When it comes to making decisions about a merger, acquisition or business partnership, marketing due diligence is essential. It’s easy to overestimate a target company’s success and underestimate the investment necessary to meet your sales targets following a merger or acquisition.
What looks like a successful marketing campaign on the surface (in terms of engagement and impressions) may not be as effective as converting sales, or reaching the desired audience. Marketing due diligence helps you identify areas of improvement and capitalise on unseen opportunities that can maximise the return on investment (ROI).
So what does comprehensive marketing due diligence entail? It encompasses looking at a business’s target audience, competitive positioning, channels used to promote products and services, marketing analytics, organisational structure, as well as new opportunities for generating demand.
By taking a strategic approach to marketing due diligence, you can assess the strengths and weaknesses of a business’s current strategy. This allows you to set realistic goals that are achievable with minimal risk.
In this blog, we’ll discuss the importance of marketing due diligence and provide best practices for conducting a successful analysis.
Marketing Due Diligence IS NOT Market Due Diligence
A quick Google search will show you that the terms market due diligence and marketing due diligence are often conflated. The difference is that marketing due diligence hones in specifically on a target company’s marketing strategy and performance. Market due diligence, on the other hand, looks more broadly at the commercial potential of the overall industry and market.
Marketing due diligence can and should form part of market due diligence, but it is important to understand the distinction between the two. Marketing due diligence gives you a comprehensive overview of how effectively a company is using its resources and strategies to promote its products and services amongst its target audience.
Why Marketing Due Diligence is Important
Having an understanding of a potential business partner’s marketing strategy is essential to make well-informed decisions. Marketing due diligence helps you identify:
- Target consumers
Marketing due diligence allows you to take a closer look at the demographic and psychographic traits of the target company’s customers. Understanding why they are drawn to the product or service can help you focus your efforts more effectively, as well as identifying new opportunities to reach out to potential customers.
- Marketing channels
Companies use different tools and platforms, such as email, social media and search engines to reach their target audience. Marketing due diligence can help you determine which channels are currently being used effectively and where these is opportunity for improvement.
- Marketing budget distribution
Marketing due diligence helps you identify where the target company has allocated its marketing budget and how it is measuring success. This information can be used to identify which strategies are most and what modifications should be made in order to maximise ROI.
- Success of past campaigns
How efficient is their current marketing strategy at attracting and converting target consumers? Marketing due diligence allows you to measure the past performance of each campaign to determine which tactics have been successful and where opportunities for improvement lie.
- Competitive positioning
Marketing due diligence helps you to understand how the target company is positioned against its competitors. How does the company differentiate itself from others in the market, compared to its competitors, is it effective at reaching out to potential customers and engaging with them?
Best Practices For Marketing Due Diligence
- Accurately identify target market
Before you can measure the effectiveness of a company’s marketing strategy, you first need to identify who they should be reaching out to.
Suppose a company is receiving a lot of engagement, but that engagement isn’t resulting in conversions. In that case, it could indicate that their target market is not properly defined, or that their messaging isn’t landing with their target market.
When defining a target market, businesses often heavily rely on demographic information (age, gender, location, etc.) But there are other factors which have a considerable bearing on the effectiveness of a marketing strategy, such as psychographics (personality traits, values, beliefs, interests, etc.).
Using AI, you can uncover deep psychographic insights into the target company’s existing customers, and from there discover whether their marketing messaging is successfully connecting with their audience.
- Evaluate existing marketing channels and budget distribution
Request a breakdown of the marketing channels that the target company is using and how much of their budget they allocate to each one. This will help you determine where their efforts are currently focussed and whether resources are being optimally used.
For example, if they are investing heavily in print ads but their target market is primarily digital-savvy millennials, then it’s clear that a shift of resources needs to occur. Similarly, if one channel is significantly underperforming compared to others, this could be as a result of inefficient budget allocation and further analysis on this area may be required.
- Analyse marketing execution efficiency
It’s not just about what channels a company is using, but how efficiently they are executing their marketing strategy. Marketing due diligence helps you to evaluate the efficacy of past campaigns and identify areas for improvement.
An effective way to do this is by examining their customer journey maps. Marketing analytics can provide valuable insights into how customers are interacting with the company’s messaging at each stage of the sales funnel and whether they are effectively converting into loyal, repeat customers.
Using a text analysis tool like Symanto Insights, you can see whether marketing campaigns generate conversation among brand loyalists online. Vanity metrics such as likes and followers are not always reliable indicators of success, but positive sentiment among loyal customers is an indication that campaigns have been successful in capturing their attention.
- Conduct thorough competitive analysis
When considering a merger or acquisition, it is important to evaluate how the target company stacks up against its competitors. Marketing due diligence allows you to compare their positioning and performance to see where they have an edge, and where they could improve.
It also helps to uncover untapped opportunities, such as new markets that the target company could be targeting or marketing strategies that their competitors are using successfully.
With Symanto, you can quickly and easily compare how consumer conversations differ between competitors, enabling you to make informed decisions about which marketing strategies the target company should be focussing on.
Marketing due diligence is essential for any merger, acquisition, or business partnership. It helps to identify key opportunities and risks associated with the target company’s marketing strategy, enabling decision-makers to make informed decisions based on reliable data-driven insights.
Get Started with Symanto
Symanto’s suite of NLP technology enables you to get more from consumer data. Read between the lines of consumer reviews and social media posts to find out how customers really feel about the latest campaign or product launch. Find out more about what drives customer decision making, and what turns a first-time customer into a brand loyalist.
By leveraging Symanto’s text analysis and AI-driven insights, you can gain a deeper understanding of customer segments, marketing performance, and competitive landscapes – all essential elements for successful marketing due diligence. With this information in hand, organisations can make more informed decisions about their partnerships and investments to ensure sustainable growth.
Get in touch to find out more, or register today for a free 21-day trial of our Symanto Insights Platform and start unlocking the potential of consumer conversation data.