Google Future Of Marketing 060907 Ebook


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Google Future Of Marketing 060907 Ebook

  1. 1. The future of marketing From monologue to dialogue An Economist Intelligence Unit white paper sponsored by Google
  2. 2. The future of marketing From monologue to dialogue Preface Early in 2006, the Economist Intelligence Unit and Google launched a research programme to address the future of marketing in the age of the Internet. An advisory board comprised of senior marketing executives from around the world worked with the Economist Intelligence Unit and Google to create an online survey that received responses from over 200 senior global marketing executives and CEOs across a range of industries. Between one-quarter and one- third of the respondents were based in each of North America, Europe and Asia. The results of the survey were presented in March 2006 to groups of marketing executives in London and New York. Following up on the feedback, the Economist Intelligence Unit conducted in-depth interviews with senior corporate marketers across industries and regions to build upon the survey and analyse some of the issues it raised. The Economist Intelligence Unit bears sole responsibility for this report. John du Pre Gauntt is the author. The findings and views expressed in this report do not necessarily reflect the views of the sponsor. Our sincere thanks are due to the survey respondents and interviewees for their time and insights. September 2006 © The Economist Intelligence Unit 2006 1
  3. 3. The future of marketing From monologue to dialogue Executive summary T he past two years have witnessed the media planning/buying functions is disappearing first examples of true two-way marketing within marketing departments. The necessity for “conversations” between customers and some better integration also affects companies’ relations of the world’s leading consumer brands. Driven by with media and advertising partners. Moreover, a confluence of innovation, competition and big the integration of creative, media placement, and shifts in consumer behaviour, the dialogue between distribution requires a greater degree of measurability brands and their customers is replacing the traditional and accountability than is normally found today. marketing monologue. The research shows that marketers remain The implications of a two-way interaction between dissatisfied with their ability to measure the results corporate marketers and their customer base are of current marketing campaigns, both offline and far-reaching. According to a worldwide survey of 228 online. But they recognise that better measurability senior global marketing executives conducted in is inevitable, given that chief executive officers February 2006 by the Economist Intelligence Unit, in (CEOs) want to see direct evidence of a return for any co-operation with Google, chief marketing officers marketing investment. This pressure on marketers to (CMOs) will need to rethink four basic elements of be more accountable for marketing results is altering their work—branding, integration, measurement and how they organise their internal departments to handle accountability, and internal organisation—in order to multi-channel, integrated marketing campaigns. conduct online and offline marketing activities that As the role of marketing expands to affect other are relevant, measurable, and accountable to the C- corporate activities such as joint ventures, alliances suite in terms it understands, such as top-line growth and even product development, top marketers and speed to market. recognise a need to create new incentive structures In the area of branding, the survey and in-depth in order to prepare their internal organisations for the interviews with senior marketers reveal that online increased level of accountability. This process will marketing enables marketers to create interactive brand speed up, as the scope of marketing campaigns widens experiences that also contain a path to action for the to include nearly all of a company’s brand assets, consumer. Leading firms are discovering that interactive products and services, not simply its best-selling or tools and content that enable customers to search and newly launched items. research information about products and services are These changes in branding, integration, becoming brand assets in their own right. The result is measurement, accountability and organisational that online branding has the potential to become the structure are not the result of a single, specific central marketing expression for organisations. technology innovation. Instead, marketers are Better branding cannot occur in separate online responding to a large and growing audience that has and offline silos, however. Survey respondents and integrated the Internet into its daily life. The ability to executives are in the midst of trying to integrate their conduct an intelligent conversation with this audience, online and offline efforts into a single strategy. One regardless of media or marketing platform, will result is that the line separating creative efforts and determine whether today’s marketers thrive or struggle. 2 © The Economist Intelligence Unit 2006
  4. 4. The future of marketing From monologue to dialogue Introduction U ntil a few years ago, marketing was a to volunteer or reveal their preferences and/or monologue. Marketers invested time, talent intentions surrounding a given product or brand and money to broadcast messages designed through interaction with content, applications and, to correspond with each stage of a theoretical buying increasingly, their own social networks. Such direct cycle: awareness, research, consideration, testing, feedback enables marketers to perceive better where negotiation and transaction. The primary role of an individual might be in their particular buying cycle. marketing was to conduct, some might say squeeze, Marketers can thereby suggest (even intervene) more customers through a hypothetical funnel on their way effectively with more relevant messages. to a point of sale. The ability of online marketing to provide direct Each stage of the buying cycle typically had its feedback has had far-reaching effects. “Every own content, media channel and corporate goals. major advertiser today is re-evaluating their entire A marketer might use television or print media to marketing investment,” states Ed Erhardt, president drive awareness or consideration at the funnel’s wide of marketing and sales for ESPN, the US TV sports mouth and then turn to local radio or direct mail to company. “It’s much bigger than simply adjusting the drive a response as the funnel narrowed. This linear media mix.” Online marketing is no longer thought communications model to reach and influence a of as “the other medium”, in addition to print, largely undifferentiated audience dominated the television, radio or outdoor advertising. Instead, strategies of marketers as well as their media and companies are drawing from their experience with advertising partners throughout the 20th century. online techniques and technologies to reinvent the Online marketing via the Internet has changed entire corporate marketing function. things radically. A survey of 228 senior global Today’s marketer can no longer just “expose” marketing executives conducted in February 2006 an organisation’s brand or product offerings to a by the Economist Intelligence Unit, in co-operation customer. The marketer’s challenge is to use brands, with Google, shows that online techniques transform content, applications and communications channels the role of marketing from a monologue to more of a to elicit a specific action from a consumer, an action dialogue with the consumer. In this new environment, that can be captured, tracked and analysed. “Because relevance is more important than repetition, and marketing channels are turning from push to pull with marketing messages are “pulled” by the consumer the consumer in control, communications with the rather than “pushed” by the marketer. customer have now become an issue that goes all the The ability to create a direct feedback loop way to the board of directors,” explains Carla Hendra, between a marketing message and a subsequent co-CEO for Ogilvy North America. action taken by a customer is online marketing’s most Today’s customer can compare multiple brands, important innovation. Whether by personalised web products and services rapidly and efficiently via pages, search engines, video content, discussion interactive channels. Our research has revealed that groups, blogs or a host of other interactive tools the customer’s new-found ability to weigh multiple and models, online marketing enables customers competing offers makes marketing more, rather than © The Economist Intelligence Unit 2006 3
  5. 5. The future of marketing From monologue to dialogue Approximately how much does your company spend on online advertising and promotion, as a percentage of its total marketing budget? Please indicate how much was spent two years ago, how much is spent now, and how much do you feel will be spent in two years’ time. 0% of marketing budget 16-20% of marketing budget (% of respondents) 1-5% of marketing budget 21-25% of marketing budget 6-10% of marketing budget 26-30% of marketing budget 11-15% of marketing budget More than 30% of marketing budget Two years ago 43 39 7 42 2 3 Today 8 51 17 6 5 4 2 6 Two years’ time 2 36 20 12 9 6 4 11 Source: Economist Intelligence Unit survey. less, important, both for driving new business and for of the surveyed companies plan to devote more enhancing repeat business. “Previously, we put the than 15% of their total marketing budget to online car at the centre of all our marketing activities,” says advertising and promotion in two years’ time, up from Andrea Baracco, vice-president of communications at 7% of the companies two years ago. Renault Italia. “Now, we are putting the client as the Raw numbers on spending only tell part of the central focus of all marketing efforts.” story. Nearly one-third of surveyed companies plan to Changing from a product focus to a client focus reallocate budget from offline marketing programmes suggests a new marketing world in which online to online advertising and promotion over the next two techniques allow for interaction at all stages of years. the buy cycle. A unified consumer buy cycle is as Moreover, these marketing funds are being challenging as a segmented consumer buy cycle. And reallocated across media types as well. The survey it’s a world in which CMOs must demonstrate a clear shows a strong preference for an increase in spending path from marketing activities to sales results. New on direct media rather than mass media. Along with acronyms such as return on objective (ROO) or return direct mail (39% of marketing executives expecting on marketing investment (ROMI) are joining the to increase investment), live events and sponsorships corporate lexicon, along with the more familiar items (53%), Internet-based marketing initiatives (87%) such as return on investment (ROI). Over the next two years, how do you expect your company to These new terms are gaining traction because allocate online advertising and promotion spend as part of its online marketing provides a clear audit trail of overall marketing budget? (% respondents) the activities that ensue between marketers and We will allocate new spending for online advertising and promotion customers. It can measure precisely the action 41 (or inaction) taken by the customer in response to We will reallocate from offline to online while keeping the overall marketing budget constant a marketer’s suggestion. Around one-half of our 29 respondents agree that the ability to quantify the Online spending will grow or shrink in direct proportion to the overall marketing budget impact of online marketing initiatives will compel 23 We will allocate new spending for offline advertising and promotion other marketing channels such as television, radio, 5 print and outdoor to become more measurable. We will reallocate from online to offline while keeping the overall marketing budget constant The shift towards more measurable marketing is 2 showing up in budgeting decisions. Thirty percent Source: Economist Intelligence Unit survey. 4 © The Economist Intelligence Unit 2006
  6. 6. The future of marketing From monologue to dialogue Over the next two years, do you expect your company to increase or decrease spending on the following media channels? (% of respondents) Increase No change Decrease We do not use this channel Internet 88 8 2 2 Sponsorships and events 53 30 9 7 Direct mail 39 30 16 15 Magazines 34 37 17 12 Guerrilla marketing 32 24 2 42 Television 20 24 12 44 Newspapers 18 38 15 29 Outdoor advertising 17 35 9 40 Print classifieds 12 28 19 41 Radio 12 23 16 49 Yellow Pages/other telephone directories 3 29 19 48 Source: Economist Intelligence Unit survey. will receive increased funding by executives over the for Google. “Advertising over the past 100 years has next two years. By contrast, those media areas where been driven by the creative iconography used by the executives plan to curtail spending include Yellow advertiser to engage a user into thinking about a Pages and other telephone directories (19% expecting brand, product or service in a particular way. What to cut investment), print classifieds (19%) and I’m seeing emerge is that media execution and media magazines (17%). Budget decisions that affect specific media Please indicate whether you agree with the following statements regarding interactive marketing today and two channels are an important, although imperfect, proxy years from now. (% respondents) of how organisations think about marketing strategy Brand advertising is driving the next phase of online marketing growth as a whole. According to the survey, the litmus test 55 for clear budget winners and losers seems to be the The level of accountability for all marketing activities is rising dramatically 50 degree that a given media type lends itself to direct User-generated media are beginning to attract more marketing spend 37 interaction with the consumer, as opposed to simply Media analytics skills are reaching equal footing with creative skills exposing them to a marketing message. in advertising agencies 34 How a message is delivered starts to count as Online is the media platform that determines how major campaigns much as the content of the message itself. “A fast- are planned and executed 28 increasing number of people don’t see a significant Mobile marketing initiatives are beginning to approach mainstream acceptance distinction between their digital and terrestrial 28 lives,” says Patrick Keane, director of field marketing Source: Economist Intelligence Unit survey. © The Economist Intelligence Unit 2006 5
  7. 7. The future of marketing From monologue to dialogue buying is becoming the new creative in advertising.” Branding Marketing executives tend to agree with Mr Keane. Integration In the survey, more than 60% of those asked about Measurement and accountability marketing innovation over the next two years say Organisational innovation that improved analytical skills are one of the most important things to be brought into both advertising According to the survey findings and executive agencies and corporate marketing departments. interviews, CMOs will thrive if they rethink these four The marketing function will be deeply affected by the elements to create online/offline marketing activities adoption of a more scientific orientation. This crucial that are relevant, measurable, and accountable to the transition is likely to occur between now and 2008. C-suite in terms it understands (for example, top-line During the transformation, executives will navigate by growth and speed to market). Those who do not re- four signposts identified by our research with examples evaluate these four elements will struggle. This report being set by today’s pathfinding companies and will examine each of these elements in turn. marketing agencies. The four key areas are: A definition of marketing (version 1) Because its purpose is to create a customer, a business has two—and only two—functions, marketing and innovation. Marketing and innovation produce results. All the rest are costs. Peter Drucker, management author 6 © The Economist Intelligence Unit 2006
  8. 8. The future of marketing From monologue to dialogue Branding O nline marketing is either the best or the worst Key concepts: thing ever to happen to corporate branding, The online channel enables marketers to create brand depending upon whom you ask. Undoubtedly, experiences that also contain a path to action for the consumer. the Internet has upset long-standing brand Interactive tools that allow customers to search and research relationships now that customers can rapidly assess products and services are becoming branding assets in their own online the value proposition and price of competing right. goods and services. But although consumers have The web allows online brands to evolve towards becoming an powerful tools at their disposal, marketers can use the organisation’s central marketing expression. same techniques to enhance the value of a brand. “Eight years ago, we managed real estate and rooms where the value of the properties drove the value of the company,” explains Jeff Diskin, senior brand. “Traditionally, the travel and leisure industry vice-president for brand marketing at Hilton Hotels. viewed online as a transaction engine for selling “Now, what we own are brands, which means that tickets or driving retention,” says Mr Diskin. “Now, we the primary asset to be managed is the customer see online more as a branding vehicle through which relationship, which drives the value of the company.” we establish a continuous dialogue with the customer. Instead of trying to hamper or circumvent Through that dialogue, we build our business.” travellers’ ability to compare hotels and room rates The idea of brand building as business building online, Hilton has built harmonised websites that resonates with marketing executives. Over 60% attempt to connect the practical ( “I need a room”) of those surveyed are looking to their online to the aspirational ( “I want to experience something marketing component to build brand awareness while unique”). The company’s main website,, communicating product or service quality. provides information for customers who want to know The best examples of online branding today whether there is a room available on a particular blur the distinction between exposing a customer night at a particular place at a given rate. In addition, to a brand promise and encouraging them to take Hilton has created, a website that an action or accomplish a particular task (see box: enables consumers to explore the deeper meaning of Branding as action). Marketers are using the flexibility travel. By using online to offer both the practical and of the web interface to offer customers various philosophical aspects of travel, customers are exposed calculators, maps or tools along with traditional to Hilton’s branding message in multiple contexts. brand elements in order to build a positive brand The Hiltonjourneys website takes the customer impression. through areas where they can be entertained, seduced Along with building brands through interactive and empowered by travel. Along the way, Hilton tools, marketers are looking to tie branding efforts to displays various aspects of all Hilton properties, not more tangible business results. The survey suggests just a particular hotel. In this way, Hilton is starting that marketing executives aim to bundle tactical to use the web as a central expression of the corporate goals into their overall branding strategies, such as © The Economist Intelligence Unit 2006 7
  9. 9. The future of marketing From monologue to dialogue engines, blogs or video are supplementing, and in What are your company’s objectives for online brand marketing in 2006? Select all that apply. some cases, supplanting certain types of marketing (% respondents) techniques. “The guiding principle now is to let the Build brand awareness customer perform as much of the shopping process 68 Communicate product or service quality outside of the physical dealership as possible,” says 61 Increase brand preference George Murphy, senior vice-president for marketing at 55 Chrysler Corporation. “The web has been fundamental Generate customer leads 50 for helping us do that.” Build brand affinity Mr Murphy notes that online tools such as search 47 Influence purchase behaviour engines not only enable a customer to discover unique 46 attributes of a given Chrysler product but link that Link brand message with brand experience 37 moment of discovery to a clear path to action. Typical Gather customer information activities could involve the customer going online to 31 Build customer communities explore preferences about colour, options and price 26 Link lifestyle with brand (eg, sponsor sporting or cultural activities) ranges. Subsequent actions could involve the customer 18 calculating the economic trade-offs between buying Other 3 and leasing the automobile. But these steps do not Source: Economist Intelligence Unit survey. need to follow in sequence. Some customers might want to calculate initially what they can afford and then generating customer leads (50%), building brand search for models and option packages that fall in that affinity (47%) and influencing purchase behaviour price range. Others might want to configure the model through the brand (46%). and options of the automobile they want and then see if The blurring of the distinction between traditional they can afford it. Online allows the processes to run in branding and a tactical call to action is particularly either direction smoothly and efficiently. relevant for industries such as the automotive sector, The key aspect, according to Mr. Murphy, involves where there is a long time lag between a customer’s how well the marketer uses interactive techniques initial consideration and a final purchase. Knowing to “listen” to customers in order to be ready with a whether a customer is merely considering a brand contextually appropriate message to help customers or actually shopping for an automobile it represents guide themselves further along the path to a determines not only the kind of message ( “Would you transaction. In a perfect world, this would involve a like a test drive”) but also the urgency ( “Act now to customer using interactive tools not only to determine save money”) for automotive brands and their local what type of car they can afford on a given budget, but distributors. also to locate a physical dealership and communicate Moreover, automotive marketers are finding that their intentions. media planning for an interactive sales funnel does Recreational cruises are another example where not follow the typical, linear progression of using customers often spend considerable time gathering television/radio for reaching broad populations information online. “The web plays a huge role in then following up with direct mail to drive a specific the education process for consumers, especially for customer response. For high-consideration items complicated products like a cruise,” says Chris Arnholt, such as automobiles, new media tools such as search vice-president of marketing services for Carnival Cruise 8 © The Economist Intelligence Unit 2006
  10. 10. The future of marketing From monologue to dialogue Which marketing objectives do your company’s online advertising/promotion activities target today, and which will they target in two years’ time? Select all that apply. (% of respondents) Image building/Brand equity Lead generation Customer acquisition Customer transaction Customer retention Today 33 22 23 8 15 Two years’ time 27 20 21 12 20 Source: Economist Intelligence Unit survey. Lines, which is based in Miami, Florida. Ms Arnholt purchase online in greater numbers. According to the notes that from a marketing standpoint, the online survey, by 2008 marketing executives aim to position component is especially relevant for cruise operators their online presence with respect to customer given that many customers opt to research and transaction and retention (12% and 20% respectively) even transact outside of traditional business hours. almost as closely as to image building and lead “Online plays a critical role in our marketing strategy. generation (27% and 20% respectively). We depend on it to ensure that we are available Building brands while driving direct business continuously with the information customers need to results is a delicate balancing act, all the more make a purchase decision,” she adds. so depending on the various branding structures Firms such as Carnival Cruise Lines are finding that employed by firms today. Jim Speros is the chief a rising number of customers are not only conducting marketing officer of Marsh & McLennan Companies their research online. They are also completing their (MMC), an American holding company that owns seven Branding as action multitude of consumer online tools for helping members paths and options so they can be members navigate the large menu of choices smarter consumers of healthcare services”, Source: Economist Intelligence Unit survey. surrounding a healthcare plan. explains Mr Moya. Helping members become One web tool allows members to enter a better customers of healthcare services hits Traditionally, branding has been about rep- medical condition and postal code as well as branding strategy on multiple levels. etition. An organisation designs an iconic other search criteria (outpatient services, Better self-service removes some of message of its promise to the customer, and etc), and then click the “Compare Hospitals” the “hassle factor” insurance customers then exposes them repeatedly to the mes- icon on the Search Results page. Once the have come to expect when interacting with sage until the desired association sticks. first list of institutions is returned, the their provider. Another Humana branding However, an increasing number of member can evaluate the likely candidates goal for the web tools program is to instill companies are rethinking how to engage according to outcomes (how clinically among members the idea that the company customers with their brands by helping the effective is the hospital in treating the actively works with them for the optimal, customer research options or accomplish selected condition or procedure); process individualised solution. “From a branding a task. This is especially important for the (how often does the hospital follow best standpoint, online tools help us evolve insurance industry, where highly regulated practices demonstrated to lead to better from just a health premium and payment companies offer complex and configurable outcomes); and structure (how well does processor into a partner that helps members services. the hospital adhere to quality and safety maximise their healthcare budget”, says Steve Moya is CMO of Humana, which practices developed by an independent Mr Moya. “But we don’t make decisions for provides health insurance to approximately third-party health safety organisation). them. The reality today is that only members 9m members in the US. Humana has built a “We’re using online tools to give make decisions.” © The Economist Intelligence Unit 2006 9
  11. 11. The future of marketing From monologue to dialogue fully branded firms in the financial services industry. MMC subsidiary companies. Mr Speros notes that different tactical approaches Regardless of the particular interactive techniques must be used whether a company is a “branded house” used by companies such as MMC, Carnival Cruise Lines, like an IBM, AT&T or Target, where all activities lead Chrysler, or Hilton, the goals for branding online back to a single brand, or if a company is a “house remain to establish and/or reinforce familiarity with of brands” in which numerous brands are assembled a brand promise (every day, low prices, etc) and then under a corporate umbrella. to make this association more relevant and valuable “It’s not about driving results through to a consumer. The online branding difference is that advertising anymore because markets have become when customers search, give permission to receive so fragmented,” he says. “It’s about using all your a message or offer, or engage in another type of marketing points of presence as spokes that drive interaction, they reveal their thought processes and into the central hub of the brand promise.” Hence, preferences about a brand’s performance. Mr Speros uses MMC’s online presence mainly to Intelligent marketers can use this knowledge explain to customers the thinking that lies behind to evolve brands online from being just passive the various specialty brands, and then provide representations of a promise towards becoming an customers with a framework for working across the active, central expression of an organisation. A definition of marketing (version 2) If the circus is coming to town and you paint a sign saying, “Circus is coming to Fairgrounds Sunday,” that’s Advertising. If you put the sign on the back of an elephant and walk him through town, that’s a Promotion. If the elephant walks through the Mayor’s flower bed, that’s Publicity. If you can get the Mayor to laugh about it, that’s Public Relations. And, if you planned the whole thing, that’s Marketing. Anonymous 10 © The Economist Intelligence Unit 2006
  12. 12. The future of marketing From monologue to dialogue Integration J ohn Deighton, a marketing professor at Harvard Key concepts: Business School, has a simple description of how Online marketing is removing the historic separation between corporate marketing objectives currently mesh creative work and media planning/buying functions. with advertising campaigns. “Typically, clients do the The challenge to integrate marketing goals will grow as integration while advertising agencies specialise,” he marketers expand the mixture of online and offline media says. Until now, advertising agencies have specialised campaigns. in two ways, the first based on an agency’s media Tighter integration of creative, media planning/buying and specialty (eg radio, TV, print), and the second based types of media will require higher standards of measurement and on the agency’s marketing specialty (eg branding, accountability. design, media planning). Given such separation of creative and media specialties, it was common for a corporate marketer to organise overall strategy and agency relationships as a series of layers with little additional information online. In so doing, the user interaction between them. not only moves closer to a possible call to action, they The Internet blurs the line separating creative also indicate the relative influence of other media (in media and media planning/buying functions, offering this case television) on their buy cycle. marketing executives new scope to integrate these Optimising the influence of various media activities. Online tools, especially search engines, channels on one another becomes more important help marketers combine two important elements for when launching new branded products. In Italy, truly integrated marketing: intelligence into customer the venerable Lavazza coffee brand employed an thinking and intentions generated by other media. integrated multi-channel campaign to reach young Intelligent marketers are studying consumer Italians with “Carmencita Coffee”, a recently launched search behaviour intently not simply to understand Lavazza brand. According to Giuseppe Lavazza, how users navigate the Internet. Far more interesting strategic marketing director and member of the board for marketers is how keyword selection and search of directors, the key test for the marketing strategy behaviour can reveal the way a customer navigates entailed whether it could speak in the codes and their individual buy cycle. By collecting and analysing formats young people expected, but also in a way that massive troves of searches and their results, reflected the company’s long tradition in Italy. marketers can generate a specific taxonomy for a The answer came in the form of a series of 12 specific marketing objective. two-minute episodes for television, web, and Armed with such insight, a marketer can season mobile phone starring “Carmencita”, an animated various offline and online media outlets with keywords spokesperson for the Lavazza brand during the and other creative content that connects the user 1960s. “Carmencita’s comeback on various media from one media type to the next. For example, a screens enhanced Lavazza’s image as a historic customer might be exposed first to a marketing Italian brand that has migrated through innovative message via television that inspires them to search for communications channels to be closer to today’s © The Economist Intelligence Unit 2006 11
  13. 13. The future of marketing From monologue to dialogue sitcom. Finally, the website hosted a competition for To what degree are online and offline marketing combined into a single strategy at your company? Rate on a scale of 1 to 10, customers to win a Lancia Y car by answering some where 1=Fully integrated and 10=Not at all integrated. (% respondents) simple questions about the first five episodes in the 1 (Fully integrated) sitcom. 14 Using a historic brand icon to launch a new product 2 10 is not revolutionary. But Lavazza updated Carmencita 3 via multiple media channels in order to reach those 18 4 who remembered her and to introduce her to a new 16 audience, while building a campaign around a new 5 15 blend of coffee. 6 5 Lavazza’s example suggests that integrated 7 marketing campaigns will become the norm for new 9 8 product launches. At the moment, however, the 7 survey showed that marketing executives continue 9 2 to grapple with the challenges of integration even as 10 (Not at all integrated) they recognise both its importance and inevitability. 3 Source: Economist Intelligence Unit survey. When asked the degree to which online and offline marketing initiatives are combined into a single strategy at their companies, the opinions of survey customers”, says Mr Lavazza. respondents tilted in favour of more integration. The 12 short episodes of the Carmencita sitcom This could be expected. After all, it is hard to argue aired during October 2005, on Italia 1 at 7.30pm, the case for separate marketing activities when asked with support provided by 15-second promo and teaser in the abstract. More telling of the current state of commercials broadcast on Canale 5 and Italia 1 in integration is the influence that online and offline the follow up to the first broadcasts. Concurrently, marketing campaigns have on each other. It follows a purpose-built website ( was launched, offering a broad range of content, including How do your company’s online and offline marketing campaigns the episodes of the sitcom and curiosities about the influence each other? Select the most applicable statement. characters in it. Additionally, Vodafone and H3G (% respondents) mobile phone users were able to download episodes of Our offline campaigns determine the strategy of the sitcom to their phones. our online campaigns 34 This Carmencita series was repeated in March Our online campaigns 2006, concurrent with 30-second TV commercials determine the strategy for our offline campaigns 9 for Carmencita’s “Agony Aunt” website column, and Our offline and online a print campaign in the weekly women’s magazine campaigns interact, but neither determines the Donna Moderna, in which the Carmencita character strategy of the other 44 answered agony aunt questions from imaginary Our offline and online readers. Carmencita also became the imaginary author campaigns do not interact 8 of a book at the Turin book fair in 2006, in which she I don’t know 5 told of her adventures, drawing inspiration from the Source: Economist Intelligence Unit survey. 12 © The Economist Intelligence Unit 2006
  14. 14. The future of marketing From monologue to dialogue that integrated marketing strategies would manifest Which areas of media are hardest to harmonise with Internet media in order to plan, execute and evaluate an integrated themselves through tightly woven campaigns that marketing campaign? Select up to three. (% respondents) combine offline and online marketing assets and Sponsorships and events objectives. 35 The survey however, revealed that in early 2006 Yellow Pages/other telephone directories 34 online and offline campaigns still do not influence Outdoor advertising each other to the degree that would be expected from 31 Radio a tightly integrated strategy. Some 52% of surveyed 23 executives admit their online and offline marketing Broadcast television 18 efforts either run in parallel or are not integrated at all. Cable and satellite television 16 One factor that could contribute to this apparent Print (newspapers and magazines) contradiction is the sheer difficulty of measuring 13 Other combined media types in the first place. Respondents 6 to our survey said that traditional media channels Source: Economist Intelligence Unit survey. such as Yellow Pages and outdoor advertising will remain among the most difficult to integrate with online media in terms of measuring results. Another media format that is difficult to integrate with online purchased IBM’s PC hardware business in 2005, is sponsorships and live events. A possible reason the acquirers inherited both the advantage and for this is that few attendees at live events bring the difficulty of expanding the venerable ThinkPad interactive devices, whereas computers, televisions product line of notebook computers. According to and radio are commonly found in people’s homes. Craig Merringer, vice-president of marketing strategy That said, marketing executives expect this situation for Lenovo, the company has started integrating to change quickly as mobile devices become more IBM’s long-standing online marketing presence with a sophisticated, enabling companies to launch series of initiatives designed to speak to the customer and integrate a greater number of mixed media with a single newly branded voice. “We do traditional campaigns. activities such as banner ads and email,” Mr Merringer The apparent gap between the aspirations of full explains. “But we’re also looking at new practices integration of marketing activities and real difficulties such as word-of-mouth marketing, viral marketing encountered on the ground cannot be attributed and using social tools such as blogs and wikis in order solely to deficiencies in the marketing department. to engage the audience in a direct conversation as Along with the inherent difficulties in combining opposed to treating them as an impression.” media channels, marketers must also respond to the Lenovo enjoys the advantage of having combined fact that organisations buy and sell each other almost the already popular ThinkPad line of computers with as frequently as they try to drive transactions with an ability to try new initiatives under a different their customers. Marketing professionals are often brand name. According to Mr Merringer, the company confronted with launching new corporate-level brands has invested heavily in the main corporate website, as a result of changes in ownership in addition to, where customers are able to learn challenges in the market. more about the new brand while being able to buy When Lenovo, a China-based corporation, products directly. Lenovo also works with media © The Economist Intelligence Unit 2006 13
  15. 15. The future of marketing From monologue to dialogue Over the next two years, how interested will your company be in marketing in the following emerging media channels? Rate each on a scale of 1 to 5, where 1=Very interested and 5=Not interested. (% of respondents) 1 Very interested 2 3 4 5 Not interested Don’t know Product placement 23 17 13 7 29 12 Mobile phone text or graphical messaging 21 14 14 12 31 8 Blogs 14 20 15 14 26 11 Video-on-demand 11 13 13 11 40 13 Social network sites (eg, MySpace) 11 23 20 12 21 14 Time-shifted video (eg, TiVo, DVR) 6 10 15 13 39 17 Video games 6 5 12 9 57 12 Source: Economist Intelligence Unit survey. services companies such as Nielsen Buzz Metrics brand message to this year where there is a very heavy to monitor and participate in conversations about element of direct response,” says Mr Young. Lenovo products and services that occur outside of the The problem of integrating various marketing company’s primary online presence. goals will grow as more models of interaction with Other organisations, such as Coldwell Banker the customer take shape through weaving online and Real Estate, an American corporation, have fielded offline media into a single customer experience. The integrated marketing and media strategies. survey reveals that marketing executives are actively Source: Economist Intelligence Unit survey. senior vice-president of According to Charles Young, interested in emerging media channels such as marketing at Coldwell Banker, the company runs TV product placement (23% “very interested”), mobile- advertisements that present branding messages in phone text or graphical messaging (21%), and blogs the context of the main website. In one example, a or social network sites (25%). TV advertisement shows an actress facing the camera Although marketers are exploring the use of new with a notebook computer. “Do you want to know media channels for reaching their audience, this does how much your home is worth?” she asks. Just as not imply that they are ready to abandon existing the camera begins to zoom towards the notebook channels. Indeed, a consistent thread in the research screen, the actress changes the angle and encourages is the idea that online does not “kill” existing media viewers to visit, where they can channels as much as it changes how they are used. use the company’s Home Value Calculator to get an “The entire media mix is still relevant,” says Bob idea of current house prices. Other TV advertisements Greenberg, founder of R/GA, a digital advertising drive viewers towards the website where they can agency. “But the industry needs to develop better research the four questions they need to ask any real tools to measure the effectiveness of individual estate professional about selling their home. “We components.” went from 2005 where our TV advertising had a pure On the client side, the measurement challenge 14 © The Economist Intelligence Unit 2006
  16. 16. The future of marketing From monologue to dialogue What’s the Big Idea? depicted by popular accounts. Carla Hendra, first online generation has just started co-CEO for Ogilvy North America, comments: graduating from university. According to “As an agency, we’re past the point of asking Bob Greenberg, founder of R/GA, a digital ‘Is the 30-second spot dead?’ We don’t think advertising agency, demographics will play Marketing agencies have always been about it’s a relevant question anyway. The more a large role in determining how agencies the “Big Idea”, the single, unifying creative important question is where big ideas will manage big ideas in the future. “We’re concept around which all marketing col- come from. It’s no longer the case that you at a point where young adults, with high lateral is created. The pinnacle of creative come out with a creative idea, create the TV purchasing power, have grown up with these messaging in terms of big ideas has been the ads, the print ads, and then bolt on some technologies. It’s a simple fact that agencies famed 30-second advertisement that runs online stuff and some PR. The big change not focused on the digital landscape are out on national broadcast television. we’ve undergone is to recognise that big of touch with how to reach this audience.” As online marketing and broadband ideas can come from anywhere. Previously, a Hence, the Big Idea is neither dead nor video distribution gain prominence, the big idea would likely come from the creative is it severely wounded. But it is different inevitable “Death of the 30-Second Spot” team responsible for 30-second spots. Now, now that consumers experience a marketing commentaries have cropped up in the it can come from our brand integration proposition via multiple entry and exit general and trade press. The typical thesis group, for example, or our digital creatives.” points. “I think that the proliferation of is that mass media is dying compared to Being able to harvest creative ideas from media channels means that Big Ideas targeted media and that the 30-second multiple sources will grow more important are essential,” says Sarah Alspach, the television spot has become an anachronism. as the nature of customers and their media global director of retail branding and For marketing agencies that are habits change. Lest we forget, mainstream communication at London-based Shell navigating their way to the next level, the use of online channels, especially the International. “You need them to drive future of the 30-second spot does occupy broadband variety, is still in its early days. coherence across an abundant sea of management attention, but not in the way But more important is the fact that the choice.” looms large for companies that are seeking to of a particular marketing campaign, but to integrate integrate their marketing efforts in order to achieve those results back into the goal of continuous quantifiable business results. “The challenge is how to improvement for your brand”, responds Gregory Lee, measure it effectively, not only to gauge the success chief marketing officer for Samsung of South Korea. A definition of marketing (version 3) The management process of anticipating, identifying and satisfying customer requirements profitably. Chartered Institute of Marketing, UK © The Economist Intelligence Unit 2006 15
  17. 17. The future of marketing From monologue to dialogue Measurement and Accountability M arketers are dissatisfied with their present The success of an integrated marketing campaign ability to measure almost all marketing rises and falls based upon the marketer’s ability to campaigns. The old adage about not measure results and tie them back to specific goals. knowing which half of the marketing budget is being According to the survey, image building/brand equity wasted still rings true for many clients and their is the only area where marketing executives feel advertising agencies. “If you can’t measure it, it’s they are able to measure the results of a campaign probably not worth it because you really don’t know effectively, with over one-half respondents reporting the relationship between what you’re doing and the their ability to measure as “very effective” (26%) to behaviour you’re trying to influence,” remarks Keith “good” (29%). Pardy, senior vice-president for global marketing at Conversely, the ability to measure results such Nokia. as customer acquisition, customer transactions Mr Pardy observes that nowadays the correct timing and retention scored far lower. More telling is the of a product launch and awareness campaign for a fact that slightly more than one-third of surveyed new mobile phone is as crucial to its ultimate success executives did not even know how they measured as the features and functions of the phone itself. customer transactions as a function of marketing. “Communicating based on features and benefits alone Customer retention was not far behind, with 26% of is just not going to cut it,” he says. “The value you add those surveyed not knowing the relationship between through your philosophy and point of view as a brand marketing efforts and their effect on retaining is becoming equally important. The barriers to entry customers. have never been lower, which means that the barriers Despite the fact that online marketing campaigns to success have never been higher.” are considered by respondents to be far more measurable than their offline counterparts, the survey shows that there is still considerable room for improvement. A number of marketers simply do not Key concepts: know how to measure results flowing from online Marketers are dissatisfied with their current ability to measure activities. results of marketing campaigns, both offline and online. Undoubtedly, there are many types of online The ability to measure results will improve, however, given that advertising and marketing efforts that are still so new CEOs are requiring direct evidence of a return for marketing that there is no clear consensus on how to measure investment. them. Nevertheless, many companies are ploughing Greater accountability will change how corporate marketers ahead on the assumption that a pinch of confusion is organise their agency relationships and how they interact with not always a bad thing. It can create a clear advantage media providers. for those organisations that take the lead and learn The current landscape shows some contradiction between how how to measure their efforts rather than waiting to CMOs spend their management time between formulating see what others do. strategy and assessing performance in the field. Mr Lee believes that the marketing issue for 16 © The Economist Intelligence Unit 2006
  18. 18. The future of marketing From monologue to dialogue How effective are your company’s online advertising/promotion activities at meeting marketing objectives in these areas? Rate on a scale of 1 to 5, where 1=Very effective and 5=Not effective at all. (% of respondents) 1 Very effective 2 3 4 5 Not effective Don’tknow Image building/Brand equity 26 29 19 10 6 11 Customer acquisition 9 19 26 20 10 16 Lead generation 9 20 23 18 10 20 Customer retention 7 22 23 12 11 26 Customer transaction 5 15 18 10 17 34 Source: Economist Intelligence Unit survey. How difficult is it to measure the impact of the following online marketing activities? Rate on a scale of 1 to 5, where 1=Very easy to measure and 5=Very difficult to measure. (% of respondents) 1 Very easy to measure 2 3 4 5 Very difficult to measure Don’t know E-mail marketing 21 29 19 10 11 11 Banner advertising 16 15 15 13 21 20 Paid search advertising 12 16 17 11 9 34 Mobile marketing 7 10 12 14 13 43 Sponsored websites 7 22 18 14 15 24 Pop-up or pop-under ads 5 8 10 12 19 46 Affiliate marketing Source: Economist Intelligence Unit survey. 5 17 19 11 11 37 Rich media ads 3 12 13 15 13 43 Source: Economist Intelligence Unit survey. Samsung is to raise the status a single global brand dashboards that managers use in their day-to-day from “well-known” to “preferred” for a very large work,” he says. “A marketing dashboard would have portfolio of electronic products that ranges from a financial component, a brand component as well mobile phones, MP3 players and integrated circuits as a product component. For example, the financial all the way to domestic white goods such as air component should provide information about a return conditioners and kitchen appliances. Mr Lee sees on marketing dollars spent. The brand component better measurement and reporting tools as vitally measures preferences while benchmarking the important to achieve this objective. “For the past Samsung brand against other brands. On the product 18 months we’ve put together CEO-level dashboards side, we’re measuring product competitiveness on about the overall business to support the marketing several dimensions against the competition.” © The Economist Intelligence Unit 2006 17
  19. 19. The future of marketing From monologue to dialogue to do in a way that meshes with corporate objectives,” Which measurements does your company use to evaluate the overall impact of its online marketing programmes? he remarks. Select all that apply. (% respondents) The ability to tie marketing results to corporate Sales growth attributed to a campaign results has made quantification a top priority, 53 according to the survey. When asked about the Brand awareness generated by a campaign 47 measurements for judging the success of marketing Delivering on metrics specified in the marketing campaign (eg, cost per conversion, number of impressions, click-through rate) campaigns, sales growth eclipsed brand awareness 36 in the minds of both marketers and other corporate ROI from a marketing campaign 33 managers. Organisations now expect to see as direct Purchase intent generated by a campaign a return as possible from the resources invested into 27 Meeting interactive goals specified in the marketing campaign marketing, which can be an unsettling thought for (eg, exposure to advertisement, participating in quizzes or games) 21 many traditional corporate marketers. “Advertising Improved message association has always been sold on faith,” notes Professor 20 Other Deighton. “As an industry, advertising hates the idea 5 of its revenue stream being contingent on results.” Source: Economist Intelligence Unit survey. Be that as it may, the tide is shifting decisively towards a more measurable, and hence more This is not measurement for its own sake, but for accountable, future for corporate marketers and their strategic purposes. For Mr Lee, the goal of corporate- agencies and media partners. Quantification not only level measurement is to enable Samsung marketers measures the effectiveness of a marketing campaign, to take appropriate steps in each country where the it also provides a negotiating currency for marketers company has a presence. “We would bring together all and agencies. Mr Murphy comments: “It typically this macro-level information down to where a high- takes six months from consideration to a transaction level marketer in a given country has a framework and in the auto industry. So as a marketer, you need to process to think about the kind of spending they need be holding the customer’s hand all the way down the sales funnel. And because the web allows you to follow behaviour and model it, it’s simply the most powerful Which three areas of emerging media and marketing do you see the greatest need for an improved set of audience measurements? medium right now. I can see where people are in their Select up to three. (% respondents) buying process and will pay more or less to reach them Product placement depending on where they are in that funnel.” 45 Marketing executives concur that without better Blogs 45 measurement, all marketing activities are equal Social network sites (eg, MySpace) 40 in terms of their relationship to corporate results. Mobile phone text or graphical messaging “Having deep analytics is a crucial component to 40 Video-on-demand better understanding the ROI of your marketing 27 campaign,” says Mr Keane of Google. Time-shifted video 22 Return on investment (ROI) is accountability Video games by another name and a burning concern of CMOs. 18 Other “Accountability is the single biggest issue in the 2 industry today,” says Bob DeSena, director of active Source: Economist Intelligence Unit survey. 18 © The Economist Intelligence Unit 2006
  20. 20. The future of marketing From monologue to dialogue CMOs rely more on time-tested direct marketing Which online advertising strategy produces the best ROI for your company? Select one. activities such as e-mail marketing (37%) for (% respondents) demonstrating the best marketing ROI. The tight E-mail marketing correlation between customers receiving an e-mail 37 Don’t know message with subsequent action on their part helps 19 marketing executives to feel more comfortable about Sponsored websites 17 being held accountable than when conducting other Paid search advertising 8 online activities. Rich media ads The accountability issue will become more 5 Banner advertising important as firms launch a flurry of marketing 4 campaigns that combine online and offline elements, Mobile marketing 3 all of which require harmonised measurement. Affiliate marketing Reconciling the data sets of offline media such as 2 Pop-up or pop-under ads television and radio with online media in order to be 2 accountable for the results will test the skills of many Other 2 corporate marketers. Source: Economist Intelligence Unit survey. As such, the pressure exerted on CMOs to be more engagement for mediaedge:cia, a communications accountable to the rest of the C-suite is affecting planning and implementation agency that is part of the negotiations among corporate marketing London-based WPP. departments, their advertising agencies and media It is hard to argue against the virtue of greater providers themselves. According to Mr Erhardt of accountability. The problem, however, is that greater ESPN, the conversation between media providers and accountability can be difficult to demonstrate using corporate brands no longer starts with negotiations the current measurement models at the disposal of over the price of a timeslot for a major sporting event. the CMO. “All of the traditional indicators we use More strategic topics now lead the conversation. such as reach and frequency are not wrong,” says Mr “We’ve developed a concept called return on objective DeSena. “It’s just that they were appropriate for a (ROO),” he explains. “It’s about helping them measure marketing environment of 20 or 25 years ago.” marketing objectives as it relates to their investment The survey showed that even in the online segment with us. The conversation starts with both parties In which part of an advertising or promotion campaign does your company invest the most management time? Rank in order from 1st (most investment of management time) to 4th (least investment of management time). (% of respondents) 1st 2nd 3rd 4th Developing strategy and goals 66 18 14 3 Executing campaign 21 41 26 11 Selecting and negotiating with partners 13 25 32 30 Assessing performance of campaign 2 18 25 55 Source: Economist Intelligence Unit survey. © The Economist Intelligence Unit 2006 19
  21. 21. The future of marketing From monologue to dialogue Selling commodities for the company’s marketing planners. “Among the goals of the marketing The answer came in the form of an programme was to provide customers with a premium attempt at a Guinness World Record in fuel the ultimate model of fuel efficiency and efficiency modelled after Jules Verne’s book, then invite them to try it for themselves,” Perhaps the greatest marketing challenge Around the World in 80 Days. The company says Ms Alspach. Shell seeks what Ms Alspach involves convincing people to pay a premium sponsored a husband and wife team to drive calls the “motoring enthusiast”. While a for something that many consider a com- a standard Volkswagen Golf almost 29,000 certain portion of this market is attracted by modity. For example, petrol. Most customers kilometres (18,000 miles) around the world the technical or performance characteristics on the street perceive petrol as something to from January to April 2006, using the new of their cars or fuel, a larger component be differentiated solely on price and volume. Shell petrol blend and employing driving embraces motoring as part of a lifestyle. Trying to change such perceptions led practices that stretch fuel consumption. (The Instead of engaging this market London-based Shell International to carry car required 24 tanks of fuel to complete the segment through repeated exposure to a the branding programme for its new Fuel trip, averaging 22 km per litre or 52 miles message, Shell has encouraged interaction Economy petrol blend around the world and per US gallon.) with a continuing story (eg the Guinness into the Guinness Book of World Records Coupled with the world record attempt World Record Attempt) as the context for through its online presence. According was a rich media website that allowed users informing and gathering feedback from to Sarah Alspach, global director of retail to follow the journey online. The website lifestyle-driven motorists. “In Europe, branding and communication for Shell, provided daily statistics, mileage records, we’re well established in terms of brand the new petrol blend promises to increase daily blog entries from the team, photos of awareness so the marketing objective for us overall fuel efficiency and thereby allow the various exotic locales, and background is to drive purchase preferences,” she says. motorists to “go further” on the same on “FuelStretch”, a programme offering “At the end of the day, we are still a volume amount of petrol. But how to communicate by Shell to help its customers raise their business so a 1-2% change in customer that promise in an engaging manner taxed general fuel efficiency. loyalty is huge.” being able to answer the question, ‘What are we trying It stands to reason that a gap between top-level to accomplish with this multimedia idea that we’ve commitments to accountability coupled with a both agreed we want to do’.” somewhat laissez-faire approach to the gritty details Given the forces that are pushing marketers to of measurement may prove temporary. Too much is at greater accountability, one finding of the survey is stake now for marketers to attempt to craft a strategy particularly surprising. When executives were asked without detailed knowledge of what is happening on on which part of marketing and advertising campaigns the ground. Mr Lavazza sums up: “We are constantly their companies spend their management time, over trying to measure the precise impact of our marketing one-half say that assessing the performance of a initiatives. It’s simply not possible to compete marketing campaign is their lowest current priority. effectively if you can’t do that.” 20 © The Economist Intelligence Unit 2006