By Chad Baldwin – Vice President Sales and Business Development at Koddi
The benefits of collaboration have been lauded across the business community. From American Express to McKinsey, the collaboration presents opportunities for operational and financial efficiencies regardless of the industry. Collaboration comes in many forms and for the purposes of this discussion, we are going to focus on the benefits of collaborative marketing.
The Marketing Challenge in Multi-Tier Industries
The Internet is an amazing infrastructure for every business (and every part of every business) to speak directly to consumers. While this power creates wonderful opportunities – it also creates tremendous complexity. This complexity starts with how brands, divisions or departments within a company best orchestrate their communications to consumers. The world of digital marketing is run by auctions and with anyone being able to bid into auctions, things can get complicated pretty quickly. Governance can be challenging to say the least and overlapping online marketing efforts are rampant.
This complexity is greater in multi-tier verticals where selling a product or service actually involves a collection of different companies. Industries such as automotive, hospitality, restaurants, retail/cpg and any franchise-based business run into unique challenges. Corporate and field marketing teams need to work with external entities to align advertising across agencies, ownership groups and individual small businesses.
In the past, marketing initiatives within these multi-tier industries were less complex. Marketing and advertising tactics tended to naturally segment themselves, with the Corporation (Tier 1) focusing on high-level awareness campaigns and brand building in TV, while SMB (Tier 3) focused their efforts on local media and campaigns designed to drive foot traffic. With the Internet, the open auction and democratization of digital media, however, there are new challenges in overlapping efforts, duplication, cannibalization and attribution.
Competition within the Same Team
While the number of demand generation options that Tier 1s have at their disposal has expanded, Google, in particular, aggregates a massive amount of traffic and intent within a single open marketplace. Tier 1 brands, Tier 2 and Tier 3 individual SMBs are able to compete for the same ad inventory (search terms) in many cases and this can lead to multiple ads, different messaging and branding, and even different purchase paths.
Of course, here we come to the current conundrum. In creating a level playing field for Tier 1 and Tier 3 direct response efforts, demand aggregators have unwittingly exposed a key weakness in the coordination between these two parties. There is simply no glue that binds the marketing efforts of these players, and quite often today the question becomes: “How do you bridge the needs of Tier 1, Tier 2, Tier 3s into a single campaign without creating competing campaigns, undue complexity, and spending money against the same goals.?” In today’s uber-competitive environment, such inefficiencies can take a heavy toll on the bottom line, both at the brand and individual level.
Getting by with a little help from your friends
Most industries have adapted to these challenges principally by creating rules, guidelines and co-op incentives to drive alignment. The results can often be inefficient and variations of operating models that tend to drive even more complexity when expanded globally. Within the travel industry, however, large hotel chains/franchisees have driven innovation through new digital ‘co-op’ capabilities and operating models where marketing budgets and tactics from different entities (Tier 1, 2 & 3) can be combined together to support shared digital initiatives. This digital marketing “co-budgeting” enables the holistic brand to be more competitive, efficient, measurable and perform well. What’s more is that through modern attribution techniques, the individual entities can report on their contribution to the overall objective (sales, bookings, conversions, etc).
Now is the time to evolve multi-tier marketing. Multi-tier industries must come together to align their online marketing efforts. Given the current economic climate, every ad dollar spent must be rewarded with a sale. Innovation can enable companies to collaborate to compete against their true competitors.