After 3 years of robust growth in digital marketing budgets, spending in 2019 dropped back to 2017 levels. We have a few hypotheses to explain this surprising finding:
- There is a hesitation to invest more without a clear view on ROI and strategic priorities/roadmap;
- Some are (still) just getting started on their digital journey;
- Digital dollars are being used more smartly (“more bang for the buck”)
On the face of it, option 3 is the least likely, even though it is many companies’ ambition. Why? Firstly, the pace of digital transformation remains slow – even slower than 2015. Only 13% feel their company is (very) close to the ideal organization in terms of omnichannel customer engagement & business impact, with digital satisfaction only at 2010 levels – just over 10% are (very) satisfied. Additionally, the lower average budget conceals a “digital dichotomy”, meaning that 47% spend less than 10%...and 43% above 15%.
The former group’s spend may also suggest that hypothesis 2 plays a role, as you would assume that with digital moving up on the corporate agenda, a lot of “newcomers” are entering the space – and start spending conservatively. So, rather than indicating a pullback, the decline may actually indicate more widespread growth with many new budget holders entering the market…
Tactics & enablers or strategy first?
At any rate, I firmly believe that option 1 is THE key driver – one that applies to both newcomers and more experienced respondents. “Lack of strategy” is still ranked as the second biggest bottleneck, with more managers (17%) than directors (14%) finding this an issue. The strategy void is even stronger for “emerging” digital functions, like Medical & Sales, where lack of strategy (25% and 20%) tops the list…
The perennial skill gap – why it is important & how to address it
To define and execute a solid strategy, you of course need to have business-savvy and technically skilled people. This remains elusive in pharma: in 2019 less than 1 in 10 defined themselves as an expert - marketers (9%), medical (8%) and sales (6%). Even within digital/MCM teams the picture is only marginally better at 15%. Combined with the paltry 8% who “fully agree” that channel mix optimization has no secrets for them, this clearly calls out the need for more & better capability building.
How to fill the skill gap? Currently, 18% get no formal training opportunities and there is a lot of unmet demand for workshops (+10% desired vs actual) and coaching (also +10% differential). Other leading formats include “On the job learning” (29%) and e-learning (14%). “Conferences” comes in only 5th.
Governance and culture are key too
Senior management, organization & culture play a key role too: 52% of respondents say their company does not encourage risk-taking; and 26% say their companies are developing strong leaders for the future.
And what to think of the roles and impact of international and local digital teams? 83% say they have a central team and 66% a local one. But satisfaction levels with both groups is quite low: 50% find local digital teams effective – and that number drops to 12% for international digital teams. In terms of alignment, a lot more is needed too: a mere 20% of local staff say they leverage over 50% of the content received from international teams. (This also reinforces the rejection of hypothesis 3: “smarter” spend is clearly not the key driver for the lower budgets).
Most concerningly, though, many feel that the industry is on melting ice. Respondents believe that digital technologies can disrupt it (58% “great extent”); but only 7% feel they are prepared (read: at the minimum, have a strategy in place).
So, where do we go from here?
There are 4 key components for a successful companywide (digital) transformation:
- burning platform/business case
- strategy & vision
- enablers
- short time-to-impact “first steps”
A lot of work is still needed in components 1, 2 and 4. Even in 3 (enablers), we need to distinguish between “hard” and “heart” enablers: the hard enablers (technology, digital team capacity,…) tend to be in place or getting there (the “easier” part), but in terms of “heart” enablers, a lot more is needed – capability building, strong digital leadership, right culture, relentless change management communications…
But, as the “digital dichotomy” for the 2019 budgets revealed, averages can be treacherous. Indeed, the market is moving at 2 speeds, with leaders going from strength to strength and late entrants and laggards falling behind. This can be seen in satisfaction levels and many other parameters*.
Diagnosing where you are compared to others and then defining your strategy is clearly a priority, whether you are ahead of the curve or behind it.
In any case, your customers are ahead of the industry already and they will favour engaging with any company that understands how to create a great customer experience – just as you do in your daily life.
*If you want to benchmark your company vs the competition, feel free to contact us. We offer several unique & robust options in this space.