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From: e-Marketer

Online advertising becoming as important as spot TV

From: World Advertising Research Center (WARC)

 Brand owners must now become “marketing organisations” which spread responsibility for customer engagement across their entire corporate structure, McKinsey has argued.

“Customers no longer separate marketing from the product – it is the product,” the consultancy said in a new study.

“They don’t separate marketing from their in-store or online experience – it is the experience. In the era of engagement, marketing is the company.”

Factors stimulating this trend include the rise of DVRs, websites such as YouTube, smartphones and tablets, which are revolutionising consumer media habits.

Similarly, shoppers are increasingly looking to social networks, blogs, forums and user reviews to research, and connect with, brands.

As the amount of touchpoints proliferates, traditional “push” marketing techniques have been undermined and the importance of functions beyond the control of communications teams, like sales, IT and call centres, has grown.

“In essence, companies need to become marketing vehicles, and the marketing organisation itself needs to become the customer-engagement engine,” the study said.

Zappos gaining advantage from rigorous customer service

Online retailer Zappos was named by McKinsey as one firm deriving a significant competitive advantage from its rigorous approach to serving consumers.

“Great companies all have strong cultures. That’s our number one priority at Zappos,” said Tony Hsieh, Zappos’ CEO.

“The second ingredient is that all great companies have a vision that has a higher purpose, beyond profits or being number one in the market.”

Key is people and developing chemistry

Air carrier Virgin America has also attempted to ensure passengers receive a differentiated service.”The real key is people and developing the chemistry and the attitudes, in our staff, that create the right experience for customers,” Steve Ridgway, Virgin Atlantic’s CEO, said. “And at the end of the day, that really matters. After all, we fly exactly the same planes as everybody else. We fly them under the same very strict safety rules.”

In replicating such success, corporations must abandon models where specific divisions effectively “own” responsibilities like CRM and merchandising. “Companies will be better off if they stop viewing customer engagement as a series of discrete interactions and instead think about it as customers do: a set of related interactions,” said McKinsey. “CMOs will increasingly be held accountable for the performance of groups that don’t report solely to them.”

Marketing could be divided between “core” activities and dispursed duties throughout the company

At the organisational level, marketing could ultimately be divided between “core” activities, like branding and agency management, remaining largely unchanged, and duties that are “disbursed” throughout the company.

“Marketing is touching so many more parts of the company now,” said John Hayes, CMO of American Express.
“It touches on service; it touches on product development. We need to organise in a way that starts to break down the traditional silos in the business.”

Procter & Gamble, for example, has a specialist team buying digital advertising across different geographies, and which is located within its purchasing arm but staffed by marketing experts.
  
McKinsey recommended setting up cross-functional marketing “councils” to encourage coordination, alongside possibly building online forums to solicit consumer feedback and assistance in the creation of new products.

Building third party alliances is vital

Cementing third-party alliances is also vital, proven by Nestlé’s team dedicated only to Wal-Mart, and covering everything from promotions and logistics to innovation and design.

Wal-Mart thus has a single point of contact with one of its biggest suppliers, Nestlé benefits from enhancing its ties to the retailer, and both firms accrue detailed shopper insights, which are growing ever more valuable.

“Marketing is going to become a much more science-driven activity,” Duncan Watts, a research scientist at Yahoo, said. “The kinds of questions that we can ask are much more sophisticated and require a whole new science.”

Data sourced from McKinsey/Huffington Post; additional contet by Warc staff, 14 July 2011

From World Advertising Research Center

Brand owners must face up to the “daunting task” of creating marketing systems reflecting the demands of the digital age, according to a new study.

As consumers gravitate towards social networks, search engines, blogs and the mobile web, advertisers are “abandoning traditional media at a shocking rate,” the Booz & Co report suggested. Such a trend has been demonstrated by the comparative resilience of online – and to a lesser extent mobile – adspend during the recession.

This is partly because both channels allow for precise targeting at low cost.

“The many virtues of digital marketing – its speed, flexibility, interactivity, and accountability – require a whole new set of marketing strategies and skills to make it work,” Booz said.

“In a Web 2.0 world, however, taking part in that market isn’t simply a matter of throwing some banner ads against a few likely websites and seeing what sticks.”

Exploit the vast amount of data available

Any adequate response to the evolving preferences of shoppers should be premised on exploiting the vast amount of data now available, the Booz report added.
“It demands a close collaboration between CMOs and CIOs to build technology to automate new marketing processes and provide real-time decision support.”

Firstly, this encompasses establishing methods to track the behaviour of consumers, including their communications and media usage habits.

Delivering programmes enabling executives to “target customers 24/7 via the right channel, at the right time, and with the right message” is also assuming centre stage. More broadly, corporate leadership, skill sets and incentives ought to be “geared towards the digital world” rather than reinforcing outdated models.

Develop a single view of shoppers

Achieving this goal ultimately means brand managers need to gain a “single view” of shoppers drawing on the mass of facts and figures hosted online and offline.
“They must use that information to make specific offers to individual customers based on their value to the company – both in the past and in the future,” Booz said.

“They must build a marketing platform that can help automate the process of publishing a consistent set of marketing messages and content … from classic TV spot to Facebook app to YouTube video to Google AdWords to blog entry.”

A novel solution may be necessary

Given the complexity of handling these tasks, and the challenges of coordinating technology vendors, advertising agencies, media owners and publishers, a novel solution may be necessary.As such, advertisers should establish a dedicated digital unit to act as an intermediary between management, IT and marketing departments, as well as running campaigns and dealing with corporate partners.

Google has recently released details about its real-time search engine, which trawls the web to provide all the latest results, and can be refined by location.
“We’ve added a conversations view, making it easy to follow a discussion on the real-time web,” said Dylan Casey, a product manager at Google.

A full conversation view is the objective

“Often a single tweet sparks a larger conversation of re-tweets and other replies … With the new ‘full conversation’ feature, you can browse the entire conversation in a single glance.”

Procter & Gamble, the FMCG giant, is one firm planning a major investment in this kind of approach at a corporate level, according to its ceo, Bob McDonald. “With digitisation, our goal is to standardise, automate and integrate systems and data so we can create a real-time operating and decision-making environment,” he said.

“By getting the right data to the right decision makers at the right time, we can become increasingly efficient and productive.”

Coca-Cola Enterprises, which distributes goods from Coca-Cola’s portfolio, has also leveraged software called SugarCRM to integrate various elements of its operations.

The main goal is a global solution

“The main goal was to get a global solution that combined e-commerce, CRM, and logistics into one package that everybody could standardize on,” said Pierre Fredet, group director for dry outlets, Coca-Cola Enterprises.

Data sourced from Booz & Co/Procter & Gamble/Google; additional content by Warc staff, 02 September 2010

General Motors is planning a seismic shift in its marketing spend during the next three years – and where the world’s number one automaker leads, others will inevitably follow.

According to unnamed company executives, half GM’s $3 billion annual budget is to be rerouted from traditional media to digital and one-to-one marketing, including gaming, mobile and interactive.

The trend away from TV and print is reflected in recent changes in the corridors of power at GM Planworks, the dedicated Starcom MediaVest Group agency that services the automaker’s media planning and buying needs.

New president/general manager Ken Taylor is charged with reintegrating Planworks into its parent company (part of the Publicis Groupe conglomerate) although Starcom USA ceo Laura Desmond insists the unit would not disappear.

She declared: “As GM has streamlined and got more agile, it seemed only appropriate to move from a siloed business approach to a more flexible, nimble approach that’d allow them to access all our centers of excellence.” 
  
It will give GM, for example, access to Starcom’s branded-entertainment division and allow it to take advantage of the group’s buying and planning power. In addition, the automaker can tap Publicis’ prize acquisition, Digitas, for digital planning and execution.

GM’s North America vp for vehicle sales, service and marketing, Mark LaNeve remains zip-lipped about numbers and strategy details but did say: “Like all major marketers, we’ve moved into digital media in a big way, but the other media types are still very important and will still be a big part of our mix.”

Small consolation for broadcasters and publishers facing the consequences of economic meltdown in the US and elsewhere.

Rival Hyundai Motor America is also doubling its online adspend this year compared with 2007. Marketing vp Joel Ewanick proclaims ominously: “Online is getting to the point where it may be more important than the 30-second TV spot.”

Data sourced from AdAge.com; additional content by WARC staff , 19 March 2008  Reprinted with permission from World Advertising Research Center