SAP

Nowadays a huge spectrum of channels and sophisticated tools are available:

 First of all the Internet has enriched its early phase tools (e.g. email, banner ads, dedicated websites, pop up ads, sponsored content, paid search) with emerging “vehicles” such as social media platforms, virtual worlds, blogs, online gaming, wikis, and widgets.

 Secondly Mobile channel is going beyond SMS and MMS allowing mobile web, video and content download, and dedicated applications.

 Finally we can also consider digital outdoors like digital video displays and interactive kiosks.

Market forecasts are confirming this growth, predicting that digital market spending should reach up to 20% of total advertising expenditure by 2012-2013 from the current 10-12 percent.

What is relevant is that the spend increase should come not only from the industries that have been until now the pioneers and big spenders in digital media (like financial services, computer and communication, and automobile) but also from industries that have dedicated until now limited resources and a small percentage of total spending.

Particularly CPG industries that are among the top advertisers in traditional media are now also going to focus on digital marketing and increase in a relevant way their investments.

What are the reasons that are accelerating the use of digital channels?
In my opinion there are four main reasons:

 The economic downturn is pushing for innovation in an attempt to explore and adopt cheaper and more effective ways to reach the customers.

 Internet and mobile device population as well as the amount of time spent by the user on the Internet or using mobile applications are constantly increasing. 
What’s more, digital channels are going to represent the 1st choice of communication media among young people.

 The consumer is doing more and more pre-shopping on line: gathering information, consulting blogs, reading expert opinions and user feedbacks.

 Digital channels allow interacting with the customer in a very personalized and targeted way and, in case of the mobile, in real time.
These characteristics could allow for the development of very innovative approaches.
For instance through the mobile channel a CPG company could recognize the presence of its customer in the shop when he is buying and reach him with a timely and personalized instant message and promotion.

In which areas will an extensive use of digital marketing channels impact a CPG company, or which capabilities will the company need in order to obtain best results?

 Multichannel Campaign management: With digital marketing we see a proliferation of channels. The marketing campaign will be more and more executed across a mix of traditional and digital channels.
Therefore it will be critical to have processes and platforms that support preparation, execution and control of the campaign across channels and as well as tools that allow comparison of the effectiveness of each channel.

 Customer data management: In the digital world quality and quantity of information available on the customer (e.g. demographic attributes) will dramatically increase.
Also the customer data will come from different sources because of the proliferation of communication channels.
A company needs, therefore, to improve its capability to collect, manage, and integrate the digital data with traditional media data and to make it available for sophisticated analysis.

 Direct and personalized communication: Direct and personalized communication with the consumer such as the use of emails will constantly increase as will the possibility to provide other types of content (e.g. videos, gadgets, dedicated promotions) according to the specific characteristics of the customer.

 Digital content creation and management: Content will be highly personalized, used and consumed faster, while being made available in different formats and through different channels.

 Data analysis: Digital channels provide huge quantities of highly measurable customer data.  On this subject, two aspects will be key. Firstly, specifically for the Internet channel, the capacity to analyze navigation behaviour of the customer on the web is critical. Secondly it is necessary to maximize the capacity to analyze customer data gathered from multiple sources in order to define a model of customer behaviour along the complete purchasing process.

What is your point of view on this? Your thoughts are highly appreciated and more than welcome.
I will blog again providing more thoughts on digital marketing impacts going deeper into the aspects related to information systems and how vendors are ready to support them.