Digital marketing has gained popularity in the recent years and has provided a useful opportunity to organizations for marketing their products and services. The domain includes emails, social media, mobile apps and website which help the organizations to connect with customers. The PESTLE analysis of digital marketing includes discussion on the macro environment factors that create industry dynamics.
Political Factors
Government’s policies and stance towards digital marketing tools determine the ease with which businesses can engage in digitalization of their marketing function. In some cases, government imposes restrictions on social media platforms which disrupt the digital marketing industry. The government can also take the step to restrict a social media platform for a certain time period.
For instance, US congress was considering putting a ban on TikTok since the digital platform was deemed as becoming a new source of addiction for users (Capoot, 2023). Such restrictions can limit the ability of businesses to rely on social media tools for marketing purposes and create barriers to the operations of digital marketing domains.
Political stability is another area which affects the digital marketing industry dynamics. Due to political uncertainty the digital marketing industry can suffer as businesses reduce their expenditure on marketing. The businesses consider the political climate in order to make decisions pertaining to digital marketing.
Economic Factors
The economic uncertainty necessitates the need to allocate organizational resources strategically to handle the negative impact of economic pressures. During economic slowdown, businesses tend to lower their spending in the domain of digital marketing. In addition, the consumer spending is also negatively affected as a result of declining economic condition (Joseph, 2022).
Inflation is one of the economic factors that carry implications for the digital marketing industry. Higher cost of energy, fuel and labor affect the overall business expenses and increased inflation adds on to the financial strain. The companies providing digital marketing services and the platforms supporting digital presence have to respond to this price hike accordingly.
Social Factors
The tendency of people to use social media and mobile apps affects the likelihood of success of digital marketing industry. A high number of users of digital platforms indicate that the industry provides a wide target market reach. Organizations are focusing on digital presence along with using print and electronic media, deeming it as a part of the lifestyle of new generation.
A great number of organizations are increasingly relying on digital presence as a means of connecting with the customers and expanding their market reach. From small scale organizations to large firms, digital presence is seen as the key to business growth and expansion. As a result, omnichannel marketing and digitalization has become the main focus for organizations.
COVID has significantly increased the time people spend on social media as social distancing and work from home opened up opportunities for digital marketing. Certain industries have benefited from digital marketing during the pandemic, such as healthcare segment which addressed the safety and health needs of the customers (Pasaribu et al., 2022).
Technological Factors
One of the main factors that play a crucial role in the development of digital marketing industry is the level of technology available. Developments in technology have enabled the digital marketing platforms to flourish. The addition of new features and seamless digital experience are linked with the integration of robust technology.
Digital companies have to make sure that the software and hardware are working effectively, and any issues are addressed deftly. Repeated issues with website, social media portals or mobile apps disrupt organization’s e-commerce activities and discourage organizations from continuing the use of these platforms. Therefore, the quality of service is of central importance.
An example of digital marketing platform is social media platforms that use AI tools to make the user experience customized. The advertising process is shaped according to the demographics and preference of the social media users. Effective targeting of the market makes social media a suitable tool for carrying out an organization’s marketing activities.
Mobile apps are another segment that has flourished significantly owing to the development of technology. Various organizations benefit from the presence of their business apps, which have been particularly useful during the pandemic. Customers relied on online purchases, which caused a surge in e-commerce activities, leading to growth of digital business presence.
Legal Factors
The legal framework for digital marketing industry outlines the laws related to management of customer data and maintaining privacy of the data. The law maker agencies develop these guidelines for the digital marketing companies. In case of US Federal Trade Commission (FTC) has put regulations in place that make the online transactions safe for customers.
The regulations governing the industry help the organizations to position themselves as a credible business. Moreover, the digital marketing platforms have to maintain a specific level of transparency to indicate that they are not exploiting the customer data. Overlooking the privacy of the customer data has resulted in legal issues for organizations.
A notable example in this case is Facebook that has frequently faced criticism due to poor management of customer data privacy (Newcomb, 2018). The collection of user data through AI tools serves the purpose of improved marketing, but it also exposes the company to litigations when the data is misused.
Another way legal framework effects companies marketing is that they are bound to perform marketing activities that are within the ethical framework. Organizations have to adhere to the legal regulations and identify what can’t be marketed. Digital marketing domain also needs to be careful about intellectual property and copyright laws.
Environmental Factors
The environmental factors include the focus of organizations on sustainability. The management takes decisions pertaining to climate impact and makes alterations in the operations. Some of these changes are observed in the form of recycling, renewable energy sources and controlling the emissions.
The increased emphasis on adoption of environment friendly operations motivates companies to seek such sustainable options. The digital marketing industry offers an alternative to the traditional paper based marketing through print media. The shift to digital medium is lowering the environmental damage and carbon footprint (Thangam & Chavadi, 2023).
Conclusion
The digital marketing industry is supported by the technological advancement, achieving fast paced growth. The macro environment is creating favorable dynamics for the industry as the availability of advanced technology, shifting consumer focus on digital medium and sustainability facilitates industry development.
References
Capoot, A. (2023). More social media regulation is coming in 2023, members of Congress say. CNBC. Retrieved from: https://www.cnbc.com/2023/01/01/more-social-media-regulation-is-coming-in-2023-members-of-congress-say.html
Joseph, S. (2022). Global economic crisis sparks reappraisal of online ad spending by brand marketers. Digiday. Retrieved from: https://digiday.com/marketing/global-economic-crisis-sparks-reappraisal-of-online-ad-spending-by-brand-marketers/
Newcomb (2018). A timeline of Facebook’s privacy issues — and its responses. NBC News. Retrieved from: https://www.nbcnews.com/tech/social-media/timeline-facebook-s-privacy-issues-its-responses-n859651
Pasaribu, S. B., Novitasari, D., Goestjahjanti, F. S., & Hendratono, T. (2022). The impact and challenges of digital marketing in the health care industry during the digital era and the COVID-19 pandemic. Frontiers in Public Health, 10. doi: 10.3389/fpubh.2022.969523
Thangam, D., & Chavadi, C. (2023). Impact of Digital Marketing Practices on Energy Consumption, Climate Change, and Sustainability. Climate and Energy, 39(7), 11-19.