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Why Irish Businesses Need To Invest More In Digital

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Digital Ireland

With the worst of the downturn behind us, Irish firms are now looking at investment and hiring plans with a longer term view. To benefit from this much-hoped-for growth, businesses will need to increase revenues and become more efficient in the short to medium term, and that means investment in digital marketing.

Digital is one sector of the economy where growth actually occurred during the recession. Irish people spent €3.7bn online last year, accounting for 5% of total consumer spending. Compare that to 2007 when it made up less than 1%, a whopping 400% growth rate!  In addition, the last five years has seen the number of Internet users jump by over 60% with 8 in 10 adults in Ireland now online.

While digital has become a more prominent part of the marketing mix, investment in this sector by Irish brands has not kept pace with growth due to the decline in marketing budgets during the recession. Consequently, with online spending forecast to grow to 7% of all expenditure in the next three years, marketers now need to invest more online and understand how to take advantage of the new digital landscape.

The Digital Influence on Consumer Decision-Making

As a result of this shift, marketing is changing and consumers have evolved. Audiences are now more individualistic, having developed sophisticated tastes and preferred ways of engaging with brands, and learning how to filter out ‘interruptive’ advertising. This consumer empowerment, together with the fragmentation of media and explosion of product choice, means that a more sophisticated approach to marketing is now needed.

With all the noise from multiple media channels and countless product campaigns, reaching consumers in the right place at the right time with the right message is increasingly difficult. The traditional ‘Push’ efforts of marketing are now not enough to engage with these empowered consumers. Instead, marketers need to allow customers to ‘Pull’ information to help them make better purchase decisions, as evaluation becomes more crucial than ever.

Consultancy firm McKinsey asserts that 2 out of every 3 brand evaluation touch-points in a consumer’s decision journey

 now involve consumer-driven marketing activities such as Internet reviews, word of mouth recommendations, in-store interactions and recollections of past experiences, with only one-third of the touch-points in the evaluation phase driven by company-driven marketing. So, whiletraditional marketing remains important, marketers now need to invest more in trying to influence consumer-driven touch points as shoppers evaluate the brands they want to buy.Irish Digital Landscape 1

Many of these consumer-driven touch points now reside online. To do well here, brands need to invest in their offering and move towards building digital platforms where they can be found. Websites where people can evaluate products, get independent testimonials and cultivate word of mouth such as review sites and social media platforms are increasingly important.

An example of a brand doing this type of inbound marketing well is car-maker Renault. It pulls people into its online Carculator App where a consumer who is evaluating different brands can compare the cost of running their current car to the purchase and running costs of a new Renault model. The brand is successfully facilitating the evaluation process and influencing the undecided towards it, pushing the value-for-money attribute for cash-strapped Irish motorists.

Google's research also supports this new consumer decision journey, with shoppers evaluating twice as many sources before making a decision in 2011 than they did the year before. The research and evaluation of product choices online is now just as important for marketers as triggering a need or desire in the first place.

E-commerce Growth

With online research increasing, so too is the custom of ‘show-rooming’ with 58% of Irish Internet users evaluating products in-store, but subsequently buying online. As global e-commerce growth skyrockets, Ireland’s nearest neighbour is seen as the vanguard in this field with 71% of all UK individuals having made an online purchase in 2011, compared to the slower uptake of 43% in Ireland. The UK experience can provide an insight into the direction online retailing in Ireland might be headed and the opportunity inherent.

Indeed, according to the UPC/Amárach Driving Economic Recovery report, many Irish consumers feel they are not served well by Irish businesses online. When those who purchased from international websites were asked if they were aware of equivalent Irish businesses to buy from, up to three-quarters said no or just didn’t know.

Nevertheless, the majority of those not aware of equivalent Irish sites would buy from them if they knew about them - this is a massive opportunity for Irish business! Although challenging to execute, many indigenous online retailers would see greater opportunities if they could provide the price, choice and delivery attributes of Amazon or ASOS.

Of course, with Ireland’s size, it’s at a disadvantage when it comes to economies of scale, but with the recent introduction of VISA debit cards, the long-awaited new post code system and cheaper distribution as a result of increased activity, the online retail infrastructure in Ireland will improve.

Mobile Movement

Irish Digital Landscape 2

As mobile and tablets overtake desktop as the primary Internet access device in Ireland, marketers need to be aware of the opportunities and challenges this channel brings. Google estimates that smartphone penetration in Ireland was at 43% in early 2012, the most used applications being mobile search, video, app usage and social networking. The research also finds that 8 in every 10 Irish smartphone users search for products or services on their phone, so local businesses need to make sure they're leveraging location-based services on mobile if they want to be discovered.

Currently, mobile only accounts for a tiny fraction of overall digital spend in Ireland, so there is a big gap between where consumers are spending their time and the amount of marketing spend targeted at them in this space. The opportunity here is now beginning to be recognised with the establishment of specialised agencies like Yappy, which helps its clients take advantage of mobile advertising opportunities..

Importantly, mobile marketing means that consumers can be stimulated by a message, research and evaluate brands and purchase through the same interface, all in a matter of moments. As smartphones are carried around all day, this ‘always on’ consumer will be a potentially lucrative target. Therefore, Irish marketers will also need to invest more in responsive web design so that consumers can engage with them on any device.

Rewarding

Last year’s State of the Net report emphasised that Irish marketing professionals are already diverting more of their advertising and promotional budgets online because of better opportunities for customer engagement and greater return on investment than traditional channels.

The increasing influence of the Internet on consumer choice, the upsurge in online shopping and the rising use of mobile devices will drive growth in the digital media and e-commerce sector in Ireland in the next few months and yearsThe rewards are there for the taking, so it's now up to Irish businesses to seize the opportunity and thrive in this domain.

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