL GROWTH

DIGITAL LEADERSHIP

Intro

2 globeone | Digital Leadership

At globeone, we are your sparring partner for developing digital leadership. We believe in good process, thorough research, and a hands-on spirit from strategy to implementation. With this discussion paper we want to show the importance of digitalization for businesses and how globeone’s tools – ‘Digital Performance Leadership Measurement’, ‘Digital Consumer Journey’ & our ‘Corporate Website Evaluation Model’ – can help you exploit it. This means embarking on a journey to discover the untapped digital potential and customer segments. At globeone, we believe that this journey will be a fruitful one.

3 globeone | Digital Leadership

Digital Future – now only the tip

of the iceberg

People tweet, like, upload, download,

create and share millions of

information in the digital sphere. At

any time around the world people not

only talk about their personal life, but

also about products, brands and

companies. As of 2014, global social

media penetration reaches 26%,

internet penetration 35% and mobile

phone penetration 93% .1

The digitization trend is fundamentally

affecting companies ’ environment, in

particular the way in which they

interact with their customers.

Consumers are much more

demanding, more empowered and

require personalized interaction.

For the past decade, companies have

started to adjust their business

models to the new era of digitalization,

recognizing the importance of this

trend. Nevertheless, few of them have

been able to keep up with the ever

changing demands for an excellent

digital experience. Technology

continuously evolves, and with that

consumers’ expectations. Winning over

and keeping the new ‘always-on’

consumer has become the business

imperative at the digital frontier.

every single second …

2,000,000 searches

570 new websites

690,000 shared items

275,000 $ spent online

100,000 tweets

47,000 app downloads

3,600 pics

93 hours video posted

Source: globeone research, 2014

China – the land of digital

opportunity:

While the rest of the world

is still rather reluctant

towards intensive online

exchanges with brands,

Chinese are at the forefront

of doing so.

66% of Chinese social media

users follow a brand.

8 brands on average.

80% care about commercial

information spread on

social networks. Source: China Internet Network Information Centre, 2013

Global mobile payment transaction value US$ in bn

Source: Statista, 2014

globeone | Digital Leadership

Impact on society – the ‘always-

on’ consumer

Digital has had and continues to have a

huge impact on how customers behave,

communicate and ultimately make

purchase decisions. US consumers

spend an average of about 10 hours a

day with all kind s of media. Nearly 60%

of that time is dedicated to digital

media, thus surpassing TV viewing

time.2 In fact, users do not just watch

TV anymore – they are online on a

number of devices simultaneously. The

number of the world´s internet users is

constantly growing, with China

representing more than 42% of the

total – with over 550 million users.3

For marketers, and especially for

advertising and media buying agencies

this creates new challenges. To reach

the multitasking, screen agnostic

customers, multiscreen campaigns have

grown to become a vital strategy.

The e-commerce market has been

experiencing a spectacular growth in

recent years. The B2C market grew by

17% in 2013, reaching a value of US$

1.2 trillion.6

Global ad spending 2013 reached US$

503 billion, with digital accounting for

20%.4 Analysts see a steady growth of

digital ad spending of 8-10% on a global

average, with mobile growing even

faster.5

Digital trends have a large impact also

on the way customers purchase.

Integration between in-store, online

and mobile channels is highly valued by

consumers, as they can maximize their

shopping convenience.

4

Chinas ‘Single Day’ in 2013

recorded US$ 5.75 billion

sales. Bigger than sales on

Cyber Monday.

China’s e-commerce is

expected to double within

the next two years to more

than US$ 400 billion.

Source: Forbes, 2013; BrandChannel, 2013

With total sales of US$ 420 billion,

North America was the largest

e-commerce region– however, it is

expected that Asia will become the

biggest contributor in 2014, with a total

spending of US$ 502 billion.7

While for B2B businesses corporate

websites and product websites are still

most relevant to engage with

customers and to inform them about

the latest product developments, B2C

companies need to broaden their

online presence and exploit other tools

and channels to engage with

customers. B2C companies that view e-

commerce only as a desktop driven

channel might struggle to compete in

the future.

Mobile web browsing, in fact,

surpassed desktop web browsing mid

of 2014. Roughly half of e-commerce

transactions already come from mobile

phones and tablets. With 93% global

cell phone penetration,

globeone | Digital Leadership 5

The digital evolution continues as it

redefines business models and enables

new ones to thrive – nothing is sacred

#1 Digital fitness

70% of the US population is

monitoring their fitness and health

via clever digital wearables and apps.

#2 Google glass

The next big revolution to access and

share information and interact with

the environment is forecast to be a

US$11 billion market by 2018.

#3 Sign language translator

First concepts of digitally powered

rings on fingers detect motion and

gestures and translate them into

spoken language.

#4 Crowd brain power

Digital think tanks like ‘Idea bounty’

allow companies to post creative

briefs and marketers receive a bounty

if they submit the winning idea.

it is clear that mobile has evolved to

one of the most important digital

channels.8 In 2002, it took Apple over a

year to sell 1 million iPods. In 2012, the

iPhone 5 sold over 2 million units in less

than 24 hours. The world’s mobile e-

commerce volume in 2012 was US$

172 billion and US$ 235 billion in 2013.

An increase of almost 40% with no

signs of slowing down in the next

years.9

Customer’s purchase journey through online and offline channels

Digital permanently affects

customers’ purchase journey –

B2B and B2C

Marketers need to offer the right

information through the right channels

at the right time. Understanding the

purchase journey of consumers has

never been more important. It can be

extremely complex as they often move

across channels during their journey.

Indeed, today´s customers do not

follow a straight path to purchase

anymore. Along the customers´

purchase journey, the line between

online and offline has become

globeone | Digital Leadership

of them research online before

purchasing a product, and roughly 50%

make one-fourth of their purchases

online.11 The so-called ROPO effect

(Research-Online-Purchase-Offline) is

also becoming a dominant trend, with a

percentage of 51% users already doing

it.12 With new payment opportunities,

faster and simpler transactions,

consumers expect brands to interact

with them at all touch points of a

purchase experience, online and offline

alike.

6

Source: Google/ Ipsos, 2013

Online and offline channels in research and buying processes

#1

#2

#3

#4

research

research

research

research

ONLINE

ONLINE

ONLINE + OFFLINE

OFFLINE

buy product

buy product

buy product

buy product

OFFLINE

ONLINE

ONLINE

ONLINE

51%

44%

32%

17%

increasingly blurred. Consumers

alternate the two channels for both

researching product information and

final purchase.10 On average some 60%

AWARENESS CONSIDERATION PURCHASE LOYALTY

X

X

X

X

X

X

ON

LINE

OFFLIN

E

X

X Examples of consumers‘ actions within each phase

Customer sees a product online

Asks friends’ opinions

Seeks opinions in online forums

Customer goes to a real store to inspect the product

Follows brand online

Checks prices online

Purchases product online

globeone | Digital Leadership 7

over 75% of Chinese smartphone users

have bought something from their

mobile (global percentage: 20%).13

Purchase intent across categories

varies widely. While electronics, books

and clothing are the common

categories to be purchased online,

growth can still be expected from

emergent ones such as groceries,

luxury goods or pet supplies.14

Challenges to overcome

People around the globe love to spend

their time online and love to share

millions of information every day. Albeit

this offers tremendous opportunities

for marketers there are a few key risks

to overcome. Besides security and

privacy issues, generating trust is one of

the greatest challenges. There is a

strong lack of trust in information

spread by brands. 90% of EU consumers

ranked ‘posts by brands in social

networks’ as least trusted, only ahead

of straight advertisement.

Recommendations from friends and

families, consumer and expert reviews

remain the most trusted sources.15

To overcome the lack of trust towards

online information from brands,

marketers need to understand when

and why consumers want to engage

with brands. Consumers may actively

engage to learn more about a brand,

yet content must be managed

meticulously to ensure it is trusted.

Most consumers are also willing to

engage if it is about better deals and

discounts. In China, almost 60% of

consumers are willing to trade personal

data online in exchange for deals,

coupons, or other items of value.16

Incentive management has become a

crucial part of a digital marketing

strategy. Here the same stands true.

Too complex or enigmatic promotion

schemes may evoke mistrust and

eventually scare off customers.

Product categories purchased online 2013 in the US

69% Consumer Electronics

67% Books

63% Clothing and apparel

20% Pet supplies

20% Food and groceries

6 % Luxury goods

Source: Walker Sands, 2013

This is especially true for developing

markets with Asia being the most

digitally savvy. In China, 73% of

consumers declared that they have

used in-store multimedia shopping aids

(global percentage: 42%) and

8 globeone | Digital Leadership

Drive customer awareness

Inform journalists and investors

Create brand experience and build relationship

Generate sales

Digital / viral campaign

#1 #1 #2 #2 #3 #3

Social media (Twitter, Weibo)

Search engine marketing

Corporate/ product websites

Digital brand world / club

Digital malls (e.g. Tmall)

Corporate video channel

Digital PR

Online supported events

Digital brand community

Digital B2B campaign

Search engine marketing

Corporate / product websites

Digital PR

Digital PR Social media (esp. Twitter)

Digital CRM

Digital client center

Corporate / product websites

Online tech center

Corporate / product websites

Corporate video channel

Digital PR

Prioritization of digital tools for B2B and B2C businesses B2C B2B

Secondly, marketers need to

understand the natural digital

propensity of their brand. Categories as

raw materials or chemicals for example

are likely to show a naturally lower

inclination to require a strong digital

presence. Marketers also need to

understand how sophisticated or

advanced their digital competitive

landscape is. Businesses in travel, retail

or consumer electronics are more likely

to show a high level of digital maturity

while pharmaceuticals or automotive

to assess is what they want to achieve

with their brand in the digital space.

Do they want to sell things, create a

brand experience, build customer

relations or drive up brand awareness?

Often companies fail to have clarity as of

what their digital purpose is in the first

place. Every company - B2C and B2B -

need to set clear digital objectives,

define channel roles and tools to

achieve them. The mixture of channels

and adequate tools differs substantially

between B2C and B2B businesses.

Social media and blogs

Basic steps for digital leadership

Not every brand needs to fight for

digital leadership equally, there is no

one-size-fits-all approach nor goal. But

whatever digital leadership means for

the respective business, there are some

basic steps that every marketing or

communication manager should

consider when building or reshaping a

brand’s digital presence.

1. Define the role and purpose of

digital for the brand

One of the first things marketers need

Four key digital objectives (selection)

parts suppliers tend to be less

mature.17 Clarity in purpose is the first

step to a successful digital strategy,

maybe the easiest to be overlooked.

2. Understand your digital ecosystem

A firm needs to have a clear

understanding of its own digital

ecosystem, which includes not only its

target customers, but also its

competitive environment. A brand

9 globeone | Digital Leadership

3. Measure and track digital

performance

Digital performance measurement

and how to efficiently use the

multitude of data produced at every

digital touch point is still one of the

biggest challenges.

Marketers must effectively sort

through this valuable stream of

information to derive brand status

knowledge, consumer insights and

new opportunities for digital

engagement, advocacy and sales.

Tracking and measuring the

performance of integrated marketing

campaigns is important to work out

the returns on marketing investments

and whether or not the campaign

achieved its objectives. Brand

managers must define the most

important metrics to be tracked for

their business and determine clear

KPIs that can be linked to their

strategic digital goals.

needs to understand its target groups’

specific digital behavior. It is critical to

address differences in digital behavior

across target groups. Some may be

heavier on social media, others may

be more centered around websites.

Only by understanding when, where

and how the target groups engage,

can the digital touch points and media

mix be balanced efficiently.

A holistic and consistent online and

offline consumer journey undoubtedly

is key for success. Organizations often

put marketers in positions where they

have to detach digital media planning

from traditional media. In a perfect

world, it should simply be part of one

overall media mix.

In order to fully understand and have a

clear view of a company’s ecosystem,

a similar analysis should be carried

out for competitors. In particular, a

thorough analysis should be done for

those competitors targeting the same

(or a similar) target group.

Source: Instagram, 2013

Instagram’s community

already counts 150 million

users and grows by

around 8 million new ones

per month. The strong

emotional appeal of pictures

made Instagram a high

potential digital channel

for marketers.

10 globeone | Digital Leadership

globeone Digital Performance Measurement Approach

#6 eCRM

• Software and Process Tools

• Big Data Warehousing

• Lead Generation / Prospect Management

• KPI Based Campaigning

• Sales Channel Integration

• Premium CRM Experience

#1 Traffic

• Unique visitors

• Page Views/Hits

• Visit Structure

• Bounce Rate

• Time Spent

#3 Social Media Performance

• Followers/ Friends

• Active Users

• Content

• Reach

#4 Digital Spending

• Ad Spending

• Spending per unit (offline / online)

• Real-time Bidding

• ROI Measurement

#5 Innovation Leadership

• First Mover vs.

Trend Follower

• Communicating Innovation/ Future Orientation

• Key Technologies Applied

#2 Corporate Website/Mobile

• Layout

• Functionality

• Content

• Interconnectedness

• Key Topic Focus

• Audience engagement

• Topics/Campaigns

• Integrity

Source: globeone

11 globeone | Digital Leadership

globeone’s Digital Performance

Measurement Approach provides a

framework including six key

dimensions for benchmarking.

#1 Traffic

Analysis of visitors’ behavior on

company’s digital platforms by

measuring the amount and type of

traffic, including real time traffic, no.

of visitors, page views, visit duration,

bounce rate.

#2 Corporate Website/Mobile

Analysis of the layout, functionalities

and content of the website and

mobile site, as well as their

interconnectedness. This helps to

understand what consumers value the

most and helps to identify

improvement potentials. The same

measurement approach can be

applied to the corporate intranet.

#3 Social Media Performance

Measurement of performance across

social media by checking, among

others, number of users and their

engagement or activeness online. This

is highly relevant in order to keep up

with the pace of always-on consumers

and to provide them with the social

media experience they are looking for.

#4 Digital Spending

In order to ensure the highest return on

digital investments, companies need to

accurately check their spending. In

particular by tracking digital expenses

and monitoring related performance

through measures such as real-time

bidding and ROI.

#5 Innovation Leadership

Ensuring innovative digital channels

that keep up with consumers’

preferences. Up-to-date functions and

design are necessary to meet and

anticipate users’ expectations regarding

online experiences.

#6 eCRM

It is highly relevant to actively manage

relationships and interactions with

customers, in order to improve their

experience and, ultimately, increase

sales. This can be done through CRM

software and tools and by constantly

storing and analyzing data regarding

consumers’ online behaviors.

globeone’s Corporate Website

Evaluation Model is build around five

proven elements:

#1 Layout

#2 Functionality

#3 Content

#4 Interconnectedness

#5 Key topic focus

The analysis of each of these five

elements includes the thorough

assessment of several sub-elements.

Marketers should assess their level in

comparison to their competitors.

Continuously monitoring and adapting

is important to attract and retain

visitors and customers and ultimately

to build strong relationships.

12 globeone | Digital Leadership

Evaluation criteria #1 Layout

#2 Functionality

#3 Content

#4 Inter- connectedness

#5 Key topic focus

Sub scores of each individual criteria being thoroughly tested for client brand #A and defined competitor set (competitor #B and #C)

Landing page Interactivity Up-to-date content Integration of sub-brands Product related

Clear layout Convenient ^navigation No. of non-product topics CRM data generation Brand related

Creative Product experience & configuration

Attractive specials and campaigns

Direction to sales channels Services

Structured Loading speed Integration of corp. storytelling

Link to partner sites Entertainment

Localized Cross-platform Integration of company origin

Social media integration Innovation & technology

Mobile integration

Integration Service channels

Final score competitor #A

Final score competitor #B

Final score competitor #C

Source: globeone

globeone Corporate Website Evaluation Model – illustrative example

0% 50% 100% 0% 50% 100% 0% 50% 100% 0% 50% 100% 0% 50% 100%

0% 50% 100% 0% 50% 100% 0% 50% 100% 0% 50% 100% 0% 50% 100%

0% 50% 100% 0% 50% 100% 0% 50% 100% 0% 50% 100% 0% 50% 100%

13 globeone | Digital Leadership

Who are we? globeone is a management consultancy with special competence in brand management, strategy, communications, and research. We are passionate about positioning brands in their home markets and around the globe.

From our offices in Europe, Asia, and South America we combine global strategy and local opportunity to help ambitious leaders outsmart the competition.

Want to know more?

Dr. Niklas Schaffmeister Managing Partner

Carina Hauswald Managing Director Cologne

Niklas Schaffmeister advises many Western blue chip corporations as well as ‘Champion Brands’ from emerging markets on how to boost their brand and business performance in key growth markets. He spent seven years in China, is fluent in Chinese, and has conducted major consulting projects in India, Russia, Brazil and South-East-Asia.

We’re looking forward to hearing from you! Or visit us at www.globe-one.com

Carina Hauswald is an expert in brand management and strategic market communications. Her profound marketing expertise has allowed her to create meaningful impact for DAX and MDAX listed companies. As an expert in the internationalization of corporate communications, she helps companies explore their untapped story potential and inspires them to bring the right story to life.

phone: +49 221 788068-11 niklas.schaffmeister@globe-one.com

phone: +49 221 788068-17 carina.hauswald@globe-one.com

Hanna Rohloff Senior Consultant, Cologne Hanna has extensive experience in brand management and strategic market communication with a strong focus on the US market. Hanna worked on global and local mandates, creating meaningful impact for clients from a variety of sectors. hanna.rohloff@globe-one.com

Digital Leadership Practice

Sebastian Hepp Senior Consultant, Cologne Sebastian advises clients from different industries in developing brand and communication strategies in Germany, China, India and Brazil. He has comprehensive expertise in optimizing digital strategies and adapting them to local market requirements. sebastian.hepp@globe-one.com

Na Tang Senior Consultant, Shanghai Na has extensive experience across countries and industries having worked with leading brands in China, Italy and the UK. Na’s unique expertise in marketing, management and finance makes her a powerful and versatile consultant. na.tang@globe-one.com

Philipp Dittes Consultant, Shanghai Having a background in Business Management and Sinology, he supports clients in the analysis of the Chinese market and the positioning of their brands in China. His projects cover a broad range of industries – from chemicals to sporting goods. philipp.dittes@globe-one.com

References

1. GlobalWebIndex

2. GlobalWebIndex

3. GlobalWebIndex

4. Emarketer

5. Techcrunch

6. Emarketer

7. Emarketer

8. GlobalWebIndex

9. Statista

10. Google

11. McKinsey iConsumer 2012

12. Google

13. Walker sands’ 2014 future of Retail study

14. Walker sands’ 2014 future of Retail study

15. Forrester Research

16. China Internet Network Information Centre

17. Capgemini Consulting

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© Copyright

This document of globeone GmbH or its network office is intended exclusively for the client or addressee. It remains exclusive property of globeone GmbH or its network office until the rights of use are expressly transferred. Any revision, use, duplication or commercial distribution of this work is permitted only with the consent of globeone GmbH or its network office. This document is a discussion paper. It makes use of secondary information and hypotheses and is therefore for discussion only. It does not include any recommendations or binding statements.