COMPASS MAGAZINE #10
COMPASS MAGAZINE #10

MARKETING COMES OF AGE Armed with data-driven strategies, marketing shifts the balance of power in business

Modern technology helps marketers to better measure, predict and influence consumers’ purchasing activity while creating exciting new ways to engage their senses. With new success, however, comes new pressure.

Marketers are scrambling to meet soaring expectations – both inside and outside their organizations – as proliferating channels put a strain on skills and budgets.

For decades, marketing experts have collected all of the data they could find to piece together pictures of consumer “types” – women 18-35, men with an active outdoor lifestyle, soccer fans – striving to understand them well enough to craft messages these groups would embrace. That task just got a lot easier.

Technology – digital, mobile, social – has created fundamental changes in how and where consumers get their information and what they expect from brands. In turn, the ability to track consumer behavior with technology has transformed marketing all along the path from consideration to purchase to loyalty. The combination of big data with technology-driven advances in creative development and distribution techniques is helping to push marketing strategy from an art form crafted largely by intuition and creativity toward a technology-driven and data-focused science.

Adding technology and science to marketing’s arsenal doesn’t mean that creativity and intuition are doomed, of course. In an increasingly cluttered landscape where new channels of communication spring up almost daily, engaging creative that makes a brand stand out is more important than ever.

“The Web has millions of little niches and individual communities with people who intersect somehow,” said Nick Parish, editorial director for the Americas of Contagious, a UK-based consultancy that describes its mission as “making brands braver.” “That’s where data comes in, but also where really great creative ideas come in. Data is important, but we can’t short sell the ability to create ideas that transcend.”

MELDING CREATIVITY WITH DATA

Although the need for creativity hasn’t changed, the strategy underlying the creative process has. With the ability to mine valuable observations, guidance and growth actions from big data, marketing is learning to combine data-derived insights that guide strategic development with cutting-edge technologies to deliver experiences that are immersive and entertaining.

“With consumers completely in control of the buying process today, and the fact that consumers have an informational device, also known as a smartphone, with them at all times, we can and will be ignored at will,” said Joe Pulizzi, founder of the Content Marketing Institute, a Cleveland-based company that trains organizations in how to engage consumers with great content. “To get any kind of attention, we need to focus on the 99% of the time when customers don’t need us. How do we do that? We need to create valuable experiences for customers outside the products and services we offer.”

“WHEN PEOPLE ASK ABOUT THE OPPORTUNITIES AND CHALLENGES IN MARKETING, IT’S THE SAME THING: CONSUMER DATA.”

MARC DE SWAAN ARONS CMO OF MILLWARD BROWN VERMEER

Those “experiences” capture customers’ attention by engaging, informing and even delighting them. Run-of-the-mill marketing tactics need not apply. Forrester Research of Cambridge, Massachusetts, found that 49% of consumers don’t trust digital ads, 38% don’t trust email and 36% don’t trust branded apps, leading Forrester to conclude that customers “crave useful interactions,” no matter the platform or delivery mechanism.

Using data in engaging ways yields better returns. McKinsey & Company, a management consulting firm based in New York City, found that companies that use big data and analytics effectively are as much as 6 percentage points more productive and profitable than those that don’t. McKinsey also looked at 250 marketing engagements over five years and found companies that “put data at the center of the marketing and sales decisions” improved their marketing return by 15% to 20%.

A more recent study by Forbes Insights, which conducts primary research for companies worldwide, found that leaders in data-driven marketing were six times more likely than non-data-driven companies to increase profitability and five times more likely to note an increase in customer retention.

B2B’S UNIQUE CHALLENGE

Of course, consumer companies aren’t the only ones grappling with the impact of the digital revolution. Business-to-business (B2B) companies are facing the same technology and customer challenges. With longer sales cycles, more influencers and many digital points of contact, customization and targeting are especially important to B2B companies.

Pulizzi cited OpenView Venture Partners, a Boston-based venture capital firm, as a B2B company that effectively combines content experiences with digital data. OpenView provides free, high-quality information for entrepreneurs. That largesse has allowed OpenView to develop a subscription list of more than 30,000, which management can use to identify and target their next investments.

US$70 billion

Although only about a decade old, digital marketing is already a US$67 billion industry, according to Forrester.

Marie Taillard, associate professor of marketing at ESCP Europe of Paris, the world’s oldest business school, cites GE Aviation’s use of software that permits customers, sales and marketing to communicate and collaborate in real time as an example of “one piece of technology enabling an entire ecosystem.” Open marketing collaboration in business-to-business is significant, she said, “because it’s a technology change, but it’s also a huge cultural and organizational change.”

MARKETERS ON THE HOT SEAT

The cultural and organizational changes that are occurring reverberate loudest for chief marketing officers (CMOs), whose functions, responsibilities – even their titles – have been influenced by the digital tidal wave. A recent Harvard Business Review article, for example, pointed out the need for “chief marketing technologists” who blend strategy, creative development and technology as part of evolving C-suite roles.

While only a few companies are combining the chief marketing and chief technology officer roles and adopting blended titles like CMTO, most are realizing that the two executives and their teams must become close collaborators. Gartner, a research and advisory firm based in Stamford, Connecticut, found in its 2015 CMO study that 81% of large organizations have a chief technology officer, most of whom report to marketing chiefs. Along with role changes, budgets also are shifting. Gartner predicts that by 2017, CMOs will control more of the technology budget than chief information officers do.

“The role of marketing is broadening and taking on disciplines that were once outside marketing, like customer care and technology,” said Rohit Bhargava, marketing consultant, author, and CEO and founder of Influential Marketing Group, a digital strategy consultancy. “The lines are blurring because the channels are blurring.”

Marc de Swaan Arons, CMO of Millward Brown Vermeer, a global marketing consultancy, is co-author of the company’s Marketing 2020 report. In this era of digital change, he said, the CMO role and the entire marketing department need to reorganize.

“What we do in marketing is changing beyond recognition, but how we organize is eerily the same as 50 years ago,” de Swaan Arons said. “Marketing has become too important to leave to just the marketers at a company. All other disciplines are saying, ‘Help us figure out what to do next,’ and they’re looking at marketing.”

The study, done in conjunction with advertising associations worldwide, found that the general view of CMOs – once thought of by the rest of the executive board as spenders with little responsibility for revenues – has equalized in importance with the rest of the C-suite over the past decade.

But marketing chiefs are dealing with the toughest challenges of their careers. Marketing budgets are shrinking, even as the number of marketing channels increases exponentially. While more data can result in a more scientific approach to marketing’s activities, it also increases the need for emerging, hard-to-find marketing skills and ratchets up the pressure to deliver measurable results.

NEW TECHNIQUES FOR NEW TIMES

The tools and techniques that marketers have at their disposal multiply and advance almost daily. While by no means an exhaustive list, some of the major trends include:

Mobile. Consumer adoption of mobile devices, and especially smartphones, will influence marketing as companies work to figure out the best way to reach people on the go. Optimization, targeted contextual marketing, mobile payments, tracking and measurement and the addition of wearables to the mix are top trends for 2015.

Social media. According to Gartner’s most recent survey of CMOs, spending on social media will increase more than 125% over the next five years, from just 10% of marketing budgets now to more than 22% in 2020. While brands are energized by the ability to have direct relationships with customers, those relationships also come with increased risk.

2017

Gartner predicts that by 2017, CMOs will control more of the technology budget than CIOs do.

“You don’t have to screw up very much today to lose a customer’s trust,” said Glen Urban, chair of the Massachusetts Institute of Technology’s Center for Digital Business and an emeritus professor of marketing. But Urban said he also believes that social media storytelling, in which customers relate their personal brand stories and experiences, is one of marketing’s most powerful tools. Visual elements are playing a more important role too, with apps that include Instagram, Vine and Snapchat helping consumers to create more artistic stories, which also include brands.

Analytic and Predictive Technology. Data analytics is advancing rapidly, moving beyond the ability to analyze current behavior and toward predicting customer needs and wants. This ability will only improve as an even greater deluge of data from smart devices, including vehicles, watches, TVs, refrigerators and home-management products, comes online. But with more data come bigger expectations.

“Millennials will tell you everything and expect you to use it,” de Swaan Arons said. “If you don’t, they’ll think badly of you. They’re driving big changes in consumer expectations.”

Using analytics to develop actionable insights depends on identifying relevant customer-behavior data. In creating its “House of Cards” original programming, for example, streaming-media provider Netflix (Los Gatos, California) used a triad of insights culled from data on its then-30 million subscribers – their love for director David Fincher, actor Kevin Spacey and political drama – to develop content viewers would embrace. They did. And as “House of Cards” has racked up awards for excellence, the company has gained 3 million new subscribers, according to thewire.com.

Augmented Reality and 3D. Virtual-reality headset Oculus Rift has marketers buzzing about the possibilities to change the way they design, display, manufacture and market products with 3D technology. Augmented reality, meanwhile, offers the ability to overlay digital information on the real world. Retailers are already experimenting with offers such as virtual dressing rooms (Converse, Tobi.com) and instructive make-up mirrors (Shiseido).

“DATA IS IMPORTANT, BUT WE CAN’T SHORT SELL THE ABILITY TO CREATE IDEAS THAT TRANSCEND.”

NICK PARISH EDITORIAL DIRECTOR OF CONTAGIOUS

Holly Henderson, a fashion designer and professor at the Fashion Institute of Technology in New York City, has been using computer-aided design (CAD) for more than 15 years. 3D modeling of designs and 3D printing have extended her business from concepting clothes to manufacturing them. The enabling of direct consumer relationships through social media, meanwhile, has added the potential for crowdsourcing of designs and for one-off customization.

“There are still people in the design world who get angry about using technology, as if machines will take their jobs away,” Henderson said. “But you still need a creative foundation. You still need to know how to draw and have a design sense.”

Transparent technology. As digital becomes the norm, technology becomes so simple to use it almost disappears. Consider Disney MagicBand bracelets. Visitors to Disney parks opt in to buy the smart wristbands, which customize their experiences.

Content Marketing. Rather than create content that simply trumpets their brands, companies are focusing on creating free and relevant content to build credibility and loyalty with their target audiences. Procter & Gamble’s Pampers Village website for parents and American Express’ Open Forum communities for small businesses are examples of content marketing. B2B companies, especially, use content marketing – more than 90%, according to the Content Marketing Institute.

Marketing Automation. This ad-buying technology, also called programmatic advertising, uses data and effectiveness models to calculate and adjust where advertising is placed and even to automate the buy. eMarketer, a New York City-based market research company, predicts programmatic advertising will reach US$20 billion – 63% of digital display ad spending – by 2016.

A DECADE OF TRANSFORMATION

Few other disciplines have seen such radical shifts and changes from technology as marketing. Just 20 years ago, online advertising barely existed. Ten years ago, Facebook and LinkedIn were just starting out. The first Apple iPhone debuted fewer than eight years ago and the first iPad only five years ago. Yet digital marketing is already a US$67 billion industry, according to Forrester.

While change is inevitable, marketing industry insiders agree that a foundation that balances data with a customer-centric strategy is critical to success.

US$20 billion

eMarketer predicts programmatic advertising will reach US$20 billion – 63% of digital display ad spending – by 2016.

“When people ask about the opportunities and challenges in marketing, it’s the same thing: consumer data,” said de Swaan Arons. “How you aggregate it, how you figure out what is actionable. It’s a huge challenge and a huge opportunity for marketers.”

Bhargava advises measuring marketing success by customer response. A digital experience, after all, is still a customer experience. “Customer satisfaction is overrated,” Bhargava said. “If I’ve given a customer something that they wanted and nothing more, then they’re satisfied. We don’t need more satisfied customers. We need more delighted customers.”

Beth Snyder Bulik is a freelance journalist who specializes in writing about marketing and advertising for publications that include Advertising Age.

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