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Breaking down borders

By Eshani Bhatt,

From market testing to brand building and go-to-market strategies, digital is critical to supporting effective international expansion

Digital can be a powerful tool for supporting fluid cross-border expansion. From aiding decision-making around which geographies to prioritise, to acting as a first (virtual) foot in the market, to negating the need for costly physical infrastructure and on-the-ground staff, a comprehensive and yet nuanced digital strategy is critical to penetrating new markets.

Here, we will outline how international expansion can best be incorporated into a digital strategy, using a framework we have developed whilst supporting our private equity clients with their international digital deals.

Digital can be a powerful tool for supporting fluid cross-border expansion.

Local knowledge

The first step, of course, is to ensure you truly understand the digital ecosystem, channel dynamics and behaviours of your new target market. This will involve conducting detailed research to help shape and nuance the expansion framework. In particular, search trend analysis is critical, to help get under the skin of local customers and to understand their behaviours and needs. It is necessary to analyse key digital customer journeys – for example, whether websites are transactional or more research-orientated, the levels of digital penetration and the role that offline may play.

A review of competitive dynamics is equally important, in order to understand the channel tactics and key platforms used. For example, expansion into Russia may focus on Yandex, over Google Search, whilst in China, the emphasis is likely to be on QZone. A competitive review will also be helpful in identifying other significant market trends. In Poland, for example, Allegro is a key marketplace which is in marked contrast to the majority of other markets where Amazon dominates.

Brand awareness

Brand awareness is critical for successful international expansion. Typically developed through long-term investment in not only digital but also ATL/PR, awareness in new territories may already benefit from the halo effect of digital brand building in existing markets. It is vital to understand burgeoning levels of awareness, therefore, before deciding whether to focus on a single international brand or to develop individual local market brands.

There are some fantastic examples of tailoring a single brand, which can drive both authenticity and engagement amongst local audiences. Flash cleaning products, for example, are branded Maestro Limpio in Mexico, Mastro Lindo in Italy, Meister Proper in Germany, all with distinct brand identities.
This approach does not suit all businesses, however, so analysing brand search, social mentions and sentiment can help determine which brands, in which territories, should be preserved in a cross-border buy and build scenario. Equally, when considering exporting a brand, it is important to explore how well that brand is likely to translate internationally. For example, Barf is an Iranian detergent, which literally translates into snow, in English, but clearly holds very different connotations in other markets.

Companies should also explore whether existing social media profiles are local or global and whether the domain strategy is .com or .com/fr. While these can be changed to align with the overarching strategy, reviewing the existing setup and visibility can help support decision making.

A codified go-to-market strategy

It is important to ensure silos are minimised across international markets, which can occur when a business follows different operating models and processes in different territories. Codification of the international digital strategy, therefore, is key to ensuring expansion is scalable, repeatable and to avoid having to reinvent the wheel each time a new market is launched.

Businesses need first to understand the objective of their go-to-market strategy; is the goal to build awareness, market share or drive direct response? Once decided, it is important to articulate the short and long-term milestones to achieving this through a defined channel strategy.

Paid marketing is often a key first channel in building digital presence in a new territory because it can essentially be switched on to capture volume. Reliance on paid marketing in the early stages of expansion, however, is likely to have an impact on customer acquisition costs and wider unit economics. In codifying a go-to-market strategy it is important, therefore, to accept that there may be metric compromises in the early stages and companies will need to consider what ROI is deemed acceptable at what stage in certain markets.

This should be supplemented with free channels, including SEO and direct, which will help offset those costs further down the line. Free channels inevitably take longer to stimulate, so it is important to retain a long-term outlook and to focus on building strong foundations within these channels to ensure future success. There may also be an opportunity to build brand awareness through existing networks, including influencer activity which can encourage user-generated content.

Resource, support and structure

Of course, companies must also think carefully about the resourcing required to support the internationalisation of digital operations. Different team structures will suit different business models and should align to the approach regarding a single or multi-brand strategy.

One approach is to have international teams located in a centre of excellence, which ensures a streamlined approach and fewer silos but requires a firm understanding of localised requirements. Alternatively, brands can use satellite teams or market owners, who track local trends and own the go-to-market strategy but who may require attention to adherence to brand guidelines. Businesses may also choose to use a local market agency, which again requires a robust governance framework to ensure consistency across markets.

Having centralised teams for core digital services such as content, reporting, CRO and data can help deliver this. Translation resource is equally important, to ensure that content is adapted with nuance as this can impact SEO visibility, click through rates and user experience.

Adapting the framework

Once the framework and these operational structures have been developed, it is important to adapt the set up to suit individual market dynamics, including the level of digital maturity, local market search trends and customer behaviour.

This is a perpetual process and requires designated local market teams to manage, measure and optimise the go-to-market strategy, whilst staying abreast of changes in the local digital ecosystem.

International expansion is one of the most powerful drivers of growth and digital is a potent component of that strategy. There is no single route into new markets, but digital can be a potent enabler, whichever approach you choose to take.

Palladium is a digital and technology due diligence provider and digital transformation partner to Private Equity firms and their portfolios across Europe and the US. Palladium was named by Real Deals as 2020 Specialist Advisor of the Year at The Private Equity Awards.

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