between your CMO, CFO & CEO
THE DATA CHASM
Most organisations are plagued by an information gap (data chasm) between the CEO, CFO & CMO. This means that while everyone is aware of sales turnovers & profit margins, not much details are available about marketing investments, apart from the fact that marketing budgets fluctuate from month to month!
This information gap can have a significant effect on corporate confidence.
DEMOCRATIZE YOUR MARKETING
To democratize is to empower by making (something) more accessible.
Of course, nobody should make their marketing plans accessible to everyone! And certainly not expose their current marketing strategy by sharing their marketing data.
On a serious note, every organisation faces a constant challenge: how to bridge the significant “data chasm” between the CFO, CMO & CEO - based on the availability of marketing investments data in real time.
SOURCE OF MARKETING BUDGETS
To begin with, marketing budgets are rarely a part of ‘fixed’ cost of goods. Instead, they are "chiselled out" from the gross margin (or what will be left after deducting fixed costs from sales revenues).
Now, gross margin is dependent on sales which is elastic. This makes gross margin itself elastic. Finally, (to complete the ‘circle’ as it were), sales revenues are supposed to be directly affected by marketing!
So, if gross margin was estimated at 30% of sales revenue and a third of this was given as marketing budget (i.e. 10% of total sales revenue), then any downward trend in sales must have some compensating effect on marketing budgets - if net profit margins are to be retained.
This may not always be possible or even advisable. But if it were possible to analyse market-wise, brand-wise, activity-wise, medium-wise marketing-investments-to-sales-ratio, then it would be possible to adjust local marketing budgets without actually trimming the overall budget.
The main obstacle in achieving the above is the "marketing data chasm".
THE MARKETING DATA CHASM
In any large organisation, almost all types of transaction data are available in near real time. (Sales, Production, Distribution, Taxation, Personnel, Procurement ...) Other data which be purchased in near real time include Competition Sales & Share of Voice ...
Data which is not available in real time is mainly related to marketing investments. Why is this so?
This is so because marketing budgets are elastic (being dependent on actual sales realised). Moreover, marketing activities tend to have a ‘last-minute’ flavour. And digital marketing has actually widened the data chasm with each major player creating its own data silo. Unfortunately, there’s no Amadeus (airline reservation system) equivalent for digital ad booking.
The issue simply is non-availability of this consolidated data on marketing investments & activities in real time.
TWO PRONGED APPROACH
A two-pronged approach is required to bridge the marketing data chasm on a sustainable* basis. The first involves extreme & comprehensive process automation of your Marketing Departments. The automation must ensure the following:
I. Process Automation of Marketing Dept
* Link Marketing Budgets with Annual Brand Plans
* Include All Kinds of Marketing Investments & Activities
* Enforce Approvals linked to Budgets
* Plan & Track KPIs
* Authorise Activities online
* Monitor & Verify Marketing Activities
* One touch Settlement
* Track KPIs
* Aggregate Marketing Investments Data for
* Real-time Reporting
II. Persistent Data Model For Marketing Analytics
The second part of the strategy must involve continuous marketing analytics on a persistent* data model.
* persistent as against a one-of, project approach.
Append sales, competition & 3rd party data to build your marketing data platform on which you can make multiple analytics runs as a persistent* model.
* Deep dive into your Marketing Data
* Couple Sales data with Marketing Data
* Derive Insights About Your Marketing Strategy
* Draw Correlations & Associations
* Make Inferences & Attributions
* Predict Course Corrections
BRANDINTELLE SERVICES PVT LTD (BSPL)
BSPL was formed to assist organisations democratize their marketing - by bridging the “data chasm” between the CFO, CMO & CEO.
Brandintellé Services is designed to help marketers achieve real-time control over their marketing processes - while aggregating their marketing data in real time.
While Dataintellé Services is designed to help marketers analyse their marketing, sales & competition data to derive valuable insights & predictions.
With these two services, BSPL is equipped to significantly reduce the “data chasm” between the CFO, CMO & CEO.
To democratise your marketing, contact Nikki for your free, live demo.
email@example.com or call +91 9326790270
Brandintelle Services Pvt. Ltd., Mumbai 400 093, India
As routine tasks are increasingly automated, the role of managerial supervision will continue to be replaced by software. The role of a Marketing Manager will get redefined from quantitative to qualitative. Marketing managers will need to inspire more, supervise less.
And as the management pyramid flattens, innovation will be key parameter to measure success in marketing.
From Supervisor To Thought Leader
The industrial age introduced the science of managing people & their productivity, based on assembly lines, process improvement & machinery. This was the beginning of the management pyramid, based on asupervisory model.
Incidentally, this was also when education was standardised, for which education institutions were created. Also for the first time, clocks were produced & sold en masse to citizens (who suddenly felt the need to slot their time between work & home!)
The information age came next, bringing the first level of process automation & digital record keeping, leading to better reporting & tighter controls. The management pyramid was further reinforced with software-based reporting.
The current digital age makes it easy to do things efficiently in drastically different ways. This threatens to overturn a lot of established structures. For example, new-age digital businesses are routinely based on building a huge, regular customer base — initially running at significant losses (funded by investors). Real-time behavioural data of regular customers is the base for generating substantial subsequent sales revenues, including sales of customer data — a model that was never considered feasible earlier.
But more than anything else, the digital age is clearly associated with regular & large doses of innovation — which is only possible in a culture of experimentation and risk-taking. Ergo, managers & executives must behave like thought leaders, not supervisors!
Sheer advances in technology is responsible for making the Marketing Manager’s role almost redundant. The traditional manager’s role was based on 2 pillars:
- Supervisory — this is rapidly being taken care of by new-age software which facilitates collaboration at work.
- Knowledge & experience — this is increasingly available online.
Basic analytical capabilities are steadily being replaced with artificial intelligence and data analytics, with many routine tasks being carried out with an app.
This may explain why today’s employees work better in an open, connected and collaborative workplace rather than the old hierarchy / line of command.
As artificial intelligence takes care of mechanical jobs, the value of experience will erode & supervisory skills will be replaced with the problem-solving skills, collaboration skills, design-thinking skills & quick learning skills. Marketing managers will have to learn the art of inspiring others around them to do the same.
Marketing Activity Cycles In The Digital Age
Here’s how the marketing activities will look like in the Digital Age.We have split the activities into CXO level (affecting the company P&L) & Marketing Manager level (execution of plans). And within this, by periodicity — annual, monthly & continuous activity cycle.
1. CXO Level — Start of Year Activity(“Finalise Annual Plan”)
This is when the management finalises the Annual Plan.
- ERP Software generates product costing based on multiple parameters.
- Sales/CRM Software provides projected Sales Targets based on previous periods & other parameters. Sales Head validates figures.
- Marketing Software refers to Projected Annual Marketing Plan of current & previous periods. Marketing Head validates figures.
- Marketing Software computes Target Ratio of Mktg. Investment to Sales Revenue (IRR%) by Category, Product, Markets.
- CMO, CFO Validate. CEO Approves.
- Marketing Software publishes Annual Marketing Investment Budget with Target IRR%.
2. CXO Level — Continuous Activities (“Check Performance, Reallocate Budgets”)
- This is a constant effort to reallocate marketing budgets based on actual performance — at a corporate level — with direct effects on the P&L.
- Marketing Software reports Actual IRR%, Actual Sales — overall, by products, markets.
- Marketing Software issues alerts in advance to CFO’s team when overall IRR% approaches / exceeds target IRR%.
- CMO’s Team revises IRR%. CFO, CEO get alerts on revised IRR% effect on P&L.
- CFO, CEO approve revised IRR% (if hiked).
- Marketing Software publishes revised Marketing Budgets based on new IRR%.
3. CXO Level — Monthly Review Activity (“Revise Plans, Budgets”)
- This is a regular review of the Marketing Plan vs Actual at a corporate level.
- Marketing Software generates Review Report with:
Sales (Budget vs Actual) — Overall, Brand-wise, Market-wise
Mktg. Investments (Budget vs Actual) — Overall, Brand-wise, Market-wise.
IRR% (Budget vs Actual) — Overall, Brand-wise, Market-wise.
- ERP Software generates P&L, Financial Reports.
- CEO, CFO, CMO decide on Revised Business Plans.
- ERP Software publishes Revised Budgets.
- Marketing Software publishes Revised Marketing Budgets, IRR%.
4. Marketing Manager Level — Continuous Activities (“Execution/Feedback”)
- Marketing Team kickstarts Marketing Campaigns, Activities.
- Marketing Software monitors KPIs, suggests Course Corrections.
- Marketing Software suggests revised plans.
- Marketing Team gets feedback
- Marketing Team edits, approves revised plans.
No Future Without Software
If you check the number of times “software” crops up in the above cycles, it will become clear that automation will play an increasing role in marketing in the future. Indeed, with the rapid advances in AI & the Internet technology, software systems ‘talking’ to each other will be as routine as will be reduced human interaction in Marketing.
And we humans may play our new roles in the future — based largely on creativity, abstract thinking & an ability to inspire others.
Marketing Depts’ way of working with their agencies is changing.
With near real time availability of huge data, mostly on rapidly-changing consumer behaviour.
And constant re-definition of what’s possible.
It’s time for marketers to make a call on what marketing capabilities should be in-house as against outsourced.
No Clear Model
For many decades, Marketing Departments had a very specific set of KPIs:
- Drive down the cost of media & outreach activities
- Communicate more effectively with better creative content
- Increase overall efficiencies
Naturally, many generations of marketers & agencies developed capabilities based on the above KPIs (which brought them success).
But the past few years have made it clear that the same capabilities will not work as well in the coming years. The new requirement is to be able to connect immediately with consumers, understand & meet their expectations — which are constantly changing. For this, marketers have to determine what new core capabilities they need. (The same applies to agencies.)
Today, controlling media is less important than tuning into, responding & managing consumer experience. The new job profile of “Chief Experience Officer” is a reflection of the fact that it’s possible to track customer decision journey in real time. This also suggests that tracking the consumer journey will be the chief method of measuring efficiency of any media campaign/customer outreach exercise.
But while there are concerted efforts underway to link Purchase & Billing data with CRM & Experiential data*, there’s no clear model for all this as yet.
* For an example, refer SAP’s recent acquisition of Qualtronics
End of the AoR?
In a world of super-specialisation, the “AoR or (single) Agency of Record” model is obviously not the most efficient — as a single agency is unlikely to excel in everything. The marketing ecosystem has exploded with new channels & the entry of a multitude of players — all of which gives more choice but adds complexity for marketers. (Likewise, agencies also need to partner with “frenemies” to deliver desired end-outcomes to marketers.)
Content Is King!
From around 10 types of marketing activities & media (channels), today there are 50–60 types of channels. And from a dozen or so target audience groups, today you can break up the digital market into thousands of micro target groups. Marketing teams need to manage this without getting swamped!
With such complexity, the importance of story-telling techniques has become all the more important. Both social and digital media permits marketers to tell one story at a time to each one of a thousand+ consumer groups. This obviously increases the marketer’s investment in fresh content, but allows them to give appropriate “spins” to their stories. Thus narratives have multiplied, with their lengths becoming shorter.
In-house Or Outsourced?
So, the questions Marketing Teams need to ask are these:
- What are the (new) core capabilities required for our specific business vertical?
- What core capabilities should we build as in-house, as against outsourced (which is today’s norm)?
Building in-house core capabilities is major shift because it involves a mid-to-long-term commitment. There is a ‘buy-in’ required from the organisation’s technology layer, without which nothing moves today. This layer broadly comprises of IT investments, long term IT objectives, IT security, IT support & integration with the (evolving) ecosystem.
But the shift to in-house is serious — so much so that will affect the he DNA of an organisation over a period of time.
Obviously, all this involves some new responsibilities & new risks for the Marketing Team.
At the end of the day, things may not boil down to a simple “Outsource” or “In-house” choice — it may more likely be a balance between the two. A good example is content creation:
- Build an in-house content studio to give Marketing the ability to explore, experiment & build new & different content/formats
- Continue to work with the best studios in the industry
- Pair an in-house studio team with a set of external specialists to help create radically different content
Similarly, Marketing could set up social media listening centres as a combination of:
- Full-time staff
- Deputed agency staff &
- Rotating external specialists
The idea is to integrate in-house capabilities with fresh outside talent.
Data Analytics is already too clichéd — but is still not understood by all Marketing Teams. Even today, there are 2 kinds of Marketing Teams: those that have data, understand its power & are able to manage it internally. And those who do not.
Marketing Teams need the data along with people who understand data — to read the numbers & figure out the opportunities/threats & insights. For this, Marketing must:
- Develop a “data culture”
- Apply an “R&D” approach to data analytics (“R&D” permits an experimental, high-risk/high-returns approach.)
Role of Systems in Marketing
All this complexity must reflect in simple-to-use marketing workflow systems which communicate with other systems. Automating workflow between Marketing Dept.’s systems, agency partners’ & their systems & the continuously evolving ecosystem. Marketing systems must allow:
- Product managers to control budgets dynamically based on key results
- Senior management team to view key financial & ROI statistics
- Audit teams to conduct their practice in parallel
- Integration with Finance, CRM
- Integration with Agencies, Digital Marketing, Vendors
- Integration with Industry Databases
- Constantly evolve
The goal is to have constantly evolving open-design systems that Marketing Team & it’s partners can use to manage the complexity.
Data analysis no longer means an exercise in new techniques. The fundamental objective of collecting & analysing data is & has always been to make better decisions, to find hidden business problems and attempt to solve them.
To bring about a data culture in Marketing, the vision & commitment must come from the CMO - commitment that goes beyond occasional announcements & pronouncements!
Here's a recent example of how to focus on business objectives, follow up with swift action on available data and then deliver the insights back to the team for immediate action. By the way, this is the classical digital feedback loop: 1.aggregate data, 2.analyse data, 3.use the insights & ideas as an accelerator for improving the existing capabilities. What's additional is that we automated the data aggregation process.
Regional Sales Office - Marketing Data Analytics Exercise
A large consumer durables co. recently conducted an exercise to analyse their own regional marketing spends data. They discovered that there was a significant deviation in the patterns of media consumed by its 30+ different regional sales offices across India.
When we reviewed this data after grouping regional offices based zones, we found that even within zones, there was a significant deviation in the patterns.
This was the first indicator of arbitrary decisions being made by each regional sales office.
The next step was to establish correlations between the media/activity mix and the sales turnover of each regional office. This was more complex as with the available data it was possible to drill down to micro markets serviced by each regional sales office. After some efforts, the correlation between certain media/activity types & sales results became clear for each Zone.
Finally, we laid down a suggested media/activity mix as guideline for regional offices.
(The Brandintellé system was then set to alert users if any media/activity-type exceeded its suggested share by ±10%.And it was decided that the media mix would be reviewed on a half-yearly basis.)
This was a big step towards digital transformation: data leading to insights & ideas, leading to digital feedback, leading to immediate improvements in existing processes, leading to better efficiencies.
This exercise started with the question, “Are our Regional Offices using the optimum mix of media & activity-types in their marketing spends?" And we came up with the suggested media/activity-type mix. To achieve the above, the CMO showed willingness to understand, encourage, take feedback & advise.
The results of this exercise was presented to the C-Suite managers of the company. There were questions to be answered, valuable insights to be shared, and it all increased the data culture of the marketing team and the organisation as a whole.
The next step is more complex: to superimpose the effect of central marketing campaigns and finally arrive at a composite media mix for central & regional marketing - to yield real-time ROI statistics.
Democratization of Marketing
In the above exercise, regional & central marketing spends data existed is multiple forms spread across offices. This made it difficult to conceive of any analytics exercise - until Brandintellé was implemented for the Marketing Dept.
With Brandintellé, the marketing data was suddenly democratized! Anybody who was authorised could easily view the data, trends, correlations, deviations. Marketing managers got excited & started asking questions, leading to more analysis.
Data culture soon becomes a part of Marketing Dept.'s value system. And although it doesn't happen overnight, ultimately, everyone adapts to the mind-set of data culture. Next, they will add other relevant 3rd party data to derive more trends & correlations!
"Democratization of Marketing" really means democratization of marketing/sales data-analytics capability over a standard platform through which people can easily access data to start analysing the data. (You don't need a data scientist every time.) This changes their collective behaviour, & job profiles.
With Brandintellé, your marketing data is easily democratized, for authorised people to access for their daily work. Along with real time, audit-friendly process control. And loads of live & historical marketing data.
All of which leads to redefining the possible!
A CEO needs continuous assurance & support that business plans are on target.
One set of assurances (as we all know) are provided by the CFO, based on real-time financial data available with him.
The other set needs to be provided by the CMO, based on current market data available with him.
Everyone will agree that it’s not easy to define the job of a CMO.
To start with, here’s a list of tasks that your average CMO is expected to oversee:
- Sales targets
- Brand equity & negative publicity
- Marketing/media mix
- Competition’s activities & sales
- Excess targeting (overspend)
- Cost efficiency
- Track markets, categories & identify potential
- Track mktg. investment to revenue ratio by market
- Track Marketing ROI
And many more. Most important, while delegating these activities to individuals/teams, the CMO must ensure that every marketing activity is aligned to the company’s business plan.
High-level Definition of a CMO therefore, could be to constantly maintain a good degree of correlation between marketing KPIs & the company’s business plans. So that achieving marketing KPIs would automatically help the business achieve its targets.
To achieve this objective, it is necessary for the CMO to deeply understand the company’s business, its current targets and relate the same with marketing.
For example, business targets are usually linked to sales turnover. But social responsibilities could impact the morale of both internal & external stakeholders — thereby affecting sales. (Not to mention recruitment & product quality.)
Based on deep understanding of products & markets, the CMO needs to define a set of Marketing KPIs. And constantly update them, so that they relate to the business targets.
Marketing KPIs would typically include:
- KPIs related to building brand equity
- KPIs which directly affect sales
- Marketing activities at sales outlets
- Temporary, demand-boosting promotion schemes
- KPIs to track competition
- Marketing Investments
- KPIs to track marketing efficiency
- Effective rates vis a vis market rate
- ROI tracking by campaign
- Marketing Investment to revenue tracking by brand, category, markets
- Inflation tracking
- Effectiveness of campaigns
- KPIs which affects employees, associates, clients & vendors
- Team morale
- Talent acquisition
- Desire to register as vendors
- Pride to associate as clients
And so on.
Expert Knowledge is what’s expected from today’s CMO. The CMO’s expertise should include customers, markets, sales, creative, communication … along with a deep understanding of the business & its immediate as well as long-term goals. This helps ensure that his marketing team stays aligned with the business.
When the CMO shares current market knowledge with the CEO, it provides vital assurance that business plans are on target.
Reebok was the pioneer in sports footwear, specifically for basketball - the most popular game in USA. Back then in 2002, it was losing market share to relative newbie Nike. The target group of "young adults" identified themselves more with the newer Nike brand. Quite simply, they felt it was cooler to be seen wearing a Nike.
That's when Reebok tapped into an available insight.
Hip-hop culture and basketball had a largely-shared audience. Or to put it simply, all rappers wanted to be basketball players and vice versa.
180 Degree Turn
Until then Reebok had signed athletes as brand ambassadors. Now Reebok decided to partner with musicians as brand influencers. Big risk? It was a 180 degree turn from its brand positioning of "sneakers are all about performance”.
Reebok then proceeded to execute its strategy with huge investments in a "platform" called the Sound and Rhythm of Sport with Jay-Z as the first artiste. Within hours of launching the platform, thousands of pairs of Reebok shoes were sold!
Change The Ecosystem
This validated that hip-hop culture and basketball did indeed have a largely shared audience. And that shoe performance was no more the real differentiator. And with his, not only did the fortunes of Reebok turn - but the future of sports footwear marketing changed forever.
To this day, major sports footwear brands are sold as a lifestyle products with little stress on performance. Including Nike!
The Brandintellé Services Promise
Brandintellé Services does not promise to ring in radical strategy changes - not directly, at least. But Brandintellé Services can be of great help.
- By streamlining your marketing investment processes including :
- Budgeting, verification, settlement - making compliance easy
- Store performance parameters (pre & post)
- Include above-the-line, below-the-line activities for central, corporate & regional budgets
- Integrate with your ERP, CRM, integrate with your agencies, vendors
- Create your private, real-time marketing investments database with option to upload your sales data & competition data
- Help track ROI & key statistics for near real-time financial control
- Automate variable marketing (promotional offers & discounts)
Time for Strategy Change
All of which should leave you more free time to come up with many new strategies for your brand.
Remember: the winds of success ever floweth - just unfurl thy sail & choose thy breeze!
Most of today’s smart business platforms started as online buyer-seller exchanges, using technology as basic as online chats & cataloguing software.
This is difficult to imagine as today, they have evolved into smart eco-systems which manage large numbers of users belonging to multiple categories — mainly by using workflow automation, data exchange and a generous dash of automated decision-making, using machine-learning algorithms. These algorithms rely on digital profiles of users (a.k.a. digital identity or digital double) along with dynamic scenarios created from the collated real time data!
By the way, the first smart business platform was not the Amazon Online Book Store. It was Google who launched the world’s first smart business platform, catering to myriad business categories. (With the main category being the day-to-day consumer — the everyday “Online Joe” who is addicted inter alia, to Google Search & Google Maps!)
Google continues to make sure that the consumer is satisfied with its free services of the highest quality. In turn, this helps Google generate revenues from millions of businesses across the world. Businesses which serve the main category to generate their own revenues — with some of them being smart business platforms themselves!
Today’s smart business platforms are complex eco-systems, which play multiple roles.
Multiple categories of players are encouraged to participate — to build the eco-system.
Of the multiple categories of players, a single category of of player is considered as the “main” category.
All other categories in general, serve to fulfil the needs of users of this “main” category.
The backbone of the eco-system is a rich, tech-enabled platform which comprises of software & IT infrastructure. This backbone plays the key role of coordinating between players of multiple categories in real time.
The technology mainly revolves around:
a. Efficient & secure data sharing
b. Machine learning based algorithms
Thus, the platform is able to give different users real-time suggestions to help make decisions based on individual objectives:
a. Profit maximisation
b. Delay minimisation
c. Cost optimisation
Even the very objective behind each suggested action may vary from time to time, as the analysis is based on real-time data being accumulated continuously.
Objective & Role of the Smart Platform
In a single line, the ultimate objective of the smart platform is to shift decision-making from manual to automated. Thus, all evolving design efforts have one objective: how to collect & store data efficiently & constantly & how to use this data coupled with historical data — to ‘run’ the smart platform with minimum human intervention.
This is achieved by ensuring that:
1. Every task is executed via software.
2. Smooth interaction between various systems installed across players / within a single player (APIs). This ensures that every digital interaction captures maximum data — both primary & secondary in real-time.
3. Machine learning is applied routinely to the real time data to automate an increasing majority of decisions.
Automated decisions are based on algorithms which “learn” from the real time data is the real objective of smart business platforms. There is rising concern that that these algorithms are becoming increasingly opaque, leading to a situation where human life will be “controlled” by such blackbox algorithms. Not that it matters, but each human life was always controlled by a multitude of blackbox algorithms of other human beings!
Ride-sharing Platform — An Example
Let’s analyse a ride-sharing platform like Uber. This eco-system has multiple players who belong to different categories. But of these categories, a single category is the reason why the eco-system exists (or thrives!). The Categories:
- Car Owner
- Car Driver
- Map Supplying Co (e.g. Google)
- Car Loan Co
- Car Maintenance Co (viz. garages)
- Car Insurance Co
- Car Manufacturing Co
- Mobile Service Co
- Rider — This is the main category as Uber will cease to exist the day there are no riders!
One thing is obvious about any smart business platform: all categories must benefit from the platform. But the main category is the reason why the platform exists. At the base, Uber has a strong technological backbone — whose sole purpose is to take automated decisions with minimum manual intervention!
Thus, drivers are assigned rides & customers as assigned cars based on optimisation of mutual requirements & co-ordinates. While each ride is assigned a route based on real time traffic & map data!
Digital profiles (also called digital doubles) of each consumer are created & updated in real time. And automated decisions/actions are initiated based algorithms which rely on the digital profiles of multiple consumers.
Thus, complex decisions like handling consumer complaints, errant drivers, bad payments are ultimately managed without any human intervention.
Once a smart platform is set up, it needs to be branded & marketed like any service — supplemented with regular promotional offers to bring in new users. But once it is accepted, it becomes a marketing platform that can be used to introduce and sell new & existing products to the various categories of players!
A fact which Google has understood & capitalised on to generate many billions of dollars per year!
|To those who are not aware, marketing procurement appears to be very volatile, fluctuating & subject to constant U-turns & budget revisions.
But those who know, will confirm that the objectives of marketing procurement are different from others.
Marketing Procurement Vs General Procurement
Standard procurement is based on 3 pillars:
• Quality • Price • Speed
But marketing spends are decided by two different factors:
• Sales Revenues - Self & Competition
• Competition - Marketing Spends
At a market level, marketing investments have a direct impact on sales revenues. Thus sales revenues are used as feedback to “course-correct” marketing investments for each market.
On a campaign level, each campaign / type of activity could be associated with dynamic performance metrics. These metrics (own & the competition) are used as feedback to continue / discontinue / modify individual marketing investments.
In addition to the above, Marketing deals with a number of large, legacy vendors & a lot of deep domain knowledge requirements. Hence, people & relationships tend to get more importance in marketing procurement.
That's why marketing procurement appears to be extremely volatile, fluctuating & subject to constant budget revisions.
And that's also why applying standard sourcing principles alone does not work efficiently.
Today's agile marketing is not possible without quick course correction. Using real time performance & Marketing ROI.
The first 'stumbling-block' for Marketing ROI is the availability of marketing investments data.
Brandintelle starts by treating marketing procurement differently from all other procurement. Across multiple activities, multiple markets, budgets, offices: across the enterprise.
It achieves this with a distributed approval system for marketing campaigns, proposals & jobs - linked to a dynamic marketing budget.
Apart from transparency & best-in-class practices (both desirable objectives in themselves), this ensures that the real time data is updated in your central marketing database. This data is critical for monitoring performance & calculating Marketing ROI in real time.
Marketing ROI As Standard Output - The Main Data Challenges
| Availability of comprehensive data on all marketing investments by markets & categories – including central & regional budgets - branding & sales promotions.
|| Correlation between Product Business Structure & Brand Business Structure – (sales data is available by products while marketing spends data is by brands)
|| Correlation between Sales Markets Investment/Evaluation Markets & Geography.
||Multiple customised bases of apportioning multi-market investments to single market.
| Democratisation of Marketing
by the data, of the data, for the ...
Marketing performance & ROI management should be left to the experts in marketing. But given the sheer magnitude of expenditure, shouldn't real time marketing statistics be visible to the CXOs?
Brandintelle aims to democratise marketing using a 3 phased approach:
|Automation of Marketing Procurement, Marketing Budgets & Approvals for All Marketing Activities
by markets, brands, categories - including central, regional, local budgets, media, activation, promotions ....
|Standardise Computation of
Marketing ROI, Marketing Performance
Metrics, et al.
|Auto suggestions based on statistical correlations.
And even machine learning.
For business at the speed of light, you need to manage your marketing strategy in real time. How can you do that without a live marketing data repository for your organisation?
Swift Course Correction
Let’s say Marketing team is performing at peak efficiency. And that they have a strategy for the next quarter, or even half-year. But consider the statistics: one out of two top performers is unable to retain their market-leading position. And many of those who do, have returned from the brink of bankruptcy - before getting back into leadership position.
Like everything else, today, Marketing needs to a certain amount of experimentation - but to adopt a ‘trial & error’ approach without a swift ‘course correction’ / feedback mechanism would be suicide!
Given that the average Marketing team is able to ‘course correct’ once every one or two quarters*, it’s easy to see why ‘trial & error’ is not easily adapted.
* The average market-level, course correction exercise usually takes a few weeks currently.
De-centralize Decision Making
To get it’s strategy right, Marketing needs creative, fluid strategies that address oncoming new opportunities & threats with immediate ‘course-correction’. For this, decision-making must shift further towards the frontlines to reduce the time taken (for capturing data, aggregating it, centrally analyzing it & sending guidance back - sometimes after taking approval of senior managers.)
With automated statistical reporting & machine learning, such decision making should function like a collaborative network rather than the command-chain of today!
Real Time Course Correction
Today, speed is a major objective. Decisions must no longer be just high-quality but also ‘high-velocity decisons’ (quote: Jeff Bezos of Amazon). That means that action must be initiated as soon as possible using whatever information is available.
Because the information available is likely to be less than optimal (60% or 70% at best), this makes most decisions less than perfect.
With such not-so-perfect decisions, it’s reasonable to expect some amount of errors. Hence the need for quick ‘course-correction’.
All this means that Marketing must excel at ‘course-corrections’, making it less costly to make the wrong decision as part of a journey that has no end!
Tricky, Expensive, Laborious? Let’s Try It!
If the marketplace moves too quickly, falling behind is natural. To keep up, Marketing will need to be really fast, ready to swivel 180° and recover rapidly. That makes it acceptable to take ‘risky’, ‘inefficient’, ‘effort-intensive’ options (which were once frowned upon) - because we may not even be aware of the next intermediate destination!
With an environment that’s competitive & dependent on multiple eco systems (which are themselves evolving constantly) it’s not possible for any single individual to keep up.
Data Is Key
Live marketing data is the requirement. Of these, one set of data is available within the organization & its partners — by tapping into a network of individuals, offices & brings all marketing investments on a single platform. Included are detailed marketing investment data, sales data as well as various performance parameter data.
To this, we can add third party data, which includes competition data, category data for sales & marketing.
With all this data available in real time, we may deploy technology aggressively and purposefully to be able to apply “course-correction” at will.
To understand the current state, tap into your basic marketing investment decision system—and consider how approvals are made on a daily basis across seniority levels & markets/offices. And then check how much of this consolidated investment data with cost & performance details is available in real time.
If we were to control all marketing investment decisions through a flexible central approval system (perhaps linked to ever-involving marketing budgets), then this data could be stitched together with other available competition data such as sales, share of voice, etc.
Further, if current technology were applied to such a real time database to compute ROI based on brand, category, market & period, it could work as an “intelligent” decision-making system for brand & sales teams.
Process automation started off as a means of improving business efficiency by reducing "paper work". But that was a long time ago. Today, any process automation is just a starting point for suggesting course corrections (& even process changes!) based on data analytics, machine learning & AI.
But, if marketing investment processes are not automated across the enterprise, then what are the chances of applying machine learning & AI?
Data analytics, machine learning & AI are never easy to implement, especially when designed as outputs of automated processes. But there’s no question that once implemented, it will take existing operations to new heights of productivity!
Take Marketing. Today, experts associated with marketing teams routinely create complex plans, evaluate them & implement course-correction - to achieve amazing output - all semi manually (using spreadsheets & email). With even data analytics relating to online marketing & sales data being regularly outsourced to experts.
But if Marketing were asked how much of their own recent past data they used for insights, the answer would be “not enough”!
So, how can Marketing with its access to domain experts, have a head start when it comes to harnessing the power of data analytics, machine learning, AI?
Strip the Mystery
Today, like every department Marketing is under intense pressure to improve productivity - internally as well as by their clients. But marketing investment decisions are based on established processes (based on email, documents & spreadsheets). Of course, they refer to budget codes which are assigned by a legacy “ERP system”. And post execution, invoices are “passed” and forwarded to the “ERP System” for settlement based on a monthly cycle.
All decisions to continue / divert investments are done semi-manually - by analysing own & 3rd party data on competition data pertaining to sales, exposure & ad spends. So, even though data is routinely used to improve marketing plans, there is no software-system driven approach to compute Marketing ROI by category, brand, markets & period.
If marketing investment processes were automated, all relevant data would populate an internal "Marketing Database", which could be used (for example) to generate Marketing ROI as a system report.
Update The Hand Book
Marketing needs to deploy machine-learning software which constantly analyses its internal “Marketing Database” & suggest improvements by identifying:
* Input parameters which significantly influence certain performance units in various markets.
* Which combination of input parameters yielded the best Marketing ROI in specific markets & periods.
* How well did a campaign, activity or parameter worked for individual brands in different markets. And so on.
At first, marketing team may not understand how to go about this or even the import of this. It’s only when they can see real time data related to marketing investments that they realise that it can actually help drive productivity.
In effect, Marketing needs to update its process hand book that’s in use for years - a hand book that just doesn’t address today’s needs.
(The Syndrome Behind Punctured Equilibrium!)
Disruption is accepted as today’s economic norm. And mass disruption due to digital transformation is the next reality!
Historically, decision-making software used sample data as they could neither access, store or handle large data sets. This is why statistical methods were used to extrapolate inferences for making decisions. (Data was actually entered physically by operators into databases via customised software & processed in batches on mainframe computers.)
Today, cheap data storage & massive computing power are available on hire. This, coupled with different softwares are capable of aggregating & processing massive amounts of data in real time.
A look at the "brick & mortar" electrical power distribution systems will help understand the digital transformation.
Electrical power is distributed through power grids, which are a lot like the Internet. They're composed of millions of individual equipment - transformers, capacitors, meters & other measurement devices meters - all physically connected to kilometers of power lines.
Over the years, each power company has created a massive, complex, networked machine - which is comparable to the Internet. Individual power co. infrastructure got connected to each other creating massive power grids. And the key components of these grids are being upgraded to make them individually addressable.
(Note: Addressibility is the basic requirement for digital transformation).
Once these devices in the grid infrastructure can be remotely accessed, the data generated will be aggregated into vast databases - to be computed, correlated along with data from other off-grid devices (like weather, customers demographics, town planning.) All in real time.
Then the ubiquitous machine-learning algorithms will be applied to this vast data to optimize operations, reduce wastage, boost reliability & even reduce greenhouse-gas emissions.
That in a nutshell, describes digital transformation of the power utility industry that is underway.
Any discussion on digital transformation cannot be complete without mentioning Tesla - the automobile startup which is already seen as a threat by established giants like GM, Volkswagen, Toyota. Tesla cars constantly update data into the company's database 24x7. To this massive data is applied machine learning algorithms which are used to improve the driving experience, preventive maintenance & even improve self-driving software logic.
All automatically, on a 24x7 basis!
Digital transformation changes everything. Product design, manufacturing process, delivery & marketing - all are affected by new technology.
That's why CXOs should be directly involved in driving technology - instead of leaving it to technology heads as was the earlier practice. CXOs need to rethink business processes, understand existing eco-systems, revise product design processes as well as management systems, reporting tools & CRM. (These should no longer be seen as the CTO/CIO's sole responsibility.)
No department can be left uncovered in this exercise - least of all, marketing investments which involve
billions of dollars & are traditionally the weakest in processes. And has the maximum need for real time Marketing ROI.
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Some organisations like Amazon have successfully opted for "pure play" digtal transformation. But most opt for a safer "digital factory" approach instead.
Since digital transformation is sustainable when digital is melded with traditional IT, "pure play" must be part of the long term plan.
The New Digital Capabilities
The new digital evolution can be summarised as
• Extreme Connectivity
• Hyper Automation
• Data Integration
• Advanced Analytics
Using the above, Marketing can build
• New customer relationships
• Revolutionary new business models
• Models with available technology platforms
• Integration with 3rd party applications
• Better decision making models
But all this should be implemented across all marketing functions, and not as separate initiatives.
Digital Factory Vs Pure Play
Most CMOs adopt the "digital factory" approach to launch their digital programs as it permits them to implement innovations at high speeds, without hindrances. A "digital factory" approach uses digital technology for modelling, communications and to operate (new) processes. This allows managers to configure, evaluate & go live with new processes in parallel to (& as an extension of) existing processes.
For this, it is essential that independent teams deliberately work outside the purview of the traditional IT and with minimum restrictions, quickly turn pilot projects into innovative products & customer experiences.
The alternate to this approach is "pure play" model which merges digitalization with existing IT. In "pure play", all marketing functions are involved & affected as against an "elite" section in "digital factory". Amazon & Flipkart are just 2 examples of companies who have adopted the "pure play" model.
Most business leaders who are not as tech savvy usually take the safer option to stick to the "digital factory" approach - with separate digital and IT units delivering different "KRAs". This is probably because they are not confident of shifting the entire organisation to a “pure play” model.
"Pure play" is the only sustainable approach in the long term - even if it seems to be disruptive in the short term.
Integrated Digital & IT
A common operating model for digital and IT teams is critical for long term success. This means that Marketing must integrate new digital capabilities with existing legacy systems & processes - taking as it were, all the functions forward. Else, the complicated digital initiatives (which involve large investments) may flounder.
This is also partly because a divided approach divides teams into 2 sets of people:
1. The new, with a culture of rich data & innovative processes
2. The old, where impact of digitalisation is minimal
This bifurcation based on old & new cultures becomes the stumbling block for total digitalisation in the long term.
So, no matter how long it takes, "integrated Digital & IT" approach should be the ultimate plan for any organisation.
Perpetually Evolving Structure
"Integrated Digital & IT" approach is a long term, never-ending plan - decided not only by the starting point but also by Marketing's evolving digital aspirations. It requires both digital & traditional IT teams to constantly review existing ways of working. And collaborate on devising new paths - with margins for “making mistakes/learning”.
This means that Marketing will need to operate in flexible, perpetually evolving structures. Also agile practices, data aggregation via automation, data access across the company and advanced analytics.
Marketing ROI As Output
One simple target is to get Marketing ROI as a standard output.
With its myriad definitions & versions (including multiple performance matrices), if MROI is available as output from existing IT systems, it would ensure Integrated Digital & IT as it would have to access data from digitalisation systems as well as traditional IT.
Thus ensuring that digitalisation plans are long term!
New product category creators bring major changes along with generation of new demand. But in reality this "new" demand may have always existed for awhile – which were just waiting to be discovered & satisfied.
Every product has challenges – which are gaps between consumer aspirations & product features. But this is rarely reflected in hard data on sales & market penetration. (In high tech products, user awareness of all features itself could be the first challenge.)
The Consumer Today
Today’s consumer is constantly on the lookout for new options. Despite knowing this, detection of early trends is not easy.
A first step is that data focus should include consumer aspirations & core problems in a systematic manner. Just as sales are tracked by markets systematically. This could address customers belonging to an entire category (including competing brands) to record their unmet need & aspirations. Based on this information, new solutions / higher features & even new products should be designed.
Of course, all this is easier said than done.
Starbucks & Tesla
Both Starbucks & Tesla are good cases to illustrate unlocking of latent customer needs.
When Starbucks launched in USA, millions of households had already installed coffee machines as part of their basic kitchen. Yet there was a latent need for consumers to sip coffee & converse in a cozy ambience. Today, the same consumers pay a premium price to sip a cup of coffee in a Starbucks outlet.
For the past decade, everybody in the auto industry was talking about the future of electric cars. But it was newcomer Tesla who built the first roadworthy (no, excellent) model of electric car. It wasn’t auto giants like GM, Toyota or Volkswagen – all of which are controlled remotely, through rigid annual budgeting & strategy & reporting structures making them least responsive to user feedback.
Existing Consumer Platforms
Who can doubt that today’s brand needs to meet new expectations of the customer. This sharp hike in clients’ expectations can be linked rather simply to his ever-evolving need for personalization, convenience & speed.
Since consumers make liberal use of today's interactive platforms to express their expectations and discover new offerings, marketers should use the same platforms to track trends & identify emerging opportunities / threats. Once again, this is easier said than done!
And if a metric can indicate how many category consumers are satisfied with an existing product, it may help marketers predict the potential for a new / modified product!
In today’s digital world, this may mean extending the brand to new, technology-based user environments, sometimes, creating completely new offeringsin the process.
The real benefit of developing new user-environments is to ride on existing popular platforms which are constantly evolving.
In this way, products could enjoy benefits of existing user-environments as they grow & morph, thus staying relevant with the times in the most efficient way!
|On July 2, 2017 the Indian Govt. created history by declaring the GST Regime.
The big agency networks, advised by the big consultants decided to bifurcate Media Charges & Agency Commission and apply 2 HSN codes in agency’s Tax Invoice:
||Media Charges (HSN #1) GST Rate 5%
||Agency Commission (HSN #2) GST Rate 18%
|With different GST Rates as & where applicable.
Meanwhile, small & medium agencies across the country did not accept this format. They debated, discussed and finally adopted the simpler format of composite supply - where associated services could be billed together under a single HSN Code with a single GST Rate. (With no need for bifurcation, which would lead to additional reporting.)
This simpler format of Ad Agency GST Tax Invoice was ratified by the GST Council on August 23.
Clarification By GST Council / Finance Ministry (August 23, 2017)
On Applicability of Goods & Services Tax on selling of media & in particular print media.
Query has been raised regarding GST applicable on selling of space for advertisement in
print media. Selling of space for advertisement in print media is leviable to GST @ 5%.If the advertisement agency works on principal to principal basis, that is, buys space from the newspaper and sells such space for advertisement to clients on its own account, that is, as a principal, it would be liable to pay GST @5% on the full amount charged by advertisement agency from the client.
On the other hand, if the advertisement agency sells space for advertisement as an agent of the newspaper on commission basis, it would be liable to pay GST@ 18% on the sale commission it receives from the Newspaper. ITC of GST paid on such sale commission would be available to Newspaper.
However, if the advertisement agency supplies any service other than selling of space for advertisement, such as designing or drafting the advertisement, and such supply is not a part of any composite supply, the same would be liable to tax @18%. If such supplies are part of any composite supply, the rate applicable for the principal supply shall apply. Therefore, everything depends on the terms of the contract between the newspaper, advertisement agency and client.
| Retro Design
In the Service Tax regime, the top advertising & media agencies were advised to bifurcate media charges & agency commission were deliberately bifurcated to account for 2 factors: (Both factors are not applicable in the GST regime):
||Service Tax was not applicable for Print but applicable for Agency Commission.
In the GST regime, tax is applicable for Print medium, albeit at a lower rate.
||Most media agencies were not in a position to take the liability of Service Tax for Television Media as the tax liability would far exceed their fees. Yet, the releases had to be routed through the agencies. To circumvent this issue, TV Channels agreed to invoice the Client directly but collect payment from their agency. (Since the TV Channel invoices were addressed to Clients, they could directly avail of input tax credits.)
Agencies would bill the Service Tax levied by TV Channels as reimbursement.
Since the other component (Agency Commission) was subject to Service Tax, it was mandatory to bifurcate the 2 components.
In the GST regime, ad agencies must apply GST on the total bill amount including Television charges.
|Here’s how Service Tax Invoice format (Print Medium) differed between small & large agencies:
Small Agency Service Tax Invoice format:
| Gross Print Medium Cost
Discount 12 %
ST @ 2.25%of Gross
* assuming Agency Commission of Rs 150.00
Large Agency Service Tax Invoice format:
|Gross Print Medium Cost
Less Std. Agency Comm
Net Media Cost
Add Actual Agency Comm
ST 15% on AAC
* AAC: Actual Agency Commission
|In retrospect, their advice of bifurcating Media Charges & Agency Commission using 2 HSN codes seems to be an extension of the existing logic/method used in the Service Tax regime.
| The GST Regime
In the GST regime, the rules applicable for Input Credits are independent of Sales. But the top advertising & media agencies were advised (in continuation of existing practice?) to adopt the process of applying 2 HSN codes in their Tax Invoices:
||Media Charges (HSN #1)
||Agency Commission (HSN #2)
Majority of small & medium agencies never followed the above practice in the Service Tax regime. Naturally, they did not agree to go with this practice. Since they did not have the privilege of advice from a big consultant, they started studying the GST laws and asked their C.A.s & local experts for advice.
Soon they zoomed in on the relevant GST clause which was applicable for composite services. So if an ad agency worked on principal-to-principal (P2P) basis (buying from media owner & selling to clients independently), they could include any associated service, such as designing the ad or making media plans as a part of a composite supply. In such cases, the GST rate applicable for the principal supply (media in this case) would apply for the whole. Thus, there was no need from to bifurcate media charges from agency commission for GST compliance.
Composite GST Invoice format
adopted by small agencies
| Print Medium Charges
Trade Discount 12 %
Media Cost: Rs 850.00 Agency Fee: Rs 30.00
Media details attached
Standard Media GST Invoice format
| Print Medium Charges (Net)
Agency Commission 3% (Gross)
GST 5% on Print Medium
GST 18% on Ag Commission
The simpler Composite GST Invoice format is an option available to ad agencies, with an optional footnote to explain the breakup where required:
Breakup: Print Media Cost: Rs 850.00 Agency Fee: Rs 30.00 Composite Cost: Rs 880.00
With the media details could be attached as supporting documents.
Note: In case of media exemption (foreign clients), billing could be split into 2 Tax Invoices.
This would inter alia, reduce the complexity of applying 2 HSN numbers & 2 GST rates. And reduce data uploads on GST Server by 50% !
Small & medium agencies - who did not have access to big consultants’ advice - started reading the GST Rules. They discussed with each other, asked their local experts including C.A.s and adopted the composite GST simple format: for the following reasons:
||It follows the GST guidelines for composite billing under a single GST rate.
||It does not force the agency to disclose its buying rate. (With the option of adding a footnote to disclose the breakup.)
|| It does not need multiple HSN Codes & GST Rates.
|| It’s simpler.
As it is, there is very little logic on Govt. asking business users to bifurcate & report GST between State & Centre – a task which could clearly have been accomplished faster using software on the GST Servers. (Note: For Inter-State transactions, this is exactly how Govt. will bifurcate GST between State & Centre.)
| Finally, a small reminder:
||All advice must be seriously vetted by the advisee - especially the underlying assumptions.
||The best advice may come from unexpected quarters.
||Persistence pays. By persisting vigorously, small & medium agencies got ratification from the GST Council for the simpler, composite-tax format.
Every marketer wants increased top lines, reduced expenses & delighted customers. And that too, with a persistent, sustainable (read cost-friendly) model. That means delivering great customer experiences with agility, responsiveness & efficiency, while decreasing costs!
But is it possible to achieve all this with existing processes?
Most humans are programmed to adopt quick, one-off initiatives which usually add to existing data silos. This is because any pan-enterprise approach needs more senior management involvement, resources & time. But despite their quick results, one-off solutions invariably create data silos in the enterprise.
No More New Data Silos!
To build value & better user experience at lower cost, CMOs need to commit to a next-generation process model. This is the new way of running Marketing Dept. which combines digital processes, technologies and databases, integrated to achieve improvements in revenue, customer experience, and cost.
A simple way to visualize this operating model is to think of it as having two parts, each requiring companies to adopt major changes in the way they work:
- Shift from using individual processes and exercises in a piecemeal manner inside silos. Launch an integrated, intelligent process automation program organized around managing your marketing investments and link to marketing objectives / customer touch points. Aggregate the pan organization data pertaining to marketing investments in a central marketing server cluster.
- Engineer the processes so that all data related to marketing investments are stored in a single server cluster with a continuous process of stitching data together.
This makes it easy to process current & historical data using sophisticated tools to discover insights and make recommendations, providing intelligent decision-making tools, especially the “nonlinear” kind. Benchmarking and rate per performance-unit are great examples.
Integrated Process-Driven Marketing
Instead of working on separate initiatives inside organizational units, marketing processes must be designed to deliver marketing performance & ROI as a routine output. Marketing investment processes will naturally cut across brand marketing, corporate marketing budgets as well as regional promotions, which must be correlated to customer decision journeys & attribution, wherever possible.
Transitioning to the next-generation marketing process model starts with classifying and mapping key workflows. For example, media campaigns can usually be broken into 7 financial steps. But performance tracking with context-sensitive business communication is not usually tied to these 7 steps.
Do’s & Don’ts
Avoid local processes. To get maximum value, focus instead on simplifying & streamlining the end-to-end marketing process. Redesign processes in ingenious ways with default settings on forms so that user attention is always guided towards the most valuable output of the process – by asking user to link marketing investments to the topmost marketing objectives / customer touch points.
Adopt process automation first to reduce time-consuming transactions & semi-manual tasks.
Keep a special focus on tasks that involve multiple departments/functions.
Redesign processes for continuous improvement.
Constantly aggregate all marketing data in a single consolidated marketing database.
Maintain a conscious effort to ‘stitch’ all the data elements - this is far from easy, but will create a mine of rich, interconnected data.
Use sophisticated analytics tools to process data – for insights & machine recommendations for anything – right up to product pricing.
Outsource IT tasks where possible to complete / enhance multiple functions using best in class offerings in the shortest possible time.
After all, data is the new gold!
Just like a great creative should not be the sole/key driver of any marketing activity, should bypassing laws be the basis of any new disruptive business?
For most of us, Uber is a godsend. And why not? With fares much lower than taxis, cleaner interiors, courteous drivers, electronic payments & supreme ease of booking, Uber has maintained a great image (so far).
A decade ago, Napster showed how early technology could make it easy to share songs & digital content until regulators practically forced a shutdown.
Current regulatory concerns about Uber are similar to those raised against Napster a decade ago – because both the business models were based on breaking existing laws.
The Uber Model
Uber showed how easy it can be to run a taxi business – without owning a single vehicle. And actually created benefits for multiple stakeholders.
Coming in at a time when “radio taxi services” with telephone-based customer-booking were already popular, Uber smartly replaced voice calls with smartphones connected to Google Maps at the customer’s end. At the drivers’ end, Uber asked drivers’ to use their smart phones in place of deploying expensive, radio taxi hardware. This created obvious infrastructure savings for the taxi operator.
But Uber’s biggest advantage over incumbents went beyond this. It used ordinary vehicles with no special licensing or other legally required formalities. This cut costs of additional fees for commercial insurance, commercial registration, commercial plates, special driver’s licenses, background checks, rigorous commercial vehicle inspections, etc.
And these hidden savings were significant enough to help Uber get a significant cost benefit over existing taxis & car rental services, which it passed to consumers & car owners, resulting in high popularity and growth rate.
Not more than a decade ago, it was Napster who disrupted the then-nascent digital music industry by skirting the legal system of paying for songs.
It made it extremely easy for users to download & share a single copy of a song with millions of users. Thus, a single song purchased by a few hundred users was shared free of cost with millions of other users – reducing the legal income of copyright owners to less than 1%.
Of course, users were delirious because digital content became available for less than a song! But record companies & artistes ensured that this model was ultimately unsuccessful.
Let’s face it – companies break laws all the time, especially large ones. But these malpractices are usually executed at a B2C level, where individual customers are systematically scammed. Insurance companies mastered this art (by not paying / underpaying claims). With digitalization, telcos & banks took it to the next level for (underhand) micro-revenue generation.
Today, all consumers accept such malpractices on a daily basis. (Given the state-of-the-art technology available, it is apparently too tempting for a bank or telco NOT to indulge in covert malpractices!)
There’s a clear difference though.
While banks & telcos & other large companies may continue to indulge in covert malpractices for extra profit, their business models are not based on bypassing the law.
Napster, Uber, Lyft, Didi on the other hand, based their business model with the overt assumption that they could bypass the laws (until at some point of time – hopefully – they can get the laws “suitably” changed!)
Bringing us back to the question: Should the basis of any disruptive new business model hinge on deliberately ignoring existing laws?
New, tech-based user environments are rapidly blurring lines between products & services by delivering a rich, new customer experience. Making it mandatory for every brand to make sustained efforts to meet rising customer expectations. Typically achieved by extending a brand to adapt new technology to create new user environments.
Sure to bring about positive changes in a brand’s characteristics. And may even create a new product or two in the process.
But is that the real benefit / challenge?
personalization, convenience & speed
In today’s digital world, superior product features give at best, fleeting benefits - before a competing brand overtakes. (Or God forbid, a start-up!)
Successful technology-driven disruptions have become the norm in the past decade. This in turn, is responsible for a sharp hike in clients’ demands & desires – which can be defined rather simply as personalization, convenience & speed. Or looked at in another way, the traditional product features must be realigned with fashion, lifestyle, & ease of use.
There’s no doubt that today’s brand needs to meet new expectations of the customer. This means nothing if not extending the brand to new, technology based user environments, sometimes, creating a completely new product / service in the process.
compound the benefits
The real challenge (as well as benefit) of developing great user-environments is to accept the need to collaborate with existing popular environments as well as upcoming ones. Even if this means collaborating with the competition!
Because this is the quickest & most efficient way by which a brand can compound the benefits of available technology environments - which is driven by multiple entities & factors beyond anyone’s control.
Nimble competitors, technology disruptors, social responsibilities, provincial governments … these are factors which affect today’s marketing strategy.
To implement a marketing strategy, it must reflect as a structure – which is a combination of marketing budgets & processes.
But as much as structures are necessary to help to implement strategies, their rigidity can also become an impediment when it comes to making major changes in strategy. (A current example is the GST regime - a result of Indian Government strategy which promises structural changes in all commercial processes including marketing activities.)
So what makes marketing budgets a complex subject? Is it because marketing strategy is revisited many times a year, as compared to annually some years ago?
And what’s the solution?
Friends With Trends
Industry growth direction, technology disruption, government policies, societal pressures … these are the trend markers of today. And if the old rule of financial investments (“befriend the trend”) should apply to marketing investments, then marketing strategy must be revised practically every quarter!
This is easier said than done, what with short-term turbulence regularly distorting long term vision and diverting attention from available business opportunities.
New Societial Responsibilities
Advanced technology is responsible for better health & longevity of human beings. But the same advancing technology juggernaut is also responsible for steady loss of livelihood. Blue & white collar workers are already losing jobs to robots & automation software today. With domain experts & managers expected to give up their jobs to artificial intelligence software tomorrow.
This makes for an interesting, if sad future scenario: experienced, able human resources will continuously be added to marketplaces where jobs are shrinking. (Understandably, this may result in adverse affects on the health of human beings in future!)
Further, if companies are forced to pay taxes to support retrenched workforce, what will be the net effect?
FriEnemy & CompetAlly
In today’s marketplace, there’s a need for cooperation in the midst of intense competition! Competition & co-operation between the same entities is a matter of time & place. This necessarily involves a fluid approach to marketing strategy!
Global Cos. In Provincial Economies
The benefits of being global company need to be recalculated in the light of revised international trade policies by countries – where benefits to country outweighs benefits to the multinationals.
The US policy revision to favour employment of US citizens over benefits to US firms (by outsourcing to 3rd world countries) is the most recent case. Large Indian IT firms who have built impressive infrastructure may have to revisit their long term strategy & initiate major restructuring.
Marketing Budgets based on Flexible IT Structures
Coming to marketing budgets, there is a need for defining flexible structures which can be restructured & redefined easily.
Example: A typical marketing budget could comprise of 3 verticals:
· Central Brand Marketing Budget
· CEO's Marketing Budget
· Regional Promotions Budget
The flexibility requirement in marketing budget structures are reflected at 2 levels:
1. The ability to add a fourth vertical at any time, say for sponsoring major sports events. And a fifth later.
2. The ability to structure each vertical as a “inverted tree structure” with different number of branches at different levels.
Example: “CEO's Marketing Budget” could comprise of a 4 layer-budget while “Regional Promotions Budget” would have just 3 layers.
3. The ability to add or close new branches at different levels of each "inverted tree".
Example: Add “Internal Branding” under Corporate Marketing Budget in (say) the 3rd quarter.
4. The ability to link budgets with master entities.
Example: Link “Regional Promotions Budget” to “Sales Office Network”.
Process As Structure
All business processes are manifestation of a structure. The purpose of the structure is ostensibly to implement the strategy.
But any change in structure of Marketing Budgets may involve some change in marketing processes. To ensure minimum disruption, a flexible Marketing Budget Structure should be linked to marketing automation processes, thereby ensuring that process moves with budget structures.
In addition, it should be possible to track marketing investments by multiple entities, in addition to tracking budgets.
With the above approach, it may be possible to define a dynamic marketing structure which can withstand regular changes in marketing strategy!
What is a defining sign of today's digital age? Customers are always browsing for shopping offers. This makes it easier to sell them discounts, instead of products - but equally tough to ensure repeat business.
The Customer Decision Journey
The path customers take to move from awareness to purchase and hopefully(!) repeat business / loyalty is no longer predictable. Regular routes have been replaced by the ad hoc with the first stage almost invariably being digital.
Making substantial investments on promoting loyalty-rewards programs is not enough to guarantee growth - not even from existing customers.
Today’s customer is prone to drift - attracted not only by a change of product – but even a change in marketing approach. Let’s face it – digital just makes it so difficult NOT to shop around. It’s a sign of our times.
The consumer decision journey has 5 states:
| No State
| 1. Trigger
2. Initial search
3. Deep search
4. Zero in on single brand
5. Repeat purchase
Prepare list of brands usually online
Modifiy brand list usually online
Purchase offline or online, depending on category
Based on but not only(!) after-sales
Comparisons May Be Odious
To repeat, today’s digital world practically ensures that customers can’t help but shop around. What with the explosion of mobile apps and the hugely enhanced user-experiences which make comparison of competing brands & options almost effortless - 24 x 7. Not to forget, also enabling customers to share brand experiences with each other via social media.
Today, the user experience is as important for driving purchase as is brand loyalty.
The Limits of Loyalty
Increased benefits succeed in luring more customers to sign up for loyalty programs. But even after signing up, many customers end up choosing not to continue their loyalty programs, sacrificing the benefits. (You can get the horse to the water but making him drink is another matter.)
While mobile services & personal care still retain some brand loyalty, products like shoes, daily clothing, financial services & PCs have minimum brand loyalty - as any customer will confirm.
And almost all customers (include the most loyal ones) are bound to look around before they commit.
So it makes sense to examine new customer segments & re-visit those segments which were ignored till date.
In normal times, the average citizen is not bothered about politicians & their politics. But this is certainly not the case with Donald Trump - the 45th President Of The United States (POTUS).
Nonetheless, the average citizen (especially the American voter) does not know what to hope for from Mr Trump. So expectations range from the over-optimistic: huge shake-up in Washington DC. To the doomsayers who predict chaos on an epic scale. Why, some even doubt whether the new regime will continue the outgoing Obama administration's tech friendly approach.
And they all have one thing in common: they're based on guesswork!
Most Singular President
Surprisingly, there is considerable information available about Mr Trump's likely plans. Most of this is based on data gathered from his election campaign. Other data is from his rather public role of a mega property developer, hotelier & businessman. And all this is "corroborated" by his choice of team members - a mix of businessmen, ex-army hawks & radicals.
Clearly, Mr Trump promises to be the most unique character to occupy the US President's seat - to date.
A flamboyant personality, Mr Trump has often backtracked on his brash statements - swinging for example, from speaking against climate change to wanting to reopen coal mines. At the same time, he has managed to stoke unmistakable optimism among American business. A sentiment that does not gel with the fears about his policies re US trade protection & realpolitik.
The Age of Kali
On one hand, the S&P500 index is up. US business confidence has soared. And corporate tax cuts are (people say) only a pen-stroke away! All of which is expected to be followed by increase in domestic consumption.
In stark contrast, the 45th US President has already taken a "big brother" posture vis a vis trade with countries like EU champion Germany, rising superpower China & neighbouring Mexico.
Curiously, this contradiction is a sign of our times. Hindus know this as "Kali Yug" or the age of Kali, where light & dark, good & evil exist side by side - promising a king-sized mash-up which will ensure utmost confusion in human beings!
On a modern note, disputes are often planned as part of a trade strategy, with the intention of settling for a consideration. But how far this strategy will work with nations (which are not run strictly for profit) remains to be seen.
The Don will realise sooner or later, that dealings between sovereign nations may not be as predictable as "price discovery" is in commerce. And with no global body empowered to impose order between countries, the simplest dispute can take unexpected twists, resulting in with long drawn conflicts.
Welcome to the Age of Kali.
technology exists to facilitate business, not vice versa the same applies for data analytics, marketing automation & m-ROI tools across the enterprise, CTOs have implemented IT without the direct involvement of other senior managers
but, when it comes to Marketing, the CMO's direct involvement is necessary for any IT implementation
data & analytics revolution is a direct outcome of the recent hyper-automation activities across the globe - and surprisingly, the corporate world had a very small contribution in this hyper-automation exercise!
because, in the past decade, VC funded b2c startups were responsible for consumer b2c automation - comprehensively including consumers across markets & target groups
(it’s only recently that large corporations have started investing in b2c ventures for building databases around their target groups)
in fact, the rate of b2c automation has been so high that it far surpassed enterprise business automation efforts by corporations, making way for data explosion!
IT has always shown the route to transformation with hyper automation, this is even more true
till recently, IT was actively implemented in finance, production planning & inventory, HR & sales – where there was no direct effect on business strategy apart from increasing efficiency
hence it was an accepted practice for management to let techies drive IT projects
but now the tentacles of IT have reached the portals of marketing & business strategy
and suddenly IT is a business matter, with a serious effect on business strategy & business modelling
most CEOs, CMOs & other senior managers are still not directly involved in data analytics & hyper-automation - preferring to delegate IT to the experts
(this is understandable as there is a major aura of mystery around subjects related to data analytics)
but senior business managers are the only people who can drive changes in business - which are a direct consequence of data analytics & hyper automation
so it’s time for senior managers to (partially, if not fully) understand the complexities of data analytics & hyper-automation
there is a need for senior business managers to understand data analytics & hyper-automation and clearly define the objectives - for direct business benefits
one desirable side-effect may be to discourage unnecessary IT experiments with esoteric ideas!
starting off as a people's medium & going on to become a global flea market, the Internet has changed over the past 2 decades, to be increasingly dominated by political propaganda & commercial messages sponsored by big brands - all of which has naturally lowered consumers' expectations from the internet
brave new world - circa 1996
the internet started off as a people's medium (way back in the nineties); content was free to share, with the required servers paid for by the hosts
advertising was solicited in a friendly manner & the general public soon became euphoric about this new electronic medium - even as self-appointed pundits predicted immense possibilities of targeted advertising & the imminent fall of organized media (television, print, radio et al)
then came email which rode on this 'backbone' and has changed the way the entire world communicated
over the years, digital telephony also switched to this backbone to successfully save operating costs & offer integrated services
and soon, search engines became the standard method to discover new web services & social networks became hugely popular to challenge the supremacy of the search engines
all through, each netizen - a tiny cog in the grinding machine of the web - was the most important entity of this online community: sharing thoughts & content (original, plagiarized & acknowledged!); showing their smart, well-informed side & making new friends in this alternative virtual-yet-real world
web of ecommerce - circa 2016
the internet of the nineties is barely recognizable - the promise of a fresh new digital world bursting with new ideas, new engagements, fun people, (many of whom were not approachable till then) - has morphed into something different from what we had originally "signed up" for!
just look at social media - inundated with offensive trolls & region/race based jingoism - accompanied by loud boasts & even louder responses - not to mention the not-so-subtle brand messages
and paid search results which ambiguously steer consumers to e-commerce sites for possible purchase
along with (surreptitiously) paid content which is 'planted' across social media & other websites to predict trends in every sector
to complicate matters further, search engines track consumers' every online second to 'suggest' paying e-commerce sites based on their recent web-surfing history
while media houses upload breaking news & trends at an impossibly high frequency - much of which is less than newsworthy
even as celebrities use social media as their playground to engage with their mindless fans by sharing trivia!
web of politics
almost as if to prove that things can always become worse, politicians have taken over social media sites & governments have gone a step further to disseminate information with online dime-a-dozen press releases - faster than they are read
long ago, a former Indian P.M. had successfully flooded the sole television network of India (publicly funded of course) with blatant sloganeering - but today's calculated & planned content by politicians & governments has gone many leagues further
how can we forget the large corporations who routinely pay to 'seed' appropriate comments in social websites to promote their wares & euphemistically call it social media engagement?
and regularly pay search engines to steer unsuspecting consumers to the next step to purchase their brands!
as with advertising, the more a political story/theme is repeated, the more 'credible' it appears - making it possible for a donald trump's interview (which is repeated to millions of surfers) to drown the soft advice of a dalai lama!
the lone voice of the consumer is being steadily drowned out by the loud content of politicians & government with their armies - ready to retaliate to any consumer who dares to make a negative comment!
lowered consumer expectations
all this has made consumers wary of the internet - once the world’s most charming bazaar now converted into a series of virtual pop-up branded stores managed by big businesses
the savvy consumer no longer expects web content to be unbiased - thus lowering expectations from this once idyllic, 'virtual' world
the erstwhile humane touch has been replaced by commerce / politics of our real world
in the process, the web has become one huge extension of marketing - with technologically superior features
come to think of it, brand marketing is based on how to influence the human mind!
so for whatever it's worth, here are a few points culled together from numerous sources - which you may find useful for your marketing strategies:
• thanking customers works much better than rewarding them with gifts in return for purchases more honest, more straightforward, less foxy
• which is quite different from offering customers a reward if they do something for you do ensure that you offer something of worth!
• too many choices delay decisions for a quick decision, keep it clear & simple
• add some mystery factor now & again the human mind is naturally curious!
• ask your customers for a favour - which costs them little or nothing humans do feel a need to justify their actions
• human mind can be kicked into responding by a sense of fear & anxiety or by promising positive results appeal to your customers' good side for better results
• scarcely available items have more value than those which are easily available but the 'last chance to buy' works best when based on truth
• 'avoid loss' triggers reactions much faster than 'make profit' calculate what loss worries your customers the most - and make the most of it
• make your customers commit to take a first small step & you will prepare them for taking the next bigger one this works subconsciously in the human mind
the above points may be subject to vagaries of the human mind; more suited to carefully-timed, infrequent or even single-use strategies - so please consult your marketing expert before trying out!
40% of mobile netizens block ads. And 2 out of the 3 who don’t, intend to!
It’s all a matter of habit. With television, viewers were used to living with a linear flow of mixed content - ads + programming. So brand ads were used to riding on hired media programming.
But the early Web pioneers (circa 1995) in their urgency to create a disruptive model(?) promised free content with no irritating ads. Since the early Web model was mostly non-commercial (being funded by rich individuals), this model ran for 2 decades or more, making it the de facto model.
With the latest ad-blocking technologies offering sophisticated tools to consumers, today’s Web users are not willing to accept the view ads even for "free" content.
Today’s leading brands give equal importance to their owned content & web pages as they do to hired content & channels for consumer engagement – their ongoing "earnings".
Today, brands invest in their own content along with investments with earned-media strategies. And these decisions are continuously ratified by analysing customer data to deliver a personalized media experience for each customer segment.
As expected, there is a communication overload, leading to a humongous clutter. And the consumer is spoilt-for-choice! Naturally, quality & freshness of content is the deciding factor for engaging consumers!
More than ever before, content is king. There’s a need for true-to-life, endearing, absorbing content to define new ways for consumers to experience brands.
Big Role of Data
As consumers move across the World Wide Web, they block ads, disregard messages. Most importantly, they skip poor content, based on changing trends. The need for feedback data is natural in this scenario to create demand. Both for predicting the right content as well as knowing how consumers have interacted with the brand.
The ultimate goal remains unchanged – how to lead consumers into the sales funnel!
* Source: Global Web Index 2016
Customers never differentiate products from their user-experience. And in today’s hyper-connected age, it’s extremely easy for share their product experiences very easily. So it’s obvious that companies should constantly absorb this feedback.
Most companies try to improve their users’ experience continuously. But to truly engage with customers, companies must incorporate this experience-feedback into their product design & management function.
User Experience Model
The user-experience led model uses empathy to put customers, clients & end-users at the centre of product design, evolution & management.
An age-old example is that of providing existing customers with free advisories, alerts, prescriptions related to the product. Another example is of revamping e-commerce websites for better customer experience, leading to increase of traffic & sales.
Then there is the case of a call centre executive who sticks to the script with no regard to the current state of the customer called. Instead, if the executive is able to respond to customers as human being first, then there is a greater chance of engagement & long-term ‘connect’.
Finally, there is the example of a consumables company shipping material in advance, based on accurate estimates of refill date – thus saving customers time & effort.
In this manner, design (based on customer-experience) can be a tool for organisation transformation – to change an existing situation to a preferred one. This is as true for brand-building as it is for product support or any other facet of business management.
The Next Release
The above approach combines design, commercial strategy, technology, keeping customer experience as a top-of-mind issue. What does this involve on a day-to-day basis?
* Making product teams understand customers, their business & competitors, deeply.
* Extending customer-centric empathy to more roles in the organization. This can be achieved by sensitising more staff members to develop a feel for their customers, their business & the market.
* Setting up multi-disciplinary product design team by picking resources from design, engineering, IT, operations, project management, research, user experience, industrial design, visual design, service design & prototyping. Further, this team should be empowered to initiate design changes on a need basis, following due process.
* Encouraging teams to act & react without delay. That means shortest possible go-to-market schedules, rapid prototyping, frequent iteration based on customer feedback, and an ability to release a product that is viable but may be far from perfect.
After all, the next release is just around the corner.
Marketing efforts can boost your business or stall your growth. As usual, strategic thinking is the key. Some tactics to breathe life into your marketing investments.
The Silent Revolution
Every other media & marketing pundit has been screaming about the online marketing revolution – how digital marketing is taking over. There’s been a silent revolution in the meanwhile. The offline ground activation business has seen huge growth. Today, large retailers spend upto 50% of their budgets in ground activations clubbed with outdoor & promotion schemes.
Go offline marketing to create that brand buzz!
Everybody knows that when we become nostalgic, we become emotional, more vulnerable. And are more likely to loosen our purse strings! Launch nostalgic campaigns.
And lace your offline activations with nostalgia.
Storytelling is one of the most arresting methods of communicating. Today, that story must be shared across various media platforms. But remember to modify it suitably for the different channels – television, radio, outdoor & print.
Remember Your Existing Customers
New customers can help you grow your business. But existing customers are your base. Treat your existing customers like they're part of your exclusive VIP club.
Existing customers can give you additional business.
Big data can be used to predict short-term trends. And some of this prediction data can be used target new customers. For example, real time data on bad weather can be used by home delivery services to boost immediate sales. And real time airline booking information could be used to sell hotel rooms to passengers. (Ditto cancelled flight information for stranded travelers!)
It boils down to this: Wait for a Google Search result to lead new customers to you or proactively pitch directly to new clients!
Let Your Customers Interact With Each Other
Your customers interacting with each other may seem alien. But it’s a net benefit – as you will get to hear customer opinions which often lead to product ideas. And much more!
Try out new channels & digital platforms. Make mistakes & learn!
Even in normal times, marketers have a hard time figuring out where to invest, in what & of course, how much.
Should one invest more in developed markets to sustain market-share? Or look at emerging markets to raise market-share? Which brands should get priority over others? And how does one quickly re-balance the marketing investment portfolio?
All this becomes even harder when major global changes affect target markets & customer spending & inflationary trends persist despite Govt. policies.
Alpha & Beta
For any investment business, there are two types of strategies: passive & active. In principal, the same should be applicable to marketing investments.
The passive approach includes in tracking benchmarks of competitors and using the same as a guideline for investments. This is relatively simple and requires less effort. But since it is based on benchmarks, the yield is at best an average of the market. This economic approach is supposed to get "beta" or average market returns.
The active approach relies on an expert team of investment managers (read marketing experts, media & digital experts). The team of professionals is tasked with the responsibility to choose assets & markets in which investment can outperform the average return. This approach is supposed to get "alpha" or superior returns.
Past Performance Does Not Guarantee Future Performance!
But there are problems with this approach. First is that such teams come at a cost. Second, is that there is no guarantee of the performance of such teams - with only a small % performing well. And third, there are limited options available. This means there must be a sustainable mechanism to monitor such teams as performance may change over time.
If not monitored, actively managed investments may actually end up faring worse than the passive ones!
An Information-led Approach
A third approach is extremely data-centric to capture all data related to marketing investments to the alpha or beta approach. This also includes marketing process automation.
This information-led approach helps re-balance marketing investment portfolio continuously. For example, Brandintell Services from Mediaware helps manage marketing investments in the following ways:
* Measure response by media / activities - to weed out the bad investments &
replace with the good.
* Track ROI by markets - to track sales realized vs investments by markets.
* Check competition benchmarks - to keep ahead of the competition.
* Stay on course by following potential of existing product categories & their markets.
In addition, Brandintell Services also ensures the following:
* Bring discipline with online approvals.
* Increase transparency with centralized live marketing investment data
(on a need-to-know basis).
* Ensure budgets are not exceeded without specific approvals.
* Build a private live, knowledge portal for Marketing Team.
For a beta approach to managing marketing investments, such IT-enabled services may do the job of expert teams at a fraction of the cost. And in case of an alpha approach, the same IT-enabled services serve as a much-needed, constant check on the expert teams - to ensure that results from alpha are better than beta.
The digital revolution has been in its “early days” for the past 2 decades. And going by the frenetic pace of development, it looks like we're going to see another decade of "early days"!
Now, any revolution is all about challenging the establishment. The digital revolution is all about challenging existing, established businesses with digital technology. Leadership pecking orders are broken, to make place for digitally-savvy newcomers.
Existing businesses must have a clear strategy by which they can quickly adopt the digital way of life. Else, their response may be "knee-jerk" when tackling the disruptive digital newcomers.
From a long-term perspective, existing businesses must re-orient their entire organizations - including their marketing teams - to the digital way.
Mouth Out The Strategy
There are only so many strategies which are practical for an existing business. Not every large company can adopt a disruptive strategy or create a new ecosystem by leveraging digital platforms. Like Nestle did with their Nespresso brand (disrupting existing coffee chains by making state-of-the-art coffee machines for home kitchens).
"Follow the new leader" may seem the simple way out - but is not always the right strategy.
But by adapting to the digital way, existing businesses can retain existing customers, acquire new ones, and even counter the disruptive newcomers.
Simply put, assess the most significant opportunities & threats. And judge the timing by closely tracking the market. This should yield the possible approaches which are based on available & re-allocatable resources.
For example, large retailers have got great benefits by making it easy for customers to order online, while taking deliveries at local company-owned outlets after touching & feeling (especially for new models).
Most importantly, the strategy should be communicated in different ways across the length & breadth of the company.
Note: The objective of the strategy is simple - to match pace with their customers, as they increasingly adopt a digital way of life.
Money Where The Mouth Is
Next, there is a need to commit to the new strategies by investing in relevant digital capabilities. For marketing, this translates to investing in the customer’s digital itinerary -in addition to market research & competing product analysis, digital service & feedback. In addition, this involves development of technical capabilities to manage big data, digital content, SEO, SEM & social media.
Appetite for Risk
In a VUCA (volatile, uncertain, complex & ambiguous) world, where interestingly there is abundance of data available, businesses need to respond quickly, even though their decisions are data-empowered. This translates to developing a culture which have a built-in appetite for risk. Established businesses tend to be more risk averse.
Best of Both Worlds
Today, it is best to adapt a “best of both worlds” approach for most activities.
1. Ongoing process automation efforts should be based on well-defined processes, which are regularly validated on a test basis. And where it is not possible to capture complete process details, it should be supplemented with regular data capture from departmental spreadsheets which record most details albeit in a less-structured manner.
Marketing: Given the huge churn in marketing activities, it may not be feasible to deploy complete process automation for marketing. This can be substituted with intermittent aggregation of marketing activity data to analyze for "moving average" benchmarks, which can act as beacons which provide some direction in an otherwise fast-paced, blurred environment.
2. There is a similar situation as far as IT is concerned. Existing legacy systems are more structured & reliable, requiring more resources. Digital innovations & platforms are based on rapid development, and testing is often live on the end customer with a quick-fix team at hand to plug reported bugs! It may be best to deploy both teams for specific projects.
Marketing: Marketing analytics (target vs actual) as well as big data analytics (consumer behavior) could be kept on a separate stream from the traditional IT teams.
3. It may also be prudent to maintain to separate sets of staff – for the traditional and the new roles. The new are forced to learn faster, experiment & even do live testing of concepts, while the traditional continuing what they have been doing. An option for exposing the new to traditional to may increase their velocity, flexibility & connectivity.
Marketing: Digital teams coexist with the traditional marketing teams.
Re-align The Organization
On a long term basis, businesses will have to realign themselves so that new talent is developed/acquired, utilize new ways of funding, and set key performance indicators of staff in line with the company’s digital strategy.
We live in a world which threatens to engulf us with terabytes of data - most of it at our fingertips! Thus, all of us are constantly sorting through, identifying & extracting the few bytes of info. that we need, to make our daily decisions.
This is precisely why ensuring that product information is easily available to customers is the top priority for any Marketing Department. (All customers process available information, before making any product purchase.)
But while product information is an important part of the overall digital customer information strategy, Marketing needs to remind itself (or be reminded!) that the customer information strategy must necessarily involve a two-way flow of information.
Recording Customer Expectations
Growth is the engine which drives every successful enterprise. And continuous growth is possible by continuously fulfilling customers' expectations, which are constantly changing.
And this needs processes which encourage customers to reveal their changing expectations & record the same (feedback) – as a part of a comprehensive customer digital information management strategy.
The mobile telephony industry services the widest range of customers, which cuts across all sections of society, with ARPUs ranging from Rs 100/- to Rs 50,000/- per month. With each customer segment & sub-segment having different needs, expectations & paying-power.
This industry is known for its rapid growth, which is based on equally rapid & continuous innovations. All meant to fulfill their customers’ changing expectations. With the help of digital technology, they have maximized their revenues by offering varied services to fit the different needs of the various customer segments.
But one area where large telecom operators seem to have (deliberately) “overlooked” their customers’ demands is related to "international roaming" charges. There are many users who have surrendered a SIM card every time they opted for "international roaming" because they were presented with bills running to a few hundred thousands of rupees for a fortnight! And this experience cuts across multiple operators, who are fierce competitors.
Listening To Customer Demands
Since the past couple of decades, there was need for tourists & business visitors to make affordable local calls & access emails & downloads via mobile internet. The large telecom operators never fulfilled this need, in their greed to milk their existing customers in the name of "international roaming" charges.
While Vodafone & its competitors were busy trying to extract extra lucre from its customers, others linked with the telecom industry were apparently listening seriously to the customers’ demands.
They launched start-ups like Lebara & Lycamobile who offered new SIM cards for short-term use by tourists & business travelers. Since the tenure was limited & helped tourists, they were even able to bypass the usual strict regulatory checks for giving new SIM cards.
Soon, this became popular with tourists & visitors who needed cards for short periods. Lebara, Lycamobile, et al were making their profits from the fact that the average usage was much less than package limit. And for the first time, the tourist/visitor could actually use & discard these SIM cards because the cost was a tiny fraction of what any “international roaming” package would cost! It is even possible that companies like Lebara operate as mobile virtual network operators (MVNOs) with very little infrastructure - relying on the spare capacity of existing full-service telecom operators like Vodafone.
New SIM Activated In 60 Seconds
Before embarking on a recent trip to France & Spain, a colleague asked his current service provider Vodafone India for their best "international roaming package". They came up with an attractive offer - which frankly, sounded too attractive to be true!
A quick study revealed that the package did not include any online bandwidth component which would form the biggest consumption by far. At the quoted rates per Mb, he estimated that he would end up paying 40,000/- for mobile internet access alone. And this is without adding the mandatory pad-up of consumption that telcos have become notorious for!
After discussing with a frequent traveler to Paris, my colleague declined the Vodafone offer. On landing in Paris, he bought a SIM card from Lebara, a British firm. He got instant connectivity (activation in 60 seconds!) for a sum of 15 Euros which included 5 Euros worth of talk-time & 512 Mb worth online uploads/downloads apart from free Lebara to Lebara calls. Valid for a month, this was more than adequate for his needs.
Ten days later in Barcelona, the Lebara did not work smoothly. The local Pakistani store advised him to go for (surprise!) a Vodafone Spain SIM card for 15 Euros which gave 60 minutes free talk-time (anywhere in the world) and 1 GB online uploads / downloads for 30 days - once again more than adequate for his needs. The balance available in his Lebara SIM would be useful because he planned to return via Paris.
With this, my colleague was able to restrict his total mobile bill to 30 Euros or under Rs 2,400/-. He returned with a lot of unused mobile internet & some talk time (both useless, of course). It is not difficult to imagine what he would have been billed by Vodafone India if he had signed up for their “international roaming” package!
Old Habits Die Hard
Gradually, as larger operators like Vodafone found that fewer customers were signing up for their "international roaming" schemes (scams?), they also decided to listen to their customers' expectations. Of course, the home telco would still try to sell the "international roaming" package first!
|Managing marketing investments is a significant activity for any business. And all senior managers would like to know the ROI on their their marketing investments. Like every other investment.
So what makes management of marketing investments a complex affair?
Complexities of Managing Marketing Investments
Here are some factors which add complexity to managing marketing investments:
* Multiple brands operate in different, multiple revenue markets.
* Each market has multiple investment options.
* Each option has multiple sub-options & vendors.
* Each with unique attributes.
* The performance is measured differently for each activity, with varying cost
* Each activity / medium has specific strategies.
* And separate creative strategy.
* Activities need to be tied-up with product distribution.
* Discount schemes are treated as investment.
And so on . . .
An Information-based Approach
Today, all work is managed using Information Technology (IT). Seen from this angle, we have identified a few factors which add to the complexity.
* Maximum activities are outsourced.
* There are multiple sources for the data.
* The workflow processes are intrinsically iterative.
* The data in multi-layered.
* The dynamic environment is controlled by the competition.
* Business conversations are a part of each transaction.
Here is a detailed explanation for each factor:
Maximum Activities Outsourced
|Most tasks are outsourced to specialists. These include:
* Creative, communication strategy
* Media, digital, outdoor
* Events, activation
* Market Research
* Competition Monitoring
|The data has multiple layers. The business intelligence emerges by combining these layers in multiple permutations.
Take a look at ROI for example:
* Sales come from revenue markets.
* Investment markets differ for TV, Print, Online, Radio.
* While OOH & Activation are hyper-local.
* Investment & revenue markets linked to geography.
* ROI is measured by sales by geographical market.
* ROI is also measured by exposure, response.
* ROI is also measured for each discount scheme by market.
Intrinsically Iterative Workflow Processes
|As an example, we look at the budgeting process for marketing investments. Normally, budgeting is a periodic exercise
which is based on some fixed parameters. But the process for arriving at Budgets for Marketing Investments is extremely
iterative. And this iterative process continues right through execution. Here is an outline of the process:
* Funds available for marketing investments are a % of projected sales.
* These funds are allocated by brands to various heads of marketing investments.
* The allocation is verified with brand-wise, activity-wise annual plans submitted by experts from each field.
* The funds allocation is revised based on the annual plans. This yields the working budget & investment-to-sales ratio.
* Each annual plan is broken up to monthly briefs.
* Each brief has multiple activities.
* Each activity is planned with multiple iterations.
* Each plan is executed with dynamic changes as per actual performance.
* Each execution is completed with the final activity being verified, billed & settled.
* And marketing budgets are regularly revised based on actual sales realized.
Multiple Sources for Data.
Dynamic Competitive Environment
|The data comes from hundreds of different sources, including internal Sales Dept. Data sources include:
* Creative Agencies
* Media Agencies
* Digital Agencies
* OOH Agencies
* Activation Agencies
* Print Production
* Film / AV Production
* Sales Dept. (Internal)
* Third Party Data for Audience Measurement
* Strategic Consultants
* Third Party Data for Category Performance (Competition)
| The environment is dynamic because the competition can set / change the pace. To monitor competition there is a need to
* Store third party data for monitoring competition.
* Normalize, reconcile third party data with internal figures
(sales revenues by markets)
* Generate statistics like Share of Voice, etc. for a period with moving averages
* Benchmark & compare.
* Revise budgets regularly as per competitive benchmarks.
Business Conversations Linked to Transactions
|As we have seen, most transactions are outsourced & the processes are iterative.
* Since transactions are outsourced, there is a need for in-line business
communications linked to each transaction, especially for quick action.
* Since processes are iterative, conversations are a part of each transaction.For
example, building a media plan involves huge number of iterations, discussions and
even comments / approvals from auditors.
* There is a need for automatic intimation of approvals & ‘go-aheads’.
* There is a need to capture the rationale behind each marketing investment by
linking business conversations to each transaction.
* 70% of business intelligence lies in the business conversations.
Global marketing investments have been growing relentlessly for many decades. Estimates of growth rates of global marketing spends vary, with estimates of current marketing investments ranging from 400 hundred billion to over a trillion dollars. But there is no two opinion about the need for measuring effectiveness of marketing investments. (Senior management's need to correlate marketing expenditure to incremental business generated remains unfulfilled.)
This is because marketing investments were traditionally based on intuition & target-group sampling. But all this is changing rapidly - with the serious application of the Internet & information technology to marketing & sales.
There's Something About IT!
There is something about Information Technology & the Internet* which invariably makes it extend its defined scope. Information Technology started as a tool for scientific research & engineers. (Remember Fortran, anyone?) Then came the commercial application of IT which soon became a subsidiary function of Financial Accounting & Management Reporting, which was based mainly on financial data. Commercial application of Information Technology soon extended its ambit to cover Inventory, Production, Sales, Distribution & Servicing.
Since the past few years, Information Technology & the Internet has played a significant role in digital advertising & marketing, leading to speculation that IT could be re-positioned as a subsidiary function of Marketing. Except that IT's impact goes way beyond measurement & targeting of advertising & promotion expenditures - right up to the territory of point-of-sale. In addition to analyzing large volumes of transactions, today's data gathering can track last-minute consumer-behavior, based on sensors as well as video - with analytics capable of analyzing data from all kinds of sources including "unstructured data" like video recordings!
Welcome to the world of the future Chief Marketing Technology Officer - a job profile which would be rooted both in technology, product & marketing domain knowledge.
* This is probably why digital advertising agencies have not split into creative and media like their traditional counterparts.
The New Marketing Mantra: Listen To Sales
The impact of IT & the Internet goes way beyond digital advertising & marketing, customer-targeting & behavior- to influence pricing, product distribution, service & new product development - in real time. Whether it's consolidating pack-size/variants for a brand for optimal production, costs & dynamic pricing based on real time demand. Or creating customer-centric websites which cut down steps for new customers, even as they harness their wishes to introduce new products & service options. And redefine their supply chains to enable better response to customers with optimal inventory carrying costs.
Technology can be the glue for cross-functional teams comprising of Sales, Product Development, Marketing, Service, Production to produce new products & variants - sometimes by including customers' opinions! Technology is melding marketing into other core areas of business for real-time impact, which was not possible till recently.
At a brick & mortar level, existing sales data (primary/secondary/tertiary) could be mapped dynamically to geographical markets. On a parallel level, marketing investments which are based on evaluation markets (typically defined separately for each medium/activity) could be mapped to the same geographical markets. Thus yielding ROI by market on a real time basis.
All this demands that Marketing adapts to Technology as well as listen to Sales.
* Technology: to exploit the power of new tools for enhanced analytical skills and
* Sales: to acknowledge success / failure of marketing investments & modify strategy in real time.
With some avante garde multi-nationals already letting their Sales Teams have significant say in their marketing investment budgets, this trend may be here to stay.
In the past couple of decades, a number of brands have demonstrated exponential growth. It started with the Korean chaebols & the Indian IT giants who boast of multi-billion dollar top lines today - but were regional players two decades ago. Then came online retailer Amazon along with Google's online ad platform.
All this growth was based on 2 factors:
1. Practically endless demand from heretofore untapped markets
These companies understood the humongous demand of as yet untapped markets. The Indian IT firms went global, looking Westward to fill in the need for IT services. While the Koreans adopted the standard global model to expand their footprint. Pioneering online retailers like Amazon started by tapping into the reading habits of the U.S. market, going far beyond the established metros. (They soon added more products & expanded their footprint to other countries.) And a flock of Indian e-tailers led by the likes of Flipcart have successful replicated Amazon's model, growing at many times the original speed. The story goes on.
All these brands managed to find new ways to satisfy the new demands. Naturally, their businesses grew as fast as they could manage to fulfill the demands, using their unique competitive edges -
* low cost of inventory
* low staff costs based on technology
* large tech teams with proficiency in English
* Govt. subsidized operations, etc.
The demand of products from as-yet untapped towns &/or from other regions of the globe appears like a bottomless pit!
By the way, the Japanese did the same after World War II with their low-cost, electronics goods for the first-world citizens.
2. Electronic media collapsed the globe into a well-connected village of local dimensions
The concept of "the global village" was first floated by the noted visionary Marshall McLuhan. The global village provided knowledge, technology as well as know-how to all. Not to mention updated information about industry as well as consumer demands.
As a result, knowledge transfer (flow of information) which took months/years earlier, happened in weeks/days. Come to think of it, it all probably started with people - expats, migrants as well as a mobile population - moving freely across countries in their professional capacities. These pioneers became the first carriers of information across the globe. The electronic media followed and along with the Web, soon took over, resulting in significant acceleration in the flow of knowledge & technology. This information explosion was responsible for the growth & prosperity of the emerging brands.
These 2 factors which the emerging, regional brands (based in developing countries) took advantage of - helped them to grow at rates that were simply astounding.
Globally Distributed Brand Value
How is the economic value of a brand computed? For an electronic item like a cell phone, the electronic parts typically come from one of a handful of developing countries; the display units from another country; and the assembly probably happens in a third country. Yet, the company which designed the product & created / owns the brand is probably based in a completely different, developed country!
The final "value added" billing originates from this developed country, ensures 2 things:
1. Promotion of the national currency and
2. Contribution to the national exchequer in the form of taxes
To put it simply, the value of a global brand is distributed, albeit unevenly across a swath of markets, with the lion's share reserved for the country of origin - where the product was designed & branded. And the main reason which contributes to this situation, is the disparity in manpower & production costs across different markets.
But what happens when an emerging regional brand grows large enough to become a global leader? It certainly loses its economic advantage - but in the transition, becomes a feeder to a set of newer emerging, regional brands.
Thus the cycle continues.
Role of Technology
Each new technology promises to change things - once again!
Take a technology like 3-D printing for example. It can actually challenge the future of a globally-distributed production supply chain based on disparity of manpower & production costs across different countries. How? Because it promises to change production from a labor-intensive activity to a capital-intensive one. Because when machines start replacing cheap manpower, the component of labour cost will reduce. And production will not need to happen in far-flung countries for economic benefits.
The same is true for any hyper-automated system which drastically reduces labor from existing processes. Or a work flow process management systems which drastically reduce the number of skilled worker-hours.
It's clear that brand / product life cycles which were quite linear to date, will not continue to be so in future - as they strive become self-correcting, they will become heuristic in nature.
Common logic dictates that a brand is created from the vision of the CEO, which is his/her perception of a market need-gap. Or put a little more democratically, a brand is structured on the vision of the product team, based on the vision of the CEO.
So many may feel that debating about the structure of a brand is a waste of time, or at best a luxury!
But that is far from the truth. To be successful, a brand needs to be accepted.
To be accepted, it must satisfy 2 conditions:
That a brand must exist as a set of physical products/services is obvious.
(i) A brand should be linked to a set of products/services which are economically
produced for the defined target user-segment.
(ii) A brand must satisfy a set of criteria which ensure that it is relevant.
But what are the set of criteria which ensure that a brand is relevant?
A Scientific Approach
We took inspiration from theoretical research. The acceptance of any new scientific theory is based on 4 criteria, which are applied to confirm its validity. These are:
We applied the same to a brand. Here are the results:
Simplicity is the opposite of complexity, plurality, multiplicity. That makes simplicity synonymous with singularity.
A brand must espouse a single message, not multiple.
(Incidentally, one way of evaluating competing scientific theories is by applying a 14th century principle called Occam's razor which prefers the simplest theory as against the more complex ones.)
A brand must be complete in its features & utility for its declared target users. Simplicity alone is obviously not enough!
(In physics, over a period of time, Newton’s laws could not completely explain all the new phenomenon & observations, leading to Einstein’s theory of relativity.)
3. Practicality - Does It Work?
This criterion tests the ability to perform, by asking a simple question “does it work?". For a brand, the question may be "is it profitable?”
(Scientific theories must pass through a set of experiments to answering the question ”does it work?” - the scientific equivalent of “is it profitable?”)
4. Communicability - How Does It Fit In?
A brand’s ability to mesh with the larger eco-system is the 4th & final criterion. For example, a detergent brand may need to fit in with its target group's aspirations to the constantly evolving advanced washing machines.
(Any new scientific theory must fit in with existing accepted theories.)
We are in the era of Kali-yug as per Sanskrit scriptures - the era of Kali, the demon who stands for all the negative human qualities. This era has commenced centuries ago and will continue for many more to come. Centuries that will be characterized by a predominance of negative qualities like greed, lust & wrath – ably supported by widespread usage of intoxicating substances. Humans will be controlled by desire, rather than intellect, taught by teachers who are not learned, led by statesmen who are corrupt & serviced by businesses which are not trustworthy. (See some signs, already?)
Naturally, today’s successful brands must match the characteristics of our era - whether it’s the world’s largest selling packaged software which is far from the best in its class. Or “free” services like online search and “free” software, commonly classified as open source.
Some of today’s biggest global brands are based on "free" services. Take Google Search, Facebook & Twitter all of whom have made a business of capturing the minute personal behavioural details of its billions of users for selling to product marketers around the world. (Hundreds of thousands of them, all eager to target these consumers!)
But the free software or open source did not appear like this when it started a decade or so ago. Then, it resembled a “noble” cause – perhaps because there was no visible (substantial) revenue model. Until Google stepped in, giving away its Android Operating System free to all mobile phone makers.
The result: makers of smart phones of all shapes & sizes and from all corners of the globe have launched a “new generation” of devices powered by Android software: making it the world’s largest deployed “free” software.
With this, Google has ensured that its dominance in online search on the increasingly popular wireless devices (continuing to generate revenue from personal data). But what did the consumer get?
Let’s take a look at the typical products created by individual wireless device manufacturers:
* Manufacturer#1 created Brand "XY" by marrying a version of Android software with hardware of their choice.
* Manufacturer#2 built brand Brand "YZ" with another combination of hardware & Android software version/release.
* And manufacturer#3 made Brand "ZX", with yet another combination of hardware & Android versions. And so on.
In many if not most cases, the above products yielded less-than satisfactory user experiences - because the software is usually matched with hardware which has low processing power (because of economic considerations, to curb battery consumption, etc. etc.) This yielded a sluggish device response in general, creating a set of dissatisfied users who are always on the lookout for better options. Moreover, the Android software which "powers" the hardware is neither owned nor controlled by the device manufacturers – who need to “match pace” with the software’s schedule of versions/releases & understand its new features & problems.
Along the way, this situation has created the need for yet another set of free software providers who promise to improve the user experience by "boosting" the response of all these devices behaviour by optimizing the software & organizing the various apps (which should be the responsibility of Android software).
Like it or not, these smart phones operate in an eco system comprising of 3 independent players with independent revenue models:
1. Device Manufacturers
2. Free / Open Source Operating System Software (Android versions) &
3. "Third Party" Optimizing Software (also free / open source)
Naturally, user experience matches expectations from any free product – unreliable at best and orphan at worst.
P.S. With so many free software providers, one can only speculate on the kind of humongous personal consumer databases that are being built & updated (stealthily) for the benefit of marketers around the world – data which could potentially be misused if it fell into the wrong hands.
Lawaris is the Hindi word for orphan.
And Actual Sales Control Marketing Budgets.
Making marketing investments should be a bit like perpetual motion with all future investments funded by incremental sales, which is a by-product of marketing. (Just imagine driving an electric car in an Utopian world - where the motion of the car generates adequate electric charge to be able to power itself in perpetuity!)
In the Marketing equivalent, the only way to justify branding investments is by constantly measuring Marketing ROI - in real time, on the fly.
But as any marketing practitioner will confirm, this is easier said than done!
To begin with, let’s examine what Brandintell calls the “Brand Business Structure”.
The Brand Business Structure
On the face of it, the sole purpose of marketing investments is to build brands. But on a deeper, pragmatic level, marketing activities must ensure sales of products, which is the business of the company to “manufacture & distribute”. Ergo, brands are marketed, products sold.
A brand operates in a competitive environment, and tries to stand out with one or more attributes. All this translates to established performance benchmarks for marketing investments. (These benchmarks evolve with time.)
A brand may be linked to a product or variant or even an SKU. Or an entire category. Each products has multiple sources of revenues - which are the customers & sales channels. The ever-evolving digital media, which can be a combo. of sales & marketing channels add to the complexities.
Products & brands are designed to attract certain types of customers (target groups).
A brand needs regular marketing investments which can span across multiple channels - covering media and ground activities.
For planning & executing its marketing investments across multiple channels, a brand has partnerships with agencies & vendors.
Each brand-channel combination may have well-defined target groups & markets for evaluating efficacy.
Marketing ROI on the Fly!
Marketing ROI or M-ROI is defined as the ratio of Marketing Investments to Revenues for a product category/product/variant/SKU for a given market.
Marketing investments are made for brands, across multiple media & activities - each with its own definition of markets, deliveries & even TGs. (With some brands representing an entire category or industry!)
While sales revenues are at the atomic level - for each product/variant/SKU – and for specific distribution markets, which are based on point of sales.
Going back to the analogy of the electric car, to check its efficiency, there is a need to measure the electric power generated by the motion of the car.
In the marketing equivalent this is represented by M-ROI.
To calculate M-ROI at any point, we need sales revenue data as well as marketing investment data. While sales revenue data may be available on a weekly or daily basis, marketing data is somewhat more complicated. This is mainly because an investment could be for a product category or for a single product. And its influence be restricted to a single market or a larger area. And it each activity/medium has its own set of unique parameters.
By thus calculating M-ROI on the fly, marketing investments can be fine-tuned for course corrections.
The entire business world today is focused on efficiency. Efficiency in production, efficiency in sales, distribution, & customer support. Naturally, marketers are also gunning for efficiency – and from all accounts, achieving it.
Since most marketing activities are outsourced, the new efficiency must necessarily percolate to their advertising & media agencies along with other vendors. So it is not surprising to observe a steady shift from the exclusive agency teams (dedicated to a single client) to shared resources which are managed as a talent/resource pool with a dedicated servicing manager.
By the way, resource pooling was regularly attempted earlier by global networks but not so successfully. The current rate of success is spurred by new developments in IT/infrastructure. Today, thanks to IT, share of resources it has become easy to share all kinds of resources across multiple locations. From skilled staff like planners & buyers to high-value, specialized resources like strategy experts & account planners. Naturally, the large networks stand to gain the most, with their multiple client-servicing brands.
Smaller networks stand to benefit too – by using external resource pools. (The recent recessionary trends have created a significant population of skilled resources, with decades of relevant experience, who operate independently at comparatively low price points.)
Efficiency Over Dedicated Resources
Was a time when large marketers expected independent, dedicated teams for their brands. Some very large marketers even preferred that their agencies should create independent business units for servicing their brands. While a few marketers still continue this practice (including running their own agencies), most seem to be accepting the mantra of our times: efficiency through pooled resources.
And why not? After all, we are in the age of the cloud!
By now, it is amply clear that Marketing, Sales & Customer Service should be consolidated as a single function. But given that Marketing is increasingly being driven by IT, analytics & digital, are we far from the day far when IT will become synonymous with Marketing?
From brute-force processors to learning machines, the evolution of the technology juggernaut is unstoppable. Information Technology has already changed job profiles in a wide range of professions. And going forward, digital technology is expected to replace highly-skilled specialists in many domains, with the Internet & mobile devices acting as accelerators.
Coming to Marketing, how far are we from appointing "intelligent software" as senior marketing specialists? And when can we expect an Automatic Marketing Department?!
The Technology Juggernaut!
The relentless advance of technology is bound to have serious impact on skilled labour, replacing many highly-skilled specialists in most domains. To date, we know of at least one UK based firm ("Deep Knowledge Ventures" in the venture capital space) who has appointed a proprietary software algorithm called 'Vital' as Director on the company's board!
While all this is expected to create tremendous value for companies, it will have severe repercussions on skilled professionals. (Some advanced nations have reportedy started planning possible legislation for insuring livelihoods of skilled workers (in anticipation of technology displacing professionals).
IT = Marketing?
On another note, the last 2 decades has seen Finance become synonymous with IT. This was because over a period, all financial record keeping as well as number crunching & MIS reporting became driven by IT. So much so, that at a point of time, IT was considered as an arm of Finance Dept!
Today, the same is true for Marketing and IT - but in a much deeper way. As every business becomes a digital business, companies will strive for digital transformation, with the new generation of digital positions like Chief Digital Officer, Chief Customer Officer and Chief Customer Experience Officer. No CMO would like to be left behind in a scenario where marketing campaigns would unfold in real time, based on performance measured across device & channel.
Tomorrow's CMO will lead & transform Marketing in line with the digital transformation of the enterprise by planning the multi-channel customer experience itinerary. And integrate with real-time analytics for instant reaction / course correction, using new technologies & cloud-based services. Making each marketing campaign look like a job-in-progress, taking shape as it unfolds, based on the needs of each brand & effective measured in real time across multiple channels & devices.
Very soon, IT may be seen as an arm of Marketing!
Customized dashboards full of metadata describing detailed sales & marketing information give enormous power to the CMO's team. But these dashboards need to be powered by a 'backbone' of knowledge database & software. With a few senior executives with deep domain knowledge who constantly set the software parameters to set priorities & flags for escalation - steering the direction of the Marketing team and the success of the company at large.
Digital Media Will Replace Traditional Media
While undoubtedly, traditonal media is assuming on a digital flavor, digital will complement not replace traditional media.
Full Service Agencies
Today, no client will commit ALL their communication requirements to a single, full-service agency. So, today's full service agencies offer different services to different clients.
Too Much Media Spends
The truth is, for every single marketing dollar spent on media, there are an estimated 7 dollars spent on non media activities.
There are good clients who offer an exciting experience to their agencies & other service providers. And there are clients who are less organized, do not plan & usually end up as bad paymasters.
Lack of Marketing Data
Ironically, many clients are unwilling to invest on research data - despite their billions of spends on media & advertising.
MNC Brands for Agency Growth
Worldwide, local brands are acknowledged as the growth engine of any economy. And they can offer opportunities for their agencies' growth.
|M.R.O.I. The 4 letters that can take every Marketing Department to the next level. Making marketing budgets expand & projects expand in scope. Additional resources are willingly committed when Marketing Departments show MROI.
MROI: Returns As %age of Marketing Spend
Put simply, Management would like to know the %age of return for every buck invested in marketing & brand building. Not difficult in principle?
Be warned, every other Marketing Department does not make any effort to track MROI - indicating that they do not or cannot correlate sales booked to individual marketing investments, using shared attribution models.
The MROI Challenge
|In reality, accurate calculation of MROI is a constant challenge. Because marketing investments are continuous, across multiple (geographical) markets & use different media, activities & channels. Adding to the complexity is the fact that each campaign is based on any one of multiple tactics like dynamic pricing, sampling, retargeting, affiliates, direct marketing (email), etc. And not to mention the numerous channels for sales realization.
One highly-recommended technique is to keep the model simple & add the complexities as you go. Obviously, the higher the accuracy, higher the rewards for Marketing Departments.
Marketing Depts. invariably get more freedom if they can prove to Management that marketing spends are linked to ringing cash registers!
|MROI: A Dynamic Metric
MROI is may be calculated for a single or multiple brand/s, market/s & media/activity. But always for a specific period. That is why this dynamic metric needs to be available for tracking historically.
One 'simple' way is to store these calculated figures for posterity. But given the complex options, this is not the best method. The best way is to be able to generate from your Marketing Database, for any period, past or current.
For which, of course, you need to start by setting up your Private Marketing Knowledge Portal.
|What are your current benchmarks?
Benchmarks are marketing metrics which help track your marketing activities. Has Marketing Dept defined their benchmarks? How are they updated & how often? Do they include deliveries as well as rates? When were they last updated? Do you have benchmarks for past periods?
Or does Marketing rely on outsiders for benchmarks?
|Can all your marketing briefs & plans refer to these benchmarks?
Ideally, benchmarks / metrics should be part of your process. Are your benchmarks easily accessible to your managers when approving briefs, plans? And how do you manage brand metrics like BDI, CDI?
||Do you regularly compare plans with implementation briefs, monitoring & final activity?
Deviations between estimated & actual is legendary, making it mandatory to record & track them. Are you able to record financial deviations on a regular basis? Do you track deviations in deliveries at every stage? Or do you wait for a "post eval" exercise months after the activity is completed?
||Is business communication linked to business documents / transactions?
Business communication differs from personal because of their link to business transactions/documents.
Can you link your business conversations with your briefs, plans or estimates? Can you view the relevant
conversations that go along with each business transaction? Or do you need to search your email box in isolation?
|| Is the authorization, verification & settlement on a common platform for marketing activities?
Marketing activities are outsourced, for the most part. This makes it important to implement a strong process backbone for authorizing an activity & verifying the same before making settlement. Can you link your business conversations with your business transactions? And view relevant conversations with each business transaction?
Or do you need to search your email box in isolation?
||Do you get real-time reports on what was budgeted, planned, implemented, verified & settled?
Given that a certain amount of deviation is expected & accepted, deviation reports must be available on a live basis. This makes it easy to conduct the business of marketing on a day-to-day basis.
||Do you get correlation / link between your marketing investment & revenue / response generated?
||Marketing activities are endless, ongoing. This makes it important to track & correlate your investment with ROI & compare with expected ROI. How easy is it for you to do this?
The formal marriage between IT & Marketing is long overdue.
These days, most marketers are busy trying to understand how to turn big data into big profits. Naturally, IT teams are routinely engaged to analyze* available data. All this has put IT right in the thick of the action - to grow the company's business in partnership with Marketing. By analyzing copious amounts of customer data, which is available online (big data) as well as in-house (business data warehouse).
* sometimes with inadequate inputs from Marketing!
From a watershed point however, this is the first time that technology is being seriously used for marketing. And finally, IT is seen as a front line business partner who records, develops & co-executes business strategy, rather than as a back-office function.
In the light of the above, what stops the marriage of convenience between IT & Marketing?
Perhaps the complexities of the situation. To collaborate, Marketing & IT need to unravel the complexities & understand the implications of data.
As always, new promises come with new challenges!
Challenge #1: Exploding Data
The first challenge is posed by the data itself.
Big data is growing bigger in volume everyday, with estimates ranging from 30% growth p.a. to as much as 50%. What makes it more complex is that the growth rate is also accelerating steadily. And we are still to witness the "Internet of all things".
Clearly, as the "Internet of all things" takes firm hold of all & sundry, the data is bound to become far more complex & diverse.
Challenge #2: Obsolete IT Models
Successful models traditionally deployed by IT teams are not valid for analyzing big data.
To drive growth, business needs to quickly analyze & extract insights from this humongous pile of diverse data. This demands an advanced analytics system, which can "sit on" this huge data. But there are 2 problems that need to be overcome. First, the data structures are as varied as possible as they come from diverse online applications (unlike those associated with well-designed applications coordinated by a single IT team.) And second, the vastness of data is beyond anything that any CIO ever imagined, challenging conventional storage, querying & processing methods.
This is where traditional IT methods of requirement gathering, architecture, developing & testing become obsolete. New methods are needed.
* To recognize & include undeclared database structures dynamically, on-the-fly.
* To save a single data file across multiple servers - because of the huge size involved.
* And to process the humongous data in parallel, using by clusters of computers.
All so as to quickly crunch the large & complex data in reasonable time periods.
Challenge #3: Redefine Relations
Marketing & IT must change how they see each other.
To manage the huge data suddenly available to it, Marketing must revise their predefined idea about IT. And vice versa! But Marketing has to take the lead as it needs to drive analytics to extract insights from the data & use to increase business revenues & profits.
Marketing must acknowledge IT's basic expertise in the development of IT architectures and the execution of large application software which will help create the company’s "big data backbone" - the base to generate & store the necessary insights.
Suddenly, the image of Marketing - the creators of exciting, high-budget, creative campaigns for the company’s brands - has been cross-linked to IT's image of business processes, data security, support backbone & cost reduction.
This redefined relationship needs to be managed by both parties.
Challenge #4: Needle In A Haystack
The entire exercise of data analytics resembles looking for a needle in the haystack!
For success in exercise in analyzing data, it is mandatory to know what you want. But that's easier said than done because in analyzing big data, you often start by searching for the proverbial needle in a haystack - except that you don't know what the needle looks like!
To arrive at what the needle looks like, Marketing must patiently & painstakingly define business goals / functional requirements from the exercise, while IT checks costs vs benefits. And both must use a common phraseology for maximum understanding & minimum ambiguity!
Challenge #5: Saving The Results for Posterity
The results of these extensive (& expensive) exercises must be saved in a secure but easily accessible data store for secure access.
Marketing / IT need to be make a provision to store the insights constantly generated by data analytics in a Marketing Knowledge Database. In a private portal which should ideally be the repository of all marketing data of the company.
How do marketers track their huge portfolio of activities?
By increasing internal awareness of your marketing activities alone it is possible to increase efficiency.
(You can do this simply by channelling all marketing activities through Brandintell's process automation cum data collaboration model, to 'enjoy' a bird's-eye view of all your marketing activities as well as plans - on a real-time basis.)
Marketers must monitor performance across their portfolio of marketing activities - and immediately discontinue non-performing activities.
By tracking performance parameters continuously along with financial. Brandintell asks agencies, consultants & vendors to include performance expected as well as performance delivered, ensuring that you get a 'ringside' view of your marketing activities' performance - using past data to benchmark performance. (In addition, you may also refer to subscribed 3rd party databases.)
Brandintell identifies campaigns, activities or media which performed at optimal levels, and those which did not. By passing campaign data through Brandintell's proprietary real-time diagnostics system.
Brandintell benefits marketers by increasing efficiency. And decreasing time & efforts to gather data. And analyze intelligently.
On what basis does a company decide to sell its brands? On the brands' contribution or lack of it? On the brands' growth history? Or the category's growth potential? Based on a future market potential?
Interestingly, IT can play an important role.
IT can convert Marketing into your Private Knowledge Portal.
1. Build your private knowledge base with your own data - marketing/media plans, estimates, schedules & bills.
2. Upload 3rd party data for market research, consumer behavior, category sales periodically. In addition to readership, viewership & other data.
3.Generate sophisticated analytical reports to show high-contributing markets vs low contributing, growing markets vs the declining. Track BDI, CDI. And even track your brands' advertising to sales ratios vis a vis the industry average.
4. Generate your own tracking reports for marketing activities & brand performance.
Of course, IT is famous for bringing down costs down based on the following basic principles:
1. Increase data collaboration with your ad / media agency & other BTL vendors.
2. Automate processes related to marketing functions.
3. Integrate workflow & communication with your ad / media agency & other BTL vendors.
4. Implement online authorization for marketing activities.
5. Improve day-to-day control, cut error margins.
Marketing is complex in today’s uncertain world.
With market research steadily heading towards analysis of online (big) data, services replacing products & an increasingly volatile customer calling all the shots - leading to greater market segmentation, it is natural that the role of computers in marketing is also on the rise.
(Everybody knows that better reporting encourages agile decision-making, leading to better management control. And that data collaboration between Marketing & their agencies, vendors can facilitate efficient execution of the Marketing Plan – aided by e-transactions & e-approvals. Not to mention the intrinsic value of online/inline business communications as well as a central information store for marketing transactions & data.)
Yet, almost every CEO will agree that their Marketing Depts. should be more data-driven, process-driven & analytics-driven. Especially in today's volatile, uncertain, complex & ambiguous world.
Consolidating Marketing Investements Leads To Organization Efficiency
Does marketing automation directly affect organization efficiency at the highest level? To understand the details, let’s go back to the roles of the CEO, CFO & CMO, vis a vis the critical functions of marketing & sales.
Every CEO’s task is to steer the company. Their activities can generally be classified as setting the pace with a plan, monitoring execution & changing course when required.
- CEOs review / reaffirm / realign the company vision (annually, with periodic reviews)
- CEOs finalize the Annual Business Plan (annually, with periodic reviews)
- CEOs track revenues, investments & ROI (quarterly, with periodic reviews)
- And CEOs also track contributing vs investment brands & markets (monthly with periodic reviews) This is a direct result of execution of the Annual Marketing Plan by the CMO’s team.
|The Game Planner
CMOs plan & execute marketing activities to connect with their customers in the most profitable way. In line with the Annual Business Plan / company vision.
- CMOs devise the game plan for demand generation, dividing their resources/budgets between push activities (targeted at trade channels) & pull activities (targeted at consumers).
CMOs create the Annual Marketing Plan by optimizing resource allocation as per marketing mix, dividing budgets between contributing brands & investment brands and contributing markets & investment markets.
- A CMO’s real contribution is to constantly connect with customers, with diminishing incremental efforts. And one way of bringing efficiency is by consolidating all marketing plans & investments.
CSOs (Sales Heads) work in tandem with CMOs (Marketing) plan to prepare sales budgets based on pricing, discounts, incentives as well as advertising budgets. CSOs ensure product distribution/ availability & placement as well as visibility as well as inventories at the retail level.
- CSOs budget sales revenues by product & market in line with the Annual Business Plan.
- For this they may need to adopt macro approach along with a micro approach for revenue segmentation.
- Sales teams further track product placement by trade channel & ensure product visibility.
- Sales teams also ensure adequate inventories at market/retail level.
- Sales teams track the competition, including trade incentives offered.
The CFO’s task is to ensure budgets are adhered to – no mean task, given the volatility of the environment. The CFO is also responsible for various compliances.
1.CEOs validate the Business Plan from a financial point.
|3.CEOs track gross margins, profits as per approved budget.
|2.CEOs track revenues versus targets.
||4.CEOs ensure statutory compliance.
|5.CEOs ensure process compliance.
Automation of Marketing
Viewed holistically, marketing automation affects the following functions of the organization:
Annual Sales Budget, Annual Marketing Budget & Annual Marketing Plan. In line with the CEO’s Business Plan / vision.
Authorize Mktg Investments
Briefs, Plans, Estimates, Schedules & Revisions for Approval. In line with the CMO’s Game Plan for the most profitable customer connect.
View & optimize resources between contributing & investment brands & markets - in line with the CEO’s vision.
Verify Marketing Activities
Verify & monitor activities to match with original plans/estimates.
Highlight deviations in spends & planned deliveries.
Pass bills for payment. Connect to corporate system (P.O. No.).
Online Business Communications
Enable online business conversations linked to marketing automation software. Ensure that business intelligence data include business conversations along with business documents.
Enable e-transactions with agencies & vendors for television, radio, digital, print,
OOH, BTL/activation & schemes.
Like all mosts consolidation exercises, marketing automation with an integrated approach significantly affects the entire organization - simply by extending the umbrella of direct benefits of these critical functions to the organization’s CEO & CFO - in addition to CMO & Sales Team.
Leading ultimately, to a hike in efficiency of the entire organization.
For a long time, Amazon.com has been recommending books to its e-shoppers - based on real-time analyses of its own live transaction data. More recently, Nike lets users customize their trainers, Coca-Cola lets customers create their personalized beverages by mixing different Coke products & KLM airline helps travelers decide who they want to sit next to, by linking their Facebook profiles.
All the above are simply an acknowledgement that marketers are actively tracking & reacting to consumer responses in real time. For example, consumers who "like" a brand may be convinced to buy a premium variant by paying a higher price. And first-time prospects who are known to have searched or visited a brand online may be lured with an introductory discount.
Meanwhile, consumers are becoming "comfortably numb" to providing their personal information to companies, knowing that it will be used to create personalized communications to market products.
Skip Boarding Queue For 20 Euros
There is the classic "Skip Boarding Queue For 20 Euros" offered by many European low-cost airlines. Apart from adding a new "convenience" option for the customer & bringing in additional revenue to the airline, this offer goes perfectly well with "Value-for-money" that is the essence of any low-cost airline! (This feature was an outcome of analyzing customer comments.)
But that was before the era of "big data". Today, the online customer data available is so overwhelmingly copious & complex that many companies just look the other way! In reality, ignoring big data is today's equivalent of a head-in-the-sand attitude! Or put in another way, analyzing big data is today's scientific way of periodically evaluating product pricing.
Quest For Better Value Realization
Adaptive marketing announces the beginning of "mass" personalized brands - by augmenting mass-appeal products with personalized features. It challenges the one-definition-for-all concept of mass brands. And most important, adaptive marketing can arrest the downward pressure on product pricing.
There are many facets to adaptive marketing - but it's usually triggered by a desire to improve value realization. This in turn starts with an attempt to revise prices. (A price hike of 0.5% could increase operating profit by 3% to 4%.)
Standard price-revision exercises are usually deferred till the last minute based on the unfounded fear of losing clients. The "Sales Approach" links pricing with volumes, production cost, standard margins, competitors' prices, volume discounts & value to the customer. But the best price realization exercises are based on deep understanding of commercial data, (available with every company) by product / variant / pack-size.
Since most of sales revenue comes from its standard products, each of which may have multiple competitors, it is important to analyze the vast commercial data that is usually available in-house to study patterns & discover opportunities for increasing value. Apart from helping to discover the optimal product pricing, this exercise usually results in add-ons & new product variants. A good example of results of such data analyses is the "Pay 20 Euros Extra for Additional 10 Kilos of Baggage" - which came from analyzing the % of fliers who end up paying for excess baggage at the counter. This not only locks in advance revenue for the airline, but also reduces transaction time at the counter. This is a good example of how data analysis can lead from pricing to new products & variants.
Data Focus & "Granularization"
For those who are willing to take on big data, there are many rewards waiting. Since the customer-experience itinerary is mostly digital today - consider the humongous amounts of new media channels & touch-points - there is a rich yield of customer data for those willing to dig deep. Data that can factor in specific insights to "discover" the optimal price for your products. And lead to product & marketing adaptations on the fly!
For example, optimum pricing needs deep analysis of a huge amount of commercial data, which is available in-house coupled with customer behavioral data as well as customer feedback & random comments. This means continuously managing such data to identify factors & trends that were overlooked. Examples: Customer preferences for each product/variant/pack size & customer segment & sales-rep wise negotiations & all deals won & lost in a B2B environment. All this leads to a data-driven and consumer-focused approach to product management.
From a technical point, all this is based on "granularizing" the data.
Extreme Data-Driven Marketing
Two things: One, at the end of the day, adaptive marketing boils down to extreme data-driven & consumer-focused marketing. Products can be tailored with rapid cuts & stitches to meet customers' interests & needs - all based on continuous data analyses. It's about adapting the product offerings to connect more consumers with the brand, delivering more benefits & making brands relevant to more people.
And two, adaptive marketing has come into its own because of today's mass proliferation of digital technology & the Internet.
Traditionally, Marketing has been less data driven than most other functions - but that must change. For Marketing to be data-driven, it must opt for more automation, better processes. For this, it should demand new services from IT. And IT must deliver these new demands by redefining their approach (rather than with step-wise modifications). All of which is certain to bring many new tactical advantages for the organization.
Digital Competitors Traditional brands are directly challenged by brands which are born digital, because they use IT to their advantage - for back-office efficiency support as well as for brand innovation & brand leadership. So is logical for a traditional brand to increase investments in IT for Marketing - in fact, traditional brands must compete with their digital counterparts by matching their investments in IT!
Digital brands regularly invest large sums in IT (as compared to traditional brands) for superior technology to optimize operational efficiency, innovation, ramping-up & even expanding to related & un-related verticals.
Reinventing IT requires long range vision, huge resources & much lead time. Therefore, Marketing must look for service providers who have the requisite exposure along with solutions that delivers results in the near-term as well as a long term vision. With a clear prioritization on critical functions, Marketing can reshape its functioning to show results in months rather than years!
Naturally, it goes without saying that top-management involvement is mandatory in such an exercise. (Justifiably so, since the benefits will be enjoyed by the entire organization - not just Marketing alone).
Start-up Firm with Traditional Reporting
Re-invention of IT for Marketing functions could be looked at like running a start-up operation. IT functions struggle to keep pace with huge demands from Marketing, with deliveries are expected in short bursts, and resulting in modifed processes & methods.
Such rapid changes can easily have adverse effects on more controlled legacy operations, with non-acceptance of responsibility being the most likely issue. (In addition to problems stemming from rejection of the new.)
One way to smoothen the turbulence could be by tempering high-speed deliveries with carefully designed legacy accountability - along with adequate training for line managers.
A good way of measuring a company’s evolution is by tracking the rate at which it is moving from the age-old habit of allocating marketing budgets based on the previous year’s - to redesigning marketing budgets each year. (Based on performance against market strategies which are constantly-tuned.)
The best of companies are tempted to stick to a single “tried-and-tested” metric, especially when they have to choose from a huge, evolving range of options. And this is helped by the fact that most corporate managers & directors have incomplete understanding of marketing strategies & expenses. (Much less than they do for example, of finance, sales & production).
The primary approach to budgeting is to record proposed economic profit, strategic returns & the amortization period and track & compare with the actual figures. These parameters could then be tracked by selecting the appropriate set of metrics, which can be applied across geographical regions.
A secondary approach could analyze & plan the consumer-experience itinerary, adding a new dimension, typically digital (as major part of a customer's journey is digital).
Review product-mix with a set of 'retain’ & ‘release’ parameters as the basis.
This is based on strategic returns as well as economic profit, linking marketing “pull” investments to other “push” drivers of sales with additional variables like seasonality & competitors’ promotional activities as well as market trends, customer trends as well as offline & online responses. s as well as market trends, customer trends as well as offline & online responses.
|Monitor live correlations between current budget & MROI.
This is based on economic profit. This tracks products & markets which have high MROI & checks for dipping trends to decide whether defensive action may be required. While products & markets with lower MROI are tracked for measuring the effects of marketing investments over a period.
|Record changes in consumer behavior, especially vis a vis decision-making.
This is based on customer-experience journey. First the total reach, cost per reach & quality of contact is estimated by customer touch point, relying on data along with experience. Since digitalization has affected customer decision-making behavior (an important part of the customer experience journey, which also includes post-sales experience shared online by peer customers), attribution models are highly recommended. Starting with the simple ‘last click’ model to the more complex multi-channel attribution models, these are used to credit the property which contributed in generating web traffic.
|Prepare a list for immediate implementation
This is based on amortization period. Investments which can be made quickly need to be identified separately for quick, even if small ROI. (These investments could be market/variant specific.)
Better analytical tools are the new engine for better marketing decisions. But how many marketing teams are equipped to understand & use these complex metrics? One way may be to make analytics as a routine marketing functionlink.
Till then, Marketing Depts. will continue to view analytics as a task to be outsourced (including internal Depts.) without utilizing its full power
There is no business process that has not been disrupted by digital. And this is especially true for marketing.
Traditional marketing campaigns can be likened to a shotgun which sprays bullets pointed towards a flock of targeted birds.
Digital campaigns on the other hand, behave like a team of strategically-positioned robot sharpshooters, who are programmed to pick off targets automatically, relentlessly, one by one - with bullets constructed from hard data!
Traditional campaigns are periodic bursts, which are broadly targeted to a market / consumer segment.
Digital marketing involves continuous, customized communication with individual consumers based on individual profiles. Automated & conducted simultaneously with a multitude of consumers, offering multiple products from the co.'s brand stable & customized deals. Along with a facility for the consumer to respond directly.
This is why digital marketing is a game changer.
Snipers Vs Shotguns
Marketing activities were/are traditionally planned as periodic bursts, called campaigns. This is perfectly suited to the traditional, non-digital marketing campaigns, which is based on promotion of a single product/variant at a time.
Since these campaigns are broadcast to a multitude of consumers, of whom only a fraction are the real target, the limited efficiency is obvious. Much like using a shotgun which is used to spray scores of pellets to target a handful of birds.
Digital marketing on the other hand, allows marketers who invariably have multiple products/variants, to target individual messages for promoting each product/variant to carefully targeted consumers based on their individual profiles. The effect is comparable to a set of snipers constantly picking off individually selected targets - each with a single, precisely-aimed bullet!
Continuous Communication, Not Sporadic Bursts
Now imagine an army of robot snipers 'manning' strategic points armed with self-loading rifles (with an endless supply of bullets and unlimited access to target profile data). These snipers are programmed to continuously fire at targeted individuals with offers on multiple products/variants/offers based on updated individual profiles. The increase in efficiency is obvious.
Multiple Products, Simultaneous Campaigns
And instead of just a single product/variant/offer that is pushed in each traditional campaign burst, these robots are programmed to promote multiple products/variants/offers on an unending basis!
Result: A huge increase in efficiency.
As if all this were not enough, there is today's ubiquitous social media - which helps empowers the consumer further. Sharing information about best price, demo centres, nearest sourcing, peer reviews & post installation blues! Such rounded information for practically every product, which is available to ever-increasingly savvy individuals.
Managed well, social media can further multiply the effects of digital campaigns.
Tighter Internal Processes
Digital technology also offers an opportunity to improve internal marketing processes, bring new transparency, redefine marketing audits. And bring the Annual Marketing Plan demonstrably closer to the CEO's Vision.
Digital is enormously swift. And when its attendant complex software is properly applied, it can bring speedy results to marketing investments. Because of this nature, digital redesigns the customer experience across multiple roles - from pre-sale to sale to installation to feedback to product redesign. And across multiple channels like mobile, laptop, phone, online store & social media in a seamless whole.
Apart from understanding new technology & the new end-to-end digital possibilities, digital involves replacing old ways of thinking with completely new possibilities. Focusing outward instead of inward. Recognizing the new role of data. And discovering instead of dictating.
For example, using digital's ability to track the volume of digital information that empowered consumers pull from that marketer is a great way of measuring the effectiveness of a traditional marketing campaign.
Which by the way, is a good gauge of the wide-ranging effects of digital media on marketing!
Some brands like Google are born digital. The others are under constant transformation by the digital revolution - resulting in relentless metamorphosis.
Digital is more than just a medium. And more than just a new way of marketing brands. Certainly more than a new set of customer touch points. Digital brings with it transparency, which exposes knowledge via data - resulting in lowering of market barriers.
Digital also makes it easy for the competition. And digital can migrate supply chains geographically closer to the demand side - which can have a disrupting effect on existing economic advantages, while also generating new opportunities.
But whatever it may (or may not) be, digital is like a juggernaut, because of its constant evolution. This advancement throws up new opportunies for business & creates "game changers". That's why brand managers see it as a potential threat to category leaders and an opportunity for challenger brands & new markets!
Digital promotes disruption of existing business models, delivery models, business relations, supply chains, ... making it possible for new challengers join the race! Example: The ubiquitous "price-comparison sites" that aggregate information across vendors and make it easy for customers to compare prices & offerings.
And wireless devices are proving to be the short-cut to the consumer’s wallet!
Brand To Commodity
Digital can shake the foundations of all entry barriers & challenge the established pillars of brand differentiation.
With its sheer transparency, digital technologies promote easy comparison of prices, product feature offerings, service level commitments, while referring to customer comments on product performance! And digital offers a wide swathe of easily accessible point-of-sale options: from multi brand online retailers to dedicated online brand stores, promoting competitiveness.
The more accessible, the more transparent, the less the mystery factor of brands. As a result, premium brands tend to become commoditized, leading to margin erosion.
With skilled man-hours being increasingly replaced by software, digital brands display intrinsic efficiency. It could be a travel brand which replaces its customer service team with specialist software & databases or a bank replacing hundreds of connected processes of its tellers.
Or at the high end, a medical research center replacing part of its skilled research team with medical diagnostic software.
Lower Entry Barriers
Digital lowers market barriers. For example, web-based service providers challenged established players who differentiated themselves with their local networks of offices & agents - by entering new markets without investing in local offices/agents. Today, they have rapidly progressed to mining online consumer data prior to launching in new markets.
Today's e-retailers routinely expand their offerings to include additional product categories not handled earlier. And many smaller e-retailers launched by offering selected product categories at drastically low prices - even though volumes were small. (Apart from creating pressure on the bigger e-retailers, some of these venture-funded companies are actually able to expand their offerings & become full-fledged e-tailers.)
Conversely, a courier co. could invest in an e-commerce backbone to leverage its brick-and-mortar logistics/warehousing backbone (given the relatively low cost of building brands online.)
With its modular nature, digital disrupts existing value chains with their new 'intermediary' products/services - because new services can be quickly integrated into existing 'gaps'.
Like the not-so-successful, virtual mobile telephone operators would plug into the infrastructure of an existing telecom giant, today, smaller cos. are plugging into Amazon's cloud on rent for setting up their e-commerce sites / online stores - just paying as per usage.
On another level, large finance brokerages and insurers are encouraging local investment advisers to plug into their tried & tested IT infrastructure for operations & record-keeping. Just like large travel portals are encouraging individual travel advisors to plug into their infrastructure for a share of the profit.
Geo Shrinking Supply Chains
Digital knows no borders & can challenge the very basis of existing global supply chains.
New technology like 3-D printing for example, can actually challenge the future of a globally-distributed production supply chain based on disparity of manpower & production costs across different regions. How? Because it promises to make production a capital-intensive affair, instead of labor-intensive.
Ditto, any hyper-automated system which drastically reduces labor from existing processes. Or work flow process management systems which significantly reduce the number of skilled man-hours. In other words, if digital significantly reduces the labor component, production need not happen in far flung countries, as the economic advantage to the brand (of low labor cost) will reduce drastically.
Digital is like a space voyage - challenging all known limits & affecting all in its wake.
Take the automobile industry for example, which after being 'loaded' with satellite-based navigation systems (& data in the internet cloud) is seriously moving towards auto-driven vehicles. And on another level, today's digital technology permits consumers to rent automobiles by the hour!
It is its rapid evolution that makes digital an unstoppable juggernaut !
Today, everybody in marketing talks about analytics, big data, consumer connect, business intelligence ... Naturally, even independent Directors on company boards may ask questions regarding adoption of analytics, big data & business intelligence.
“Marketing is a $ 450 billion industry, and we are making decisions with less data and discipline than we apply to a $1,00,000/- decisions in other aspects of business.”
Jim Stengel, ex Global CMO, Proctor & Gamble
Always quick to see an opportunity, the IT industry is promoting related services heavily with new divisions dedicated to these activities.
So, what’s the real picture? How much tangible benefit is derived from such activities & investments? And how do CMOs avoid going overboard without missing the bus?
Analytics Begins @ Home
Let’s say that you are seriously committed to analytics, big data, intelligence, et al – which for budgeting purpose, should be considered as part of marketing infrastructure. Let’s also assume that budgets have been allocated for the same.
Marketing activities being markets-based & demand-led, are known for their intensity & urgency. (It is not unusual to take decisions in a hurry.) So how do you ensure that the marketing budget is shared over the different types of marketing activities?
Here’s a simple budget-share tracking report*:
Actual Budget Share
<Calc actual % >
<Calc actual % >
<Calc actual % >
|Branding / Awareness
<Calc actual % >
<Calc actual % >
<Calc actual % >
| Future Products
<Calc actual % >
| Disaster Mgt.
<Calc actual % >
|Infrastructure & Tech
<Calc actual % >
<Calc actual % >
| Big Data
<Calc actual % >
| Mktg Resource Mgt
<Calc actual % >
* Available in BrandIntell CMO’s Live Dashboard.
Deliveries Must Be Recorded – Esp. For Analytics
Another typical problem with services like analytics is that although jobs happen in batches, there is no central summarized records of delivery vs cost. (This is true of most marketing services and applies specially for any online service.) Apart from the direct benefits of consuming the analytics services, there is a dire need to record the summary benefits along with a most-important client-rating for each exercise.
This helps record & analyze cost-benefits of individual & group analytics exercises.
Here’s another simple brief tracking report*:
|119 / BrandX
| 1020 GRP
|| 980 GRP
|120 / Brand X
Aya zvz ...
|121 / BrandY
| 2130 GRP
|| 1910 GRP
|122 / BrandZ
| 295 Reach
|| 276 Reach
|123 / BrandZ
| 2130 GRP
|| 1910 GRP
* Available in BrandIntell CMO’s Live Dashboard
Notice the delivery remarks & rating recorded for the analytics exercise which can be supplemented along with detailed records of pre/post analysis, where applicable / available.
Analytics is Serious Business
Analytics is expensive business which can consume a significant % of marketing budgets. And much of it is exploratory in nature, making it difficult to pin down plan deliveries & sometimes even costs.
So the best practice is to record these exercises routinely as part of a central marketing activity database with proper records as part of your company’s private knowledge database.
Remember, anything less may do injustice to your marketing budgets.
Everybody accepts that the next generation of IT-enabled services will deliver higher service levels & new capabilities - with accelerated deliveries at reduced costs. Then why the hesitation from clients?
Given that IT infrastructure & capabilities can take upto 15% of marketing budgets, what’s holding back clients - especially if business efficiencies can be improved drastically at reduced costs? The hurdles of course, remain the same: pain of implementation, capital expenditure & of course huge security concerns.
As technology advances at break-neck speed, the next-generation IT–enabled services like software-as-a-service, infrastructure management & networking, cloud & application management – promise leaner organizations which will rely increasingly on software & hardware efficiencies via 3rd party services to facilitate new business needs – all fuelled by big data, digital touch points, BYOD & much more.
One of the major concerns remains security of the public/private cloud, particularly with respect to loss of control over critical data. Industries like health care & banking which are highly regulated (at least in developed economies), may still prefer to keep data within their self-managed firewalls, even though cloud providers are better equipped to combat security threats due to their scale & expertise.
As a logical extension, the next breed of IT-enabled software-as-a-service providers (like BrandIntell) offer to software-as-a-service using the client’s IT infrastructure & firewalls. This direct control of their data should remove the last hesitation on the part of clients.
Corporate Expectations From IT
As per a recent study by Mc Kinsey, here’s how companies prioritize these
current expectations from IT:
Top Generate more value from B2B data
Top Analyze big data
Top Address growing security concerns
Next Reduce IT costs
Next Manage multiple devices/apps (BYOD)
Next Include new application areas
Lower Migrate to private cloud
* BYOD is short for “Bring Your Own Device”.
Finally, the service should ensure continuous improvement & user demand management by setting up a focused team with the client on-board.
But the most important factor for a successful point of software-as-a-service (like BrandIntell) is that it should promote cross-workflow between internal Depts. as well as third-party sources to deliver an overall benefit rather than focussing on piecemeal services.
| What To Look For In Your IT Enabled Service Provider
Any half-decent IT infrastructure Service Provider must offer the following:
Comprehensive service offering document, progressively covering 80+% of demands with most services delivered via self-service portal with automated provisioning. Service document should also include external services, such as integrated messaging, apps for BYOD, public-cloud computing, etc.
Unit pricing with granular costing based on choice, in readiness for client to upgrade services future.
DIY Resource Utilization
Clearly present consumption & cost data to business partners to promote self-management of resources to manage & improve service.
Provider should include product-management team to incorporate new/pending business needs into service offerings as well as forecast demand, and manage capacity.
|Deep Process Knowledge
Provider should be deeply aware of all supporting processes as they are essential and for successful implementation (e.g., collect data from business partners, new user-roles, & transparency).
It’s that time of the year again, when Marketing Depts. are busy finalizing annual plans & budgets for the new financial year (starting April) - with lots of help from their agencies for current year plans, comparisons with previous years, provision for new launches & other justifications.
By and large, Marketing is still seen as this glamorous department which asks for & receives “large” budgets for TV ads & events - for spreading the brand message and building the brand. And because it is considered difficult (if not impossible) to justify how well marketing spent their budgets & what real differences it made, such questions are often not seriously asked any more.
But all this can hardly be valid in the era of data-driven marketing.
Hogging 10% or more of corporate budgets, marketing was considered one of the least-quantified & least-measured departments in most companies. And although there is wide acceptance that measurement will shift focus from monitoring marketing costs to tracking marketing returns, most corporate managers & directors have incomplete understanding of marketing strategies & expenses. (Much less than they do for example, of finance, sales & production).
That it is necessary to measure marketing activities based on standard metrics is a 'given' - just like customer service is measured via a set of customer satisfaction parameters & loyalty schemes are measured by net incremental sales + gross margin realized.
Data Driven Marketing
Today, “crunching the numbers” is vital to success in any field – and marketing which was once regarded more of an art than science, has not been spared from the recent drive towards data-driven operations.
But although marketing has become more data-driven in the past few years, leading to measurements & accountability, the multiple data sets by which marketing strategies can be evaluated are not easy to understand. And knowing which numbers to crunch is a skill that takes considerable time.
In addition to qualitative understanding, marketers need to understand their markets qualitatively - by constantly evaluating new opportunities - measuring the investment required along with the expected returns. In today's dynamic scenario, marketers must quantify product value, customer value and channels, i.e. product pricing, promotion & distribution costs & projected ROI for each round of promotion.
To achieve all this with a 'standardized' approach which is easily repeatable, marketers must rely on metrics which capture & highlight specific trends.
Being key indicators, metrics are computed statistics, ratios or formulae that quantify a characteristic or trend. And because they encourage objectivity, standard metrics are useful to record & explain phenomena, diagnose causes, share findings, and predict future results. Metrics are used in all fields & make it easy to make & compare observations.
Standard metrics are metrics which accepted by the industry. When widely accepted, metrics facilitate collaboration based on industry-accepted & realistic measurements - across geography and time periods. And avoid succumbing to any temptation to embellish figures with home-grown statistics!
After all, we can only improve on what can be measured.
Metrics come in many types - one type represents monetary value. Another represents volume (quantity). A third represents percentage while a fourth context-specific ratings (based on a predefined scale). And a fifth represents an index linked to a market median/ mean, which is usually a percentage or percentile.
In a subject as complex as marketing & brand-building, measuring marketing performance involves deep understanding of an entire range of metrics which define & measure marketing & brand-building strategies. So, in addition to monitoring stand-alone metrics, groups of metrics need to be tracked for their combined effect & financial consequences. Obviously, this involves serious crunching of numbers.
It may not come as a surprise that most Marketing Depts. currently track no more than a handful of metrics at any given time, simply because of the complexities involved. And this is notwithstanding the scores of standard metrics that a Marketing Dept. may actually need to deal with! (See Marketing Metrics Sample List below.)
Accuracy of Knowledge
To use marketing metrics effectively, marketers need to rely on a set of multiple, inter-related metrics as stand-alone metrics may give an incomplete picture. This involves deep understanding of the relationships between different metrics. And multiple metrics can also be used as checks on each other. All this leads to increased "accuracy of knowledge".
On the bright side, today's marketing metrics increasingly have globally-valid definitions. This facilitates uniform adoption across regions & development of pan-continent marketing frameworks.
By far, the easiest way to introduce measurement in marketing is by deploying automation in Marketing Dept. which captures source data from agencies, vendors, sales, as well as 3rd party data into a private knowledge portal. And presents this data as a set of pre-defined metrics which are updated automatically, on a regular basis. And presented with historical data & moving averages. As well as what-if analysis for effects on other metrics.
However, marketing professionals will still need to invest their time to master the understanding of these complex metrics. Unfortunately, there’s no easy way out for this :-)
Some Marketing Metrics
Related to Share of Market, Mind (Total 20+)
Eg. Market Share by Value & Volume, Market Penetration, Share of Penetration, Top of Mind,
Brand Loyalty, Customer Satisfaction ...
Related to Pricing, Margins & Profits (Total 20+)
Eg. Price Premium, Percent Good Value, Optimal Price, Reservation Price, Price Elasticity,
Unit Margin, Gross Margin%, Break-even ...
Related to Product Portfolio Management (Total 30+)
Eg. Unit Margin, Gross Margin %, Prospect Lifetime Value, Average Acquisition Cost,
Average Retention Cost, ARPU, CAGR, Cannibalization Rate ....
Related to Advertising Media (Total 15+)
Eg. GRPs, Readership, Impressions, Page views, CPM, Net Reach, Effective Reach,
Average Frequency, Share of Voice ...
Related to Promotions / Schemes (Total 15+)
Eg. Base Sales, Incremental Sales (Lift), Redemption Rates, Rebate Cost, % Sales on Deal,
Gross Margin Realized ...
Related to Marketing Finance (Total 40+)
Eg. Net Profit, Return on Sales (ROS), Gross Earnings (EBIDTA), Return on Marketing Investment (ROMI),
Economic Profit(EVA), Internal Rate of Return (IRR) ... ...
Comparing post-activity actual deliveries with pre-activity plan targets is a very important part of any marketing/media campaign - which should ideally result in a feedback & learning exercise. (And ideally update your private knowledge portal.)
In reality, the exercise usually ends without recording the learnings from this important exercise.
Plans Vs Deliveries
Between finalizing a brief, approving plans, signing estimates & executing campaigns, there are multiple sets of variances in plan targets & financials that are never recorded properly.
To make it worse, media channels add another layer of variances by scheduling based on their internal priorities.
All this results in a 25 - 50% deviation between the brief & final campaign - creating the large gaps which become visible in the pre / post activity evaluation exercise.
Imagine if agencies had a tool like ROI Tracker to record progress of each brief - plan deliveries & financials, stage by stage? And update a mirror image at client end?
Imagine if agencies had a tool like a digital change tracker to record all plan changes diligently? And inform the client in advance, taking
approvals when required?
It would sure make the pre / post activity evaluation exercise more productive & knowledge-based.
- 2012 - Q1 revenues up by 16% (Churn < 11%)
Core subscribers cross 10.3 million (with 20,000 net additions)
BSkyB is UK’s 3rd largest broadband service