Mastering Digital Marketing Structure & Strategy:

Transforming Multi-Channel Marketing

Best Practices, LLC Strategic Benchmarking Research

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Table of Contents

I. Executive Summary

Research Overview

Participating Companies

Key Findings & Insights

Strategic Path Forward Toward DM Success

II. Analyzing Current Digital Marketing Structures

III. Evaluating Digital Marketing Structures & Strategies

IV. Using a Specialized Center of Excellence for Digital Marketing

V. Current Digital Marketing Staffing Levels

VI. Current Digital Marketing Investment Levels & Trends

VII. Structuring for Different Market Regions & Product Lifecycle Stages

About Best Practices, LLC

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1. Analyze a deep range of current DM structures while probing the prevalence,

strengths, and weaknesses of each.

2. Spotlight opportunities to improve structure and cost-effectiveness of DM resources based

on current trends within the healthcare industry and among innovative non-healthcare

organizations as well.

Research Objectives & Methodology

Research Objectives:

• Examine how leading Digital Marketing groups:

– Structure their Digital Marketing resources to most effectively support business

units and drive revenue

– Measure the effectiveness of various Digital Marketing tools

– Allocate budgets to various Digital Marketing activities and staff levels

– Plan to utilize the Digital Marketing group to impact the organization in the future

This study explores key trends, success factors, and lessons learned for structuring Digital Marketing groups. The study also distills winning strategies for Digital Marketing activity management, staffing, and budget allocation to help executives manage their service costs and better serve their business units and their products.

Field Research & Insight Development:

Engaged 44 Digital Marketing executives and managers from 40 companies in a rapid turnaround field survey.

Analyzed qualitative findings and insights from within the study.

Client Objective:

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Data Segments Examined in this Study

Healthcare Segment – Abbreviated as HS and depicted in blue font, the healthcare segment comprises 23 total companies which serve the medical device, pharmaceutical, and biotechnology industries. The companies in this segment must navigate a more restrictive Regulatory climate than many of their cross-industry peers. For example, when asked to identify key drawbacks to a using a decentralized approach to Digital Marketing, a full 50% of the HS cited regulatory and compliance issues compared to just 29% of the companies outside of healthcare (click link to view data).

Non-Healthcare Segment – Abbreviated as NHS and depicted in green font, the non-healthcare segment represents 17 total organizations across other industries such as Financial Services, Technology, Electronics, Retail, and others.

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While the majority of data presented in this study reflects input from 44 representatives of 40 different companies across all sectors and industries, some data has been segmented in the following ways to provide deeper, more relevant insights:

Data Segments in the Study:

Elite Performing Segment (EPS)

Criteria Companies Represented

This segment examines the data and insights contributed by 8 specially selected organizations in this study (across all industries), based on the following noteworthy characteristics:

- Significant ongoing investment in Digital Marketing staff and budget

- Balance efficiency and innovation through hybrid structures often using Center of Excellence

- Comprehensive use of Digital Marketing metrics to employ multiple dashboards to track performance and drive improvement

- Integrated view of managing internal and external resources

− Bayer Healthcare− CSC− Dell, Inc.− Emirates Airlines− GE Healthcare− Merial− Thermo Fisher Scientific− Volkswagen of America

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Universe of Learning: Companies Participating in Study

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This research emerges from survey data gathered from 44 Digital Marketing and other commercial executives and managers at 40 leading global companies. The benchmark class in this study together represents 8 global economic sectors overall, including a rich healthcare segment composed of 23 medical device, pharmaceutical and biotech firms.

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Nearly 60% of Respondents at CMO, VP, or Director Level

• Chief Marketing Officer• President• VP, Brand Marketing• VP, Commercial E-Business• VP, Digital Strategy• VP, Marketing (2)• Head, eBusiness• Head, E-Strategies• Global Lead, Digital & Innovation• Director, Digital Marketing (5)• Director, E-Commerce • Director, Digital Media & Syndication • Director, Marketing (4)• Associate Director, eMarketing • Associate Director, Marketing (2)• Assistant Director, HCP Multi-channel

Strategy

Research Participant Job Titles Include:

Study analysis drew upon the deep experience and insights of senior group of executives. Almost 60% of benchmark participants hold executive positions at the levels of CMO, President, VP, or Director. The balance of participants were front-line managers working actively in Digital Marketing.

• Global Manager, CRM & eTools• General Manager, Digital Marketing• General Manager, Marketing• Senior Manager, Customer Effectiveness• Senior Manager, Customer Experience• Senior Manager, eServices• Senior Product Manager• Corporate Brand Manager• Manager, Business Intelligence• Manager, Digital & Multi-Channel • Manager, Digital Media• Manager, Interactive Marketing • Manager, Marketing (3)• Manager, Product & Digital Marketing • Digital Strategist• Digital Marketing Specialist• Commercial Analyst

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Research Probes Healthcare, Financial & Other Industries

(n=44)

Q1. Participating Companies by Industry:

Electronics2% Financial services

11%

Healthcare59%

Manufacturing7%

Retail5%

Technology11%

Other5%

More than 90% of the companies that participated in this research generate above $1 billion annually. While the majority were from the healthcare industry, the financial services and technology industries – two of which heavily depend on digital marketing – were also well-represented.

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Most DM Structures Are Hybrid w/ Trends to Centralize

The following key findings around Digital Marketing structure emerged from this research:

A Majority of Companies Use a Hybrid Digital Marketing Structure in the US: Some 55% of benchmark companies use a hybrid model for U.S. Digital Marketing. 43% use a hybrid structure that joins a Center of Excellence with individual business units, while another 12% employ a hybrid structure between a centralized Marketing group and individual business units.

A Completely Centralized or, especially, Decentralized Structure Does Not Serve the Fast-Changing Digital Marketing Space Well: Only 19% of companies use a completely centralized Digital Marketing structure, while just 7% use a completely decentralized approach.

Within the Hybrid Structure Paradigm, DM Groups Are Trending toward Greater Centralization: A clear majority of companies (61%) indicated that their DM operations have become either somewhat or significantly more centralized in the past two years. The main drivers behind this trend include cost (i.e., maximizing impact of investments, reducing redundancy, surviving budget cuts), competitive advantages, and changes in organizational structure. By contrast, only 7% of study organizations reported becoming even somewhat more decentralized in that same period of time.

Healthcare Sector Likely to Shift toward Greater Centralization of Resources: The non-healthcare segment is already significantly more centralized across all global regions and markets than the healthcare sector. And given the non-healthcare segment has demonstrated greater innovation and longer-term investment than the healthcare segment, healthcare is likely to follow if, for no other reason, to better address regulatory pressures. A CoE is ideally suited to a leading role in this approach.

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I. Analyzing Digital Marketing Structures & Trends:

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Centralized Structures Most Highly Effective for DM ActivitiesThe chart below provides a window into which structures are most effective for each DM activity. The data notably spotlight that centralized and hybrid approaches are clearly seen as more effective for managing DM activities than are decentralized ones.

Centralized CoE Decentralized Hybrid A Hybrid B

Blogs 40% 0% 11% 11% 50%

Corp. Strategy 53% 20% 0% 0% 33%

Digital Analytics 27% 25% 0% 0% 0%

Bus. Unit Strategy 42% 20% 0% 0% 17%

Email Marketing 33% 100% 18% 20% 20%

Mobile Technology 29% 0% 0% 0% 25%Online Content Development 64% 0% 8% 10% 17%

Online Videos 42% 0% 0% 0% 29%

Press Releases 53% 60% 0% 0% 25%

SEO 56% 40% 14% 14% 33%

Social Media 50% 0% 0% 0% 29%

Webcasts 56% 33% 8% 10% 0%

Percentage of Respondents Rating Each Structure “Highly Effective” for Each Category:

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Reputation

Impact

Response Rate

Leads Generat

ed

Measurable Analytics Key to Digital Marketing Success

“Hobbled by nascent technologies,

inconsistent metrics, and a reliance on

outdated models, marketers are failing

to tap the digital world’s full power.

Unless this problem is addressed, the

inability to make accurate

measurements of digital advertising’s

effectiveness across channels and

consumer touch points will continue to

promote the misallocation of budgets

and to impede the [healthcare]

industry’s growth.”

-McKinsey Quarterly

Planning and performance measurement are essential to the success of Digital Marketing initiatives. Those who track the greatest number of Digital Marketing metrics are more likely to find metrics they use highly effective.

Source:http://www.mckinseyquarterly.com/How_poor_metrics_undermine_digital_marketing_2220

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“Continued analysis and optimization of programs is essential to program success.” – Interviewed Executive

Performance Metrics and Process Insights

Improved DM

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Outsourcing Is a Cost Mgmt Opportunity

Q. What percentage of your total Digital Marketing FTEs are insourced, offshored, and outsourced?

(n=35)

Most companies in the study have outsourced at least some percentage of their Digital Marketing FTEs. Innovative organizations are outsourcing up to ¼ of their resources for Digital Marketing as a means of remaining competitive yet cost-effective.

75th Percentile Mean Median 25th Percentile

100%

66%75%

29%

47%

28%

10%

0%

% Insourced % Outsourced

Mean

65%

26%

Elite Performing Segment:

(n=8)

*Research Note:Offshoring is rare. Only 20% of companies offshored digital marketing, and most did not do so at a high rate.

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Companies Hoping To Compete On This Front Must Invest Adequate Resources into Their DM Budgets

(n=32)

Q. Please note how your Digital Marketing budget has changed in the past 24 months

(n=34)

Organizations expecting to compete using Digital Marketing will have to make adequate investment. Nearly 75% of all respondents have increased their Digital Marketing budgets over the past two years. Moreover, half of all budgets have grown more than 10%.

47%

32%

16%

5%

50%

14%

14%

21%

More than 10%

Growth50%

0-10% Growth24%

No Change

15%

0-10% Decrease12%

Past 24 Months

Healthcare

Non-Healthcare

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More Evolved DM Groups in Other Industries Achieve Greater Centralization (and Cost Efficiency)

(n=42)

Q. Which Digital Marketing structure does your organization use in each of the following regions and markets?

Digital Marketing services are centralized within both healthcare organizations and non-healthcare organizations; however, non-healthcare have evolved more rapidly towards centralized forms. For healthcare, which here and elsewhere was observed to lag behind key indicators of innovation, a centralized approach to Digital Marketing represents a key leverage point for greater operational efficiency.

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Centralized Marketing Group

33% 36% 36%29% 29%

9% 5%11% 12%

16%

Non-Healthcare HealthcareCentralized Marketing Group

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About Best Practices, LLCBest Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics, and winning strategies of world-class companies.

Link for Report: Mastering Digital Marketing Structure & Strategy