Digital Marketing and Cost Management for Improving Company Performance Geoffrey Harvey Tanakinjal By
Dean, Labuan Faculty of International Finance, 87000, Jalan Sungai Pagar Universiti Malaysia Sabah
Abstract
This article explores the intersection of digital marketing and cost management in driving company performance, with a focus on Indonesia and Malaysia. It provides an overview of digital marketing practices, emphasizing the use of targeted advertising platforms to optimize marketing spend.
The examples of Tokopedia in Indonesia and Grab in Malaysia illustrate the implementation of cost management strategies that led to improved company performance. These companies utilized data-driven approaches to analyze the performance of different marketing channels and campaigns, enabling them to allocate resources more effectively. The discussion highlights the importance of monitoring and optimizing marketing spend, as well as leveraging influencer marketing and targeted digital advertising to maximize return on investment. The insights from Indonesia and Malaysia demonstrate how businesses can enhance performance by integrating digital marketing and cost management practices.
Introduction
The American Marketing Association (AMA) defines marketing as "an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders"
(AMA, 2004). This definition highlights the importance of technology in providing alternatives, creating choices, and delivering value in modern lifestyles. Technological changes have transformed the marketing discipline, impacting the way products and services reach consumers (Cox & Alderson, 1948).
The introduction of the Internet has revolutionized mass media communication, but it has also become overloaded with advertising messages that often annoy customers (Tezinde et al., 2002).
This annoyance contributes to concerns about trust in e-commerce. Studies suggest consumers perceive traditional "brick and mortar" businesses as more trustworthy than online businesses (Mutz & Journals, 2005). Trust becomes a vital ingredient for successful customer relationships in the online context (Siau & Shen, 2003), particularly in digital marketing. Digital marketing refers to the use of digital channels, such as search engines, social media, email, and websites, to promote products or services (Chaffey & Ellis-Chadwick, 2019). It encompasses various strategies and tactics aimed at reaching and engaging target audiences online. According to Chaffey and Ellis-Chadwick (2019), digital marketing involves the application of marketing principles using digital technologies and media. It leverages the power of the internet and digital platforms to communicate messages, build brand awareness, drive traffic, generate leads, and facilitate customer relationships.
In the current literature Nirwana and Melany (2023) stated that AI plays a significant role in digital marketing (Figure 1.0). There are four main areas that AI can be seen as adding value to digital marketing namely Ideating, Creating, Distributing and Evaluating. However this process depends heavily on the understanding of the user and the communication process.
Source: Nirwana and Melany (2023)
Figure 1.0 Implementation of AI in Four Phases of Digital Marketing
Furthermore, Smith and Chaffey (2021) emphasize that digital marketing encompasses a range of activities, including search engine optimization (SEO), pay-per-click (PPC) advertising, social media marketing, email marketing, content marketing, and mobile marketing.
Mobile marketing defined as "the use of the mobile medium as a means of marketing communications" (Leppäniemi, Sinisalo, & Karjaluoto, 2006, p.10), has played a significant role in providing choices and delivering value. It differs from mobile advertising regarding content delivery and direct response (MMA, 2007). The mobile medium, such as mobile phones, enables marketers to communicate information, promotions, competitions, and more (Barnes &
Scornavacca, 2004; Carroll et al., 2007; Tsang et al., 2004). Table 1.0 provides a clear visual comparison of the characteristics that differentiate mobile marketing from digital marketing.
Table 1.0 Differences between mobile marketing and digital marketing
Characteristics Mobile Marketing Digital Marketing Platform Scope Targeted specifically at mobile
devices. Encompasses all forms of marketing
through digital channels.
Channel Diversity Utilizes mobile-specific channels like SMS, mobile apps, and push notifications.
Includes a wide range of channels such as websites, search engines, social media, and email.
Portability and Accessibility
Capitalizes on the portable and always-accessible nature of mobile devices.
Extends beyond mobile devices to include desktops and laptops.
User Experience Optimizes experiences for smaller screens and touch-based interactions.
Considers various screen sizes and user interface considerations across platforms.
Targeting Capabilities
Utilizes mobile-specific data points like geolocation and app usage for targeting.
Offers a broader range of targeting
capabilities, including demographics, behaviors, and
interests.
Measurement and Analytics
Provide specific metrics for mobile- specific campaigns, such as app installations and in-app engagement.
Offers comprehensive measurement tools covering website traffic, conversions, social media reach, and ROI.
These activities are designed to reach the right audience, deliver relevant messages, and drive desired actions. Digital marketing has become increasingly important in today's business landscape due to the widespread use of digital devices and the internet. It allows businesses to target specific audiences, measure and track results, and tailor marketing efforts based on consumer behavior and preferences. This may directly or indirectly influence the cost management of the day-to-day business operation of a company. Cost management defined as the process of planning, estimating, budgeting, controlling, and analyzing costs associated with business operations and activities (Horngren, Datar, & Rajan, 2018; Hansen & Mowen, 2018;
Drury, 2020), plays a crucial role in helping managers make informed decisions, achieve organizational objectives, and improve productivity and profitability. It involves activities such as
cost estimation, cost control, and cost analysis, enabling effective resource allocation and expense monitoring (Horngren, Datar, & Rajan, 2018).
By applying cost accounting and costing techniques, organizations can plan, control, and monitor costs to optimize performance and enhance competitiveness (Hansen & Mowen, 2018). The collection, analysis, and dissemination of cost information enable management to make informed decisions, execute plans, and achieve cost efficiencies (Drury, 2020). Overall, cost management is a critical aspect of business operations, enabling organizations to effectively manage costs and resources in pursuit of financial objectives.
Digital Marketing and Cost Management
Digital marketing and cost management are closely interconnected as effective cost management practices play a vital role in optimizing digital marketing expenses and maximizing return on investment (ROI). By implementing cost management strategies, businesses can ensure that their digital marketing efforts are efficient and cost-effective.
One example of the relationship between digital marketing and cost management is the use of targeted advertising platforms. These platforms enable businesses to narrow down their audience targeting based on various demographics, interests, and behaviors, allowing them to allocate their advertising budget more efficiently (Chaffey & Smith, 2017). By precisely reaching the desired audience, businesses can minimize wasted ad spend and increase the likelihood of converting leads into customers.
Another example is the optimization of content for organic reach. By creating high-quality, engaging content that resonates with the target audience, businesses can reduce reliance on paid advertising and increase organic visibility and engagement (Gupta, 2021). This approach helps minimize the costs associated with paid advertising campaigns while still driving traffic and conversions.
Furthermore, leveraging the power of influencers can be a cost-effective digital marketing strategy. Collaborating with influencers who have a strong local presence allows businesses to tap into their existing audience and credibility, reducing the need for extensive advertising campaigns (Lodish et al., 2020). Micro-influencers, with smaller but highly engaged followings, can be particularly effective in reaching niche markets at a lower cost compared to macro- influencers.
By closely monitoring and analyzing marketing spend, businesses can identify areas of high and low ROI, enabling them to reallocate resources accordingly. This process involves analyzing the performance of different marketing channels, campaigns, and tactics to determine the most cost- effective strategies (Smith & Chaffey, 2021). Through continuous evaluation and optimization, businesses can ensure that their digital marketing efforts are aligned with their budgetary constraints and organizational goals.
Cost management practices in digital marketing are crucial for maximizing the efficiency and effectiveness of marketing expenditures. Targeted advertising, content optimization for organic reach, influencer collaborations, and thorough analysis of marketing spend are some of the strategies that allow businesses to strike a balance between cost control and achieving desired marketing outcomes.
Company Performance
Digital marketing and cost management practices contribute to enhancing company performance by driving cost-effective marketing strategies and maximizing return on investment (ROI). In Indonesia and Malaysia, businesses have leveraged these practices to achieve significant performance improvements.
One example of how digital marketing and cost management positively impact company performance is through the use of targeted advertising platforms. By utilizing platforms like Google Ads and Facebook Ads, businesses can precisely target their ads to specific demographics, interests, and behaviors, ensuring that their marketing budget is spent on reaching the most relevant audience (Chaffey & Smith, 2017). This targeted approach helps increase the efficiency of marketing spend, leading to higher conversion rates and improved company performance.
In Indonesia, Tokopedia, an e-commerce platform, implemented cost management strategies by optimizing its digital marketing expenses. By adopting a data-driven approach, the company analyzed the performance of different marketing channels and campaigns, identifying the most effective ones in terms of generating sales and customer acquisition (Bain & Company, 2021).
This enabled Tokopedia to reallocate its marketing budget to the most profitable channels, resulting in improved company performance and revenue growth.
Similarly, in Malaysia, Grab, a ride-hailing and food delivery platform, effectively utilized digital marketing and cost management practices. Grab focused on influencer marketing and targeted digital advertising to reach its desired audience while optimizing costs. By collaborating with local influencers and leveraging social media platforms, Grab increased brand awareness and customer engagement without incurring high advertising expenses (Grab, 2021). This approach contributed to improved company performance by driving user acquisition and increasing customer loyalty.
Conclusion
In both Indonesia and Malaysia, cost management practices in digital marketing have allowed companies to allocate their resources more efficiently, ensuring a higher return on investment. By closely monitoring and optimizing marketing spend, businesses can identify areas of high and low ROI, enabling them to make informed decisions about resource allocation and marketing strategy adjustments (Smith & Chaffey, 2021). This data-driven approach to cost management helps optimize marketing efforts, improve company performance, and drive sustainable growth.
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