Fundamentals for a successful digital marketing campaign

Written by John Rahim, Business Development Director, Modem Media Europe

Although analysts are now predicting that the UK may be the only country in Europe that will not to be effected the predicted recession, many people working in IT and new media may feel this good news is to little too late. According to Forrester Research, the Global IT spending in 2000-2001 was down an enormous £62 billion compared with 1999-2000 figures. Furthermore, predictions are that 1999’s level of spending will not resume until the end of 2003 or even 2004.

This recession will be unlike any that we have previously experienced. This is not due to the causes, or what ultimately will be its remedy, but due to the fact that the way that businesses run today are now radically different compared to the last recession of the early 90’s.

During these difficult times it is essential for companies to focus on the preservation of their brands and ensure that niche players and new entrants in the market do not erode precious market positions. This is of particular concern for the retail financial services sector, a market already at saturation point, and now facing increasing competition from established companies in other industries, many of who are exercising their deep knowledge of their vast customer base to sell them credit cards, insurance and ISA’s. Admittedly, many of these new entrants, such as Sainsbury’s Bank, have partnered with an established player who supply the infrastructure to provide these services.

With regards to ISA’s, one of the most stable financial products of recent years, the short-term landscape is not looking good. Recently published figured from the Association of Unit Trust and Investment Funds have cited a 44% reduction of funds under management compared to this time last year. Gross ISA’s sales for September fared even worse with a 46% slump down from £682Million in September of 2000 to £376Million in September of this year. The top 5 fund companies however are still bullish with staggering combined assets under management of over £54 Billion. Nevertheless the first real consumer loyalty test will come in early 2002, when the ISA marketing season starts in earnest.

Bearing all of this in mind one question that must be facing every executive working in retail financial services is how to differentiate their products in an already overloaded marketplace. This combined with declining marketing budgets is causing serious headaches for many managers.

Despite all of the gloom many executives actually have opportunities which at first may not be immediately apparent. Although IT and e-commerce budgets may have been slashed, according to the market research company Netvalue the number of home Internet users has increased by 53% in the last 12 months to 15 Million users. Users are increasingly spending more time online and using the net to gather the information that they need in order to make their financial decisions. Companies selling financial service products online need to strategically determine their offerings and ensure that they have highly tuned and effective digital marketing campaigns in place way before 2002.

Probably, the first and most important thing is to determine who are your most profitable customers. Although this may seem logical, understanding who your customers are, and then understanding their needs and requirements is crucial to the success of any campaign. Through an effective segmentation strategy you will understand what is most likely to stimulate positive behaviour and ultimately lead to a sale. Such undertaking needs to be completed prior to any media being booked or creative being produced.
Once this has been done phase 2 of your strategy needs to commence. The creation of an effective customer proposition is also a key element. Knowing who your customers are, and what they might buy alone will not help you. You need to create a propelling proposition that will highlight your products differentiation. This normally is communicated through the creative work however; the right planning of the media is essential to ensure that your message gets through to your intended audience.

In addition to online advertising the creation of the right partnerships and affiliate campaigns is essential. Online consumers looking to buy financial services are as likely to trust advice given by portals such as the Motley Fool, Interactive Investor or Money Extra as they are directly from a bank’s or fund company’s corporate site. The relationships that consumers have with these portals can be extremely strong and an effective partnership will focus on the strengths and brand values of your partner. When negotiating such relationships it’s good to focus on the following points:

· Does each company have aligned economic interests? Both companies are engaging in the partnership to generate revenue and develop their position in the marketplace. If either party views the relationship as one sided it’s unlikely to be a success.

· Is the culture right for both companies? – Never underestimate the power of culture. If two companies are diametrically opposed in terms of their culture it’s unlikely that they will enjoy a productive relationship. Companies such as Egg have chosen to partner with MSN and Boots. They believe that the culture and product offerings are similar enough to attract the type of customer who would be interested in their services. If Egg were to partner with a B2B financial services portal it may prove less successful.

· Can you develop senior level relationships?

Although the tactical day-to-day running of the relationship will be managed by project managers and account directors, if the relationship is to flourish you need to have buy in from senior management on both sides. Having your CEO or CMO involved from the outset will help in more ways than one.

Another important development in digital campaigns is optimization. Optimization is the ability to alter campaigns whilst they are being run so as to ensure that they achieve maximum impact. If a banner campaign is proving ineffective in reaching your target audience you can change the creative used or place it in another area of a portal where it may have greater success in targeting your intended audience. Systems like Centrport allowed Citibank in the USA to reach more customers when they entered into a major portal deal with AOL. Likewise, it reduced the CPA (cost per acquisition) by significantly in a recent campaign for the brokerage firm CSFB Direct.

Lastly, probably the most important advice is to partner with an agency that solely operates in the digital environment. You would not consider asking your branding agency to shoot your TV commercial. Likewise you need to take care in selecting your interactive marketing agency. Don’t forget the winter of recession has just started and every penny counts, so make sure that you spend it wisely!