Home / Opinion / Online-views /  The rise and rise of digital influence

There is no doubt that a digital tsunami is headed our way. About 650 million Internet users in India are expected to spend an average of two hours online every week by 2020. What generates a lot of debate, however, is whether this will translate into a sustainable top-line and bottom-line growth for companies. Even as billions of dollars are flowing into the country and cool sounding terms like “unicorns" being thrown around, many of us still recall the dot-com bust of 2001, where the conditions were ripe, but the business models flawed. Or closer home, the euphoria surrounding organized retail in the middle of the past decade came crashing down with the financial crisis by the decade-end. Added to them, some of the recent shutdowns, consolidation and down-rounds have thrown up fresh questions on sustainable business models once again.

Amid all the questions and uncertainties on the actual size and profitability of the e-commerce market, what is clear to us is the dramatic rise of what we call “digital influence". Digital influence refers to the role that the digital medium plays in influencing purchases—irrespective of whether the purchase is finally made online or offline. Digitally influenced consumers turn to the Internet for product information, brand reviews and experience with the brand. They often look for where to buy the product or get the best price. They look for opinion of their trusted advisers, i.e. friends and family on social media.

The extent of digital influence varies by category. In some categories such as appliances or electronics, as much as 60% of the spend is currently digitally influenced and this number is growing rapidly every year. Even in categories such as fast-moving consumer goods (FMCG), the extent of digital influence is quite sizeable. A recent report titled Re-Imagining FMCG in India, published by the Boston Consulting Group (BCG) in collaboration with the Confederation of Indian Industry, estimates $40-45 billion or 30-35% of spends in FMCG would be digitally influenced.

Unfortunately, in all the noise that surrounds e-commerce, the importance of digital influence often gets ignored. That happens because creating a positive digital influence is challenging and the results are typically not immediate. But given the sheer multiplier impact of influence, it is imperative that players should harvest it to the hilt, but in a structured manner.

First, one needs to invest in online marketing capabilities. In our work, we have found that on an average, companies are under-investing in digital or investing in the less effective vehicles. Most marketing decision makers have grown up in the era of Above-The-Line (ATL) and Below-The-Line (BTL) marketing and often do not fully understand the digital platforms their core consumers engage in. They are less familiar with the techniques used for targeting them based on a specific context and previously demonstrated behaviour. Taking a data-driven approach for programmatic media buying results in a paradigm shift: buying specific digital audiences rather than buying an inventory of click-through. A famous marketing guru had once said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half." Well, with the right capabilities in digital marketing, he may have his answers today—just a few decades late!

Second, create relevant, rich personalized content. Best-in-class companies are investing in creating powerful engaging content that is personalized and adaptive to the micro-segments they target. A leading global beauty company engages consumers through personalized style advice and expert opinions. The company realized that most women wanted to wear the “right make-up", but were unsure of what products were suited for their skin and how to apply them. The company has created content that provides need-based solutions by helping consumers understand their skin needs and directing them to relevant products. The brand website offers do-it-yourself tutorials on different make-up styles, elevating the conversation to a much deeper connect. Several of the company’s flagship brands have mobile app offerings that offer personalized suggestions based on mood and outfit as well as virtually experiment with different products through a visualization tool.

Third, create engaged communities and brand advocates online. Consumers are increasingly turning to trusted sources to seek advice and cut through the growing marketing clutter. Hence, creating deeply engaged communities and powerful advocate networks is no longer just a “good to do" but potentially a strategic differentiator. The strategic choice involved is in leveraging existing social media platforms (e.g. ride on a Facebook) versus building own platforms to drive community engagement. Several variables such as goal of the community, attributes of the product, traits of the core consumer and the brand’s starting position on social media can guide companies in making the decision. Thankfully, word-of-mouth has gone from being an art to science over the past few years and there are proven and structured interventions available to drive advocacy. Finally, this is not just about great creative—best-in-class companies have a structured review mechanism, tracking key performance metrics through digital listening.

The biggest issue in driving digital influence is that it cannot be an afterthought. It requires investments in the right people, talent and technology through both in-house and outsourcing specialist capabilities. This is not something to be delegated to a “couple of young nerds", but something to be embraced as an organization-wide priority. After all, the impact of digital influence can often be 5-10x the actual e-commerce revenues.

Amitabh Mall is partner and director, and Namit Puri is principal at the Boston Consulting Group.

This is the second part of a three-part series about the digital economy. All views are personal.

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