A digital future
CMOs are falling behind in making their businesses digitally oriented, according to new research, amid a growing need to keep on top of all the online points of contact consumers have with brands.
New research by Accenture suggests that many chief marketing officers feel unprepared for the challenges of today’s marketplace, with nearly four out of 10 claiming that they lack the right people, tools and resources to meet their marketing objectives. Many struggle to manage the proliferating points of contact that consumers have with brands in an increasingly digital world.
It sounds like a lose-lose situation: the more inventive marketers get, the more demanding customers become. Simon Carter, marketing director at Fujitsu UK and Ireland, suggests that, thanks to the sheer volume of marketing messages they are exposed to, customers have become both impervious and resentful to approaches from brands.
“This makes it harder for the marketers of tomorrow to come up with innovative and engaging initiatives – a bit like having to constantly develop new drugs, as the human immune system becomes resistant.”
At the heart of this growing expectation is a desire for relevance. According to CMOs who responded to the Accenture survey, consumers’ assumptions that brands will now tailor messages personalised to them are having a long-term affect on marketing strategy.
Carter says Fujitsu is attempting to address this by returning to what he believes are the roots of marketing – putting the customer at the centre of the business. But he adds that this approach must have wider support outside the marketing department. “It requires a company culture that recognises this need, and recognises the custodianship that the CMO has of driving this principle through the business.”
One way of ensuring the relevance of communications to individual customers and consumers is to make use of as many types of data as possible. However, according to Lysa Hardy, CMO of NBTY Europe, which owns health retailer Holland & Barrett: “The danger is that you can do these activities but it doesn’t move the needle. We need to understand what is working and what is driving a response, and be really ruthless about it.”
Working out what activity is effective, and which marketing channels are producing return on investment (ROI) is another age-old challenge that has continued to grow in complexity in the digital era. Hardy says that ROI is her “biggest headache”, while Accenture’s research shows that nearly one in five respondents score themselves as “below average” at conducting multi-channel attribution – correlating marketing with the sales it generates and measuring the effectiveness of media buying.
The scale of the challenge is proportional to the rate at which the number of media channels is growing. Determining the individual contribution of each of them is fundamentally very difficult.
Jim Freeze has spent 10 years as CMO at various technology companies grappling with this issue. He says that marketing at his present employer, contact centre system supplier Aspect, is increasingly driven by measurement and each project, whether lead generation activity or a press campaign, will be able to show the returns expected.
“We determine those numbers by looking at industry best practices or benchmarks for best-in-class companies. It has been part of the mantra for the past few years, but we are being even more precise about it now and upping our targets. It is hard to demonstrate ROI but it doesn’t mean it can’t be done.”
There is little doubt that data has grown in importance within marketing, and Hardy – a self-confessed “data head” – has introduced econometric modelling since joining NBTY in September 2012. She believes that econometrics – statistical analysis that puts economic models into a real-world context – “disentangles” the dilemmas about where marketing spend should go. It can measure a promotion’s success based on weather, high street footfall, the products on offer, the quality of creative and so on.
“We put all the data from the past five years into a complex model and that allows us to draw comparisons. We can start to see the return we are getting, factoring in all those elements.”
Hardy says the company has made decisions based on this data, including cutting its TV advertising. “We have always historically put TV ads on when we have a sports promotion, and we saw that it wasn’t really working. Econometrics showed us that if we run a promotion with TV ads, we would have slightly more sales but not enough to offset the cost of the TV, so it’s not worth spending the money.”
Not all companies are equipped with the skills to use econometrics, but one solution is to employ data analysts who can understand and interpret data for the business and marketing team. Providers of data platforms and other technology are also likely to have expertise that can be tapped.
Problems remain for those without prior experience of econometrics: relying too much on automated systems might not give an accurate reflection of marketing performance, while obsessing too much over pinpoint ROI figures could waste time and resources. Somewhere in between is a happy medium.
Hardy says: “Econometrics is the same as any science – you need to apply common sense and experience to the findings to make it work.”
Mike Distefano, CMO at global executive recruitment company Korn/Ferry International is also wary about an over reliance on data and metrics. “Keeping track of clicks, conversion and lifetime value are important, but let’s not forget that broadcast, radio, outdoor, print and, most of all, human interaction are incredibly important to the overall branding and buying process, which ultimately may not be directly trackable.
“Measure what you can and, where you can’t, stay close to your clients through research and surveys to determine the effectiveness of different channels,” he says.
Knowing how much to invest in digital and in which areas are key questions for all CMOs. Accenture’s research finds that CMOs are falling further behind in their efforts to instil a company-wide digital focus than they are in addressing all the other marketing priorities identified by the report – the others being marketing operations, customer analytics, customer engagement and offering innovation.
The research points out that rapidly growing companies score 21 per cent higher on the measure of ‘digital orientation’ than those in negative sales growth. But of the five priorities, digital orientation is still considered least important by CMOs and is the area where they are making least progress.
Freeze believes that this disconnect comes from complacency, or even naivety, on the part of some organisations. “Many companies view digital as a cost-effective way of doing various marketing activities – often to the point that many believe they don’t need to invest to do it well, and that’s just not true. You have to make the proper investment.”
Hardy admits that NBTY does not have enough investment in digital, and says taking it into the digital era is an integral part of her remit. “The business is a good retailer and what I’m trying to do is transition it into a business of the future. Digital is a key part of that. So while the business has talked a lot about how digital is important, if you look at our marketing spend it still leans towards traditional media – we have very much been TV led.”
She knows this can’t change overnight: “We won’t suddenly stop TV ads and put all our money into digital. We have to bring one down as we bring the other up.”
Hardy has also reorganised how the ecommerce team works – it now reports directly to her rather than being “buried quite a way down the organisation” – and is bringing in a new director of ecommerce to run the team and accelerate the company’s digital progress.
Ensuring that the wider organisation understands what marketing is and what it does is of growing importance to CMOs. At Fujitsu, Carter has moved from the consumer to the B2B market, and he believes that the boards of B2B brands are generally less appreciative of the true role of marketing. “They see the discipline as short-term and tactical and, in many cases, a subsidiary of the sales function.”
Freeze echoes Carter’s view that marketing can no longer be viewed as a series of standalone activities, and cites this as one area where the role of the CMO has changed. “I think marketing is becoming much more strategic, which is part of the reason ROI is so important – the focus on ROI implies the importance of marketing from a strategic perspective and that is probably the single biggest change I have seen.”
That said, CMOs need to ensure that an increased focus on minutiae does not come at the expense of imagination, as Distefano comments: “The key to successful marketing today is a true left brain, right brain balance, as in the end, it’s much less about the analysis and much more about the creative that will drive the greatest successes.”
Chief commercial officer
Carnival UK (owner of P&O Cruises and Cunard)
Marketing Week (MW): Do you agree that chief marketing officers are struggling to keep customers engaged?
Gerard Tempest (GT): The pace with which expectations are changing has never been faster. Customers expect that every brand they interact with should match the very best interaction they have with any brand, which is increasingly difficult for brands to deliver. Cruise brands should be delivering an online shopping experience as good as Amazon, because that’s what customers expect – and why shouldn’t they?
Developing a detailed understanding of not only what customers want but also how they prioritise these needs, and importantly what they are prepared to pay for, is critical. We are building a comprehensive insight programme to help us understand this for our customers and our competitors’ customers.
MW: Many CMOs admit to finding it difficult to quantify return on marketing investment. Do you agree?
GT: We’re in the ‘below average’ box for sure - distributing our product through our trade partners adds further complication to an already difficult area. Choosing a model that you think is most appropriate for your business and sticking with it allows you to measure change effectively, but I’m not sure pursuing absolutes to a high level of granularity beyond a certain point is a worthwhile use of resources.
MW: How has the growing importance of digital media affected the way Carnival operates?
GT: Cunard Line recently worked with LBi to redesign its website for the UK, the US and Australian markets, and today we have a shared service supporting both our P&O Cruises and Cunard brands, which allows us to centralise specialist resource and increase our efficiency. As our digital channels become more important, ‘digital’ becomes much more an approach for the entire business to engage with rather than a specialist department.
MW: How has your role changed in recent years?
GT: Moving from a specialist functional leader to a broader business leader, bringing the entire organisation on the same journey you want to take your customers on, and having the whole business aligned on both the ambitions for the brand and everyone’s role in getting there.
Director of marketing
For our chief marketing officer Karen Quintos, there are two priorities she asks her global marketing team to focus on, which are even more important in the present climate. One is to communicate to our customers in a consistent way and represent the brand. The second is about enabling our sales teams with differentiated, competitive marketing programmes that will enable us to maintain our share of consumers’ spending.
We look for return on investment in every one of our marketing decisions and this has been a real focus for us over the past few years. To help us think more strategically about marketing, we’ve made significant investments in sophisticated marketing analytics tools that can help us identify the effect of our decisions and the results of our approach to marketing. The data we receive from these tools has also allowed us to think about the brand as a whole, rather than segregate results by geography, product or audience.
We really are one of the early adopters in the industry when it comes to social media and online communication, and digital is a key element of our approach. As well as allowing us to market our products, it plays a key role in bringing our brand story to life, enabling an ongoing dialogue with our customers through social, mobile, blogs, and Dell.com.
Without a clear social media and digital strategy, there’s little doubt CMOs will be left behind.
39% CMOs who score themselves 3 out of 5 or below on overall preparedness (five percentage points worse than last year)
65% CMOs who rate consumer expectations of relevance as having an important long-term impact
22% CMOs who say inefficient business practices are a barrier to becoming digitally oriented
66% CMOs allocating more than 25% of their marketing budget to digital
Source: Accenture, ‘Turbulence for the CMO’