Marketing Musings

Why Digital Real Estate is the Best Investment You Can Make

Why Digital Real Estate is the Best Investment You Can Make

Who wants to develop a bona fide omnichannel experience?

In our post-pandemic world, every brand builder should enthusiastically raise their hand. Or, at the very least, give me a ✋.

Take Target, for example. According to IMD, the retailer had its best quarter ever, Q2 2020, with digital sales scaling an incredible 195% and overall sales up 24.3%.

You don’t have to be a marketing whiz to figure out why. The integration of Target’s physical and digital presence was seamless. Buy it online, grab it curbside. Or click and buy that paper shredder you desperately needed, along with a bag of groceries, and it all shows up at your door later that day.

Here are a few other fun stats from Target: multi-channel consumers spend 4x as much as store-only consumers and 10x more than digital-only consumers.

Image Source: The Robin Report

Similarly, direct-to-consumer (DTC) brands who had a heyday during the pandemic are realizing they might need more brick-and-mortar presence to solidify brand awareness, according to Retail Dive.

But here’s the rub: all real estate isn’t held in the same regard. Whereas retailers won’t blink at high prices ($100+/square foot), I see clients balk all the time at spending money on their digital structures.

They think that just because something is virtual, it should cost less. And that’s not only brands; some marketers I know have that perspective as well.

That’s like trying to build a penthouse on a building with no foundation. For ambitious brands with their sights set on scaling and growing, that’s not just a shaky structure.

It’s building a business that’s bound to collapse.

Invest In Your Digital Foundation

Once upon a time, digital was an add-on, a small line item in the overall marketing channel spend. But now we’re more than a quarter-century into online sales and promotion, digital-first can’t be an afterthought.

When I think about the brands who went belly up during COVID, like Brooks Brothers, part of what killed the company was a lack of innovation, authenticity, and flexibility company-wide, and particularly regarding their digital endeavors, too.

My firm, Digital Surgeons, is often hired by challenger brands looking to grow by evolving and transforming their digital channels. We recently were engaged by a leading CPG retailer and manufacturer whose products are a household name. Like every other savvy brand, they see the benefit of DTC, so they asked us to help gain insight into their customer journey.

We analyzed their customers across multiple marketing channels, and through a deep audit, we assessed their ecommerce channel’s health. Cohort analyses, loyalty program analysis, and subscription regression modeling quickly showed the economic benefit for growing this under-performing channel. The recommendations all were tailored to the core focus of driving business growth and expansion through further validating and investing in DTC enablement.

Their response? While they loved the ideas, they wondered if we could scale back the project significantly by starting with an MVP. After all, they’re also looking into building their own branded brick-and-mortar stores, and real estate ain’t cheap.

As consultants sometimes we must recognize that our job sometimes ends with giving sound advice — what clients do with it is up to them.

I couldn’t help but fester on this, though, after my analysts and strategists had sliced and diced the data. The clear economic benefit and the payback period were sound. And their ability to drive revenue, capture first-party data on their customers, and drive a seven-figure subscription and accessory business was all but empirical.

Designing for Everywhere & Anywhere Commerce

What do you think of when you hear the word “omnichannel”? Do you believe that omnichannel is just about the channels themselves? Is the goal to simply have both a digital and a physical presence?

That would be like building a house with a bunch of individual rooms constructed on a sprawling piece of property. It’s nothing without the connections.

In today’s marketing realm, we certainly have the digital tools to connect with customers. And we have the marketing know-how too. It’s about understanding that today’s shoppers want a hybrid experience and then deciding to invest in the right structures to support their habits, preferences, and desires.

After all, what you’re building is a consistent presence. An identity that doesn’t waiver regardless of the medium. And the ability, above all else, to make the customer experience personal and gratifying.

The Trick to Buying Marketing Real Estate: Location, Location Location

Like purchasing any other kind of real estate, smart investments pay off, and dumb investments can bite you, well, you know where.

Buying the worst house in the best neighborhood, for example, might be a good move. Or it can totally backfire. Better to build the best possible home you can, in the exact right neighborhood — that’s being strategic with your investment and ensuring a healthy and happy existence.

So, for example, I’ve seen clients spend seven figures on outdoor ads or an experiential partnership without batting an eye. And no doubt, these experiences can be powerful, but the impressions you make are something consumers will carry in their mind — and maybe their hearts if you’re lucky enough (or clever enough) to make that kind of connection.

But if there’s no through-line to the tiny digital marketing machine everyone carries in their pocket — their smartphone — then how long do you think that connection will last?

Is That Working Dollar Really Working?

I’ve also seen brands dump the lionshare of their marketing dollars on working media only to find that they are literally driving to broken URLs or poor-performing ads or digital destinations. That’s essentially throwing good dollars at bad experiences.

The journey is as much about the outcome as it is the window shopping.

One of my biggest pet peeves is brands that have the lights on but nobody’s home. For example, I see brands spend millions of dollars on building digital assets like websites, ecommerce stores, apps, and paid media, but they don’t put enough money into their content and community budgets. Or, conversely, they spend a ton on content but not enough on outbound marketing structures. So for me, that tension point is all about throwing good money at the wrong problems.

Not investing in the foundational digital experience, in my opinion, is equivalent to launching a best-in-class retail store for a few bucks a square foot.

Not gonna happen.

The trick is to tap into all the information you can gather and figure out where to correct and improve foundational cracks and build out a robust, immersive omnichannel experience.

To do that, you have to understand the different places that the consumer wants to be, play, and interact. Then, ask yourself how do we weave our brand promise and purpose into their lives?

It’s all about careful construction. And I think we have to do it one message at a time, one interaction at a time, one experience at a time. In today’s world, you’ve got a lot of real estate to use as building blocks, from real-world spaces (i.e., brick-and-mortar stores, outdoor advertising) to digital spaces (i.e., websites, ecommerce sites, social media accounts, online marketplaces, mobile apps, podcasts, chatbots, beacons, wearables, in-store sensors).

By intelligently claiming your space through thoughtful digital transformation, you can shape your brand’s story and build out inspiring areas at every point in the customer journey.

Just as the fusion of digital and physical realities is shaping the currency we trade in (hello, crypto and NFTs), long-term brand building involves an omnichannel strategy.

The key word there is build. You have to own your real estate first before you can build something of value. And to do that, you have to understand the people who will inhabit whatever you develop — your customers.

This is what it takes to be a digital real estate developer. How can you build on this thought? I’d love to hear how you’re going about constructing your brand and its omnichannel experience. Hit me up in the comments.