The Evolution of Marketing Channels: Trends and Research Directions
Journal of Retailing, 91(4), 546-568.
51 Pages Posted: 5 Aug 2018
George W. Watson
Southern illinois university - southern illinois university at edwardsville, stefan worm.
BI Norwegian Business School
Robert W. Palmatier
University of washington, shankar ganesan.
University of Arizona - Department of Marketing
Date Written: March 1, 2015
Despite the vast increase in marketing channels research published in the past decade, few contemporary analyses review or synthesize the domain. This article provides a comprehensive review of marketing channels research from 1980 to 2014. To present a multidimensional view of marketing channels, the authors evaluate extant literature from four perspectives: (1) key theories and constructs, (2) marketing channel strategies, (3) units of analyses, and (4) substantive topics in channels research. A content analysis of the relevant topics within each perspective that have had the greatest impact on channel research provides insights into research trends. This multidimensional analysis offers an integrated guide to extant literature, as well as an outline of promising directions for research, in light of the most significant trends.
Keywords: marketing channels, retailers, wholesalers, franchisors, distributors
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- DOI: 10.2307/3151867
- Corpus ID: 167737701
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The rise of digital marketing in medtech
Healthcare professionals (HCPs), like many others, have been profoundly affected by the shift to remote work triggered by the COVID-19 pandemic. As they have become more comfortable with remote work and digital communications, medtech companies have realized the importance of adapting to digital to better engage with HCPs, including digital marketing, e-commerce, and virtual sales channels. This important shift to omnichannel engagement in medtech was highlighted in an earlier McKinsey article where we reported that 45 percent of HCPs expect few in-person interactions with sales reps. Here, we explore how leading medtech companies are using digital-marketing and analytics tools to tailor the content, timing, and format of their interactions with HCPs to improve the quality of engagement and the returns on their marketing investments.
The growing role of digital
In the past few years, medtech companies have been ramping up their digital-marketing capabilities to serve HCPs and healthcare systems more effectively. They have built skills in designing and implementing marketing campaigns via email, social media, and other channels. They have developed expertise in search engine optimization (SEO) and search engine marketing (SEM). And they have embraced digital-channel management, web-platform and app management, and other new commercial disciplines.
To understand how digital marketing is evolving in medtech, McKinsey conducted a survey of 100 companies (44 in the United States and 56 from the EU5 1 France, Germany, Italy, Spain, and the United Kingdom. ) in early 2021. As recently as five years ago, the majority of medtech companies (65 percent of the survey sample) spent no more than 20 percent of their marketing budget on digital marketing. However, by 2020, most of the companies surveyed (84 percent of those based in the United States and 74 percent in the EU5) had shifted more of their budget to digital marketing. What’s more, about one in five of this group had redirected at least 50 percent of their marketing budget to digital marketing (Exhibit 1).
More than 90 percent of surveyed companies reported that the success of their digital marketing had improved by 10 percent or more.
We expect this shift to continue in the next few years, with the average medtech company dedicating 40 percent of its marketing budget to digital marketing. Most of the companies in our survey felt the shift has been productive: more than 90 percent of the sample reported that the success of their digital marketing had improved by 10 percent or more, as manifested in higher returns on investment, particularly for US medtech companies, where 50 percent of respondents in our survey reported a 20 percent or greater ROI (Exhibit 2).
As resources are reallocated to digital marketing, how are medtech marketing teams using these increased budgets? Success stories from medtech leaders have indicated that the funding is mainly being allocated to four key areas: product launches, lead generation, “next-best-action” analytics, and omnichannel campaigns.
Product launches. With most trade shows and conferences canceled because of the pandemic, medtech product launches have largely shifted to digital channels. Among the companies in our survey, 80 percent reported having used email and social-media campaigns to launch a new product in 2020, while 65 percent had launched products at online conferences. US and EU5 companies used much of the same digital platforms to launch their products, except that US companies were more likely to use online conferences than their peers in the EU5 (Exhibit 3).
Lead generation. As HCPs embraced remote interactions, medtech companies intensified to use digital marketing for lead generation. Among the companies in our survey, 45 percent believed that email campaigns were the most effective digital channel for generating new opportunities during launch, while another 40 percent favored social-media campaigns. Also, for post-sales communication, the use of personas to personalize messaging and tailor the relevant digital channels, as one global medtech player has implemented, can be very effective (Exhibit 4).
‘Next-best-action’ analytics. In recent years, it has become important to convey a value proposition that goes beyond a single product to the broader portfolio of solutions. “Next-best-action” analytics can help enhance digital-marketing campaigns to work closer together with other marketing and sales channels. There is a strong need for that, highlighted by 74 percent of respondents. The impact is a better coordination between channels. Additionally, analytics can help medtech companies to reach HCPs with additional product solutions that can complement their current purchases and create value for the HCP, the healthcare facility, and the patient. In more advanced applications, some life-sciences companies are incorporating machine learning to build integrated data pipelines and dashboards that can help sales reps segment and prioritize each account, and enable a more customer-centric approach to engaging with each HCP, including next-best-action solutions to meet each HCP’s needs.
Omnichannel campaigns. By using a coordinated, multichannel approach to marketing campaigns, medtech companies are able to engage with HCPs at the right time with the right message in the right format. Successful companies are including digital campaigns along with more traditional channels, such as inside sales and face-to-face rep visits, as an important component of their omnichannel strategy to reach HCPs. Also, while more than half (55 percent) of the companies in McKinsey’s survey sample, regardless of location, indicate they run multichannel campaigns, more US companies also run cross-division campaigns (30 percent, compared with 20 percent in the EU5), often using multichannel and cross-division campaigns in combination.
Recent successes give a sense of the promise of digital marketing for medtech companies. One global medtech company optimized its paid search, launched and refined new social-media ad campaigns, and used A/B testing to inform weekly landing-page updates—thereby increasing qualified leads more than fivefold within four months. By deploying agile marketing and digital channels, a smaller medtech company went from launching one or two new messages for professionals and patients every two to three months to market-testing more than 50 messages in three months, resulting in a 20-fold increase in average lead volumes for prioritized product families. And when a global medical-device company purchased licenses for a social-media marketing platform, it saw the digital connections of a hundred of its staff soar from 1,500 other users to 70,000 in just six months.
Five pitfalls to avoid
It is clear, then, that digital marketing can help medtech companies address the recent shifts in HCP engagement, whether as part of a focused marketing campaign or as an ongoing “always on” means of communication. However, we have seen a number of pitfalls that companies should take care to avoid if their efforts are to be successful in digital marketing:
Implementing digital marketing in isolation. The move to an omnichannel approach requires companies to link digital marketing to other channels, including inside sales and face-to-face sales reps. Proper change management should be implemented to ensure the onboarding of sales teams, customer service, and other commercial functions on digital-marketing tactics and agile ways of working . Effective communication with HCPs depends on a clear understanding of the purpose, timing, and method of engagement for each interaction.
Failing to define clear ownership. To present a globally unified message, digital-marketing content needs its own “home” in the organization, as well as its own budget. Best-practice companies set up a center of excellence (CoE) or other central unit charged with driving the overall strategic vision and creating content tailored to the digital-marketing strategy and stored in a centrally available library. Individual regions can then draw on this content and adjust it to reflect regulatory requirements and other local circumstances. Exhibit 5 illustrates the interplay between the central organization and regions in a hypothetical product launch. However, companies need to avoid making too many regional modifications, as this can dilute the intended messaging. Putting guardrails in place helps to ensure the type and extent of local tailoring stays within acceptable limits. For the CoE, meanwhile, high-impact activities include HCP prioritization and recommending the next best actions for sales reps. By demonstrating quick wins from steps like these, the CoE will build confidence in its effectiveness in the rest of the organization.
Neglecting digital capabilities and tools. Building a digital-marketing channel requires the right talent. A CoE typically consists of a digital-marketing lead, product owners, user-experience and user-interface designers, campaign and channel experts, and data analysts. The regional teams responsible for implementation usually include campaign managers and content managers who tailor the strategies and content developed by global teams to fit local needs. Alongside talent, companies also need to invest in a digital-marketing platform that is integrated into their CRM system. They can start with basic digital tools (for example, optimize campaigns; dynamically improve digital-marketing channels like search engine advertising key-word selection; analyze click-through, conversion rates) and data-integration initiatives and move on to more advanced capabilities such as digital analytics (for example, cross-channel attribution modeling) and A/B channel–campaign testing as their experience matures.
Overlooking performance metrics. Without rigorous monitoring, a company won’t be able to assess the impact of digital marketing at the regional level or manage incentives and resource allocation effectively. Having a central team define and track key performance indicators (KPIs) helps to ensure that efforts achieve their intended goals and have a positive return on investment. Commonly used KPIs include cost per conversion and purchase volume. Additionally, a CoE can track more advanced KPIs (for example, channel impact using attribution models instead of “last-click attribution” and cross-region impact comparison). A sound governance structure is needed too, with results routinely reported to leadership and global teams deployed to support regions if the expected impact fails to materialize.
Underestimating the power of digital engagement. Today’s HCPs are heavily invested in digital in general, and in particular, social-media business and networking platforms, physician-to-physician online communities, and search engines. The CoE or centralized unit overseeing digital strategy can ensure their company is benefiting from the power of digital engagement, identifying trends across channels, and designing a strategy for HCP prioritization with a message that addresses their unmet needs at the right moment via the right channel.
Developing a strong digital-marketing function takes time and effort and requires visible support from senior leaders. How effective it will be as a driver of HCP engagement depends on how well—and how quickly—medtech companies can embed it in omnichannel customer journeys, build internal capabilities, and use data and analytics to personalize communications to meet individual healthcare professionals’ needs.
Ralph Breuer is a partner in McKinsey’s Cologne office, Elizabeth Guenther is a consultant in the Southern California office, Rukhshana Motiwala is a senior capabilities and insights expert in the New York office, and Christian Zerbi is a partner in the London office.
The authors wish to thank Jerome Königsfeld, Delphine Nain Zurkiya, Julia Samorezov, and Valérie Van der Voort for their contributions to this article.
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