Isobar and alpha DNA launch Digital Strength Index

WHAT IS DIGITAL STRENGTH?

Based on over five years of data gathering, analysis and benchmarking, the Digital Strength Index is an aggregate measure of the digital performance of the top 1000 public companies in the US. The index can determine those companies’ relative digital position across a composite set of analytic measures. Most importantly, the index translates the digital strength score of companies into forward looking top-line growth acceleration expectations.

 

“Digital strength may be the most important determinant of business health and future growth not being measured…” – Harvard Business Review 

Building Blocks of Digital Strength

Magnitude

Magnitude measures the volume of digital customer interactions for a business across the broad online landscape. It is represented as a z-score calculated within the specific competitor peer set. It aggregates a diverse set of metrics across platforms (site, search, social) and effectiveness dimensions (penetration, engagement, popularity). Bigger businesses with larger customer files should score high on Magnitude.

Share

Share contextualizes the volume of digital customer interactions relative to the overall size of a business, its customer base and total revenues (online and offline channel revenues aggregated). It is represented as a percentage calculated within the specific competitor peer set.   High growth companies tend to score better on this Share measure since digital interactions often reflects underlying growth dynamics in the customer base and points to market share gains in the near future.

Momentum

Momentum captures the strength of the incoming trend in digital customer interactions for a business in recent times, typically 2-3 years depending on the category. A range of velocity measures are considered to represent Momentum, i.e., month-over-month, quarter-over-quarter, year-over-year change in order to de-seasonalize the data across categories over time and tease out true changes in acceleration.   It is represented as a percentage of digital acceleration measures with positive growth. Businesses experiencing customer acquisition spurts typically score high on Momentum.

Growth

Growth is the translation of change in digital velocity to forward looking topline revenue growth expectations for a business. The predictive signal has been developed primarily to rank order a portfolio of companies based on their future growth potential. The underlying algorithms leverage and benefit from near-real-time digital data on businesses available after the last quarter earnings release publicly disclosed by the company. Growth is expressed as a year-over-year percentage change in topline revenue expected in the upcoming period.

Trajectory

Trajectory reflects the strength of the fit between digital customer interactions and overall revenues of a business over time. Companies with fundamentally stronger customer bases, superior customer experience and high growth profiles typically have a digital trajectory that mirrors its revenue trajectory.   Conversely, struggling businesses lag in their digital act compared to peers and it manifests in poor digital correlation measures. Trajectory is visualized as a measure of correlation.

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