SapientNitro Global Marketing Series: Part Three – Five Ways Agencies Are Grappling With Global Marketing

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Our CMO Global Marketing Readiness Study, a 6-month research study of 114 CMO-level marketers, has culminated in three separate points of view on the future of global marketing. The final article of …

Our CMO Global Marketing Readiness Study, a 6-month research study of 114 CMO-level marketers, has culminated in three separate points of view on the future of global marketing. The final article of The Evolution of Global Marketing series explores the implications of these trends for agencies — how agencies can better support large global brands; it also points out major areas where they are currently struggling.

For the full series and supporting infographic "Obstacles to Global Marketing," please visit our blog: http://bit.ly/Q0RnB8

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  • 1. SapientNitro Global Marketing SeriesFive WaysAgencies AreGrappling WITHglobal marketingArticle 3 of 3 The Evolution of Global Marketing | By Freddie Laker and Hilding Anderson
  • 2. Executive Summary CMOs are struggling to adapt to a world that is fundamentally different from when they started their careers. Disruptive digital technologies and the new expectations of the global consumer are forcing global firms to adjust and innovate. At SapientNitro, we have made a significant effort to understand how these changes are impacting large global organizations. What we found was surprising: just 15% of senior marketers are prepared to deal with the rapidly changing consumer, and just 8% believe agencies are succeeding in their support of global brands. This should be a wake-up call for global marketers. To further develop an understanding of the causes and implications of these trends, we have conducted a 6-month study of 114 CMO-level marketers, including one- on-one interviews with former or current CMOs including The Home Depot and Intercontinental Hotels. Our research has culminated in three articles. The first is focused on identifying the obstacles, and understanding the implications of these new challenges. The second posits a new “Global Marketing Mindset” of the future CMO — one more comfortable with technology, consumer insight, analytics, and multi-disciplinary strategy teams. The final article explores the implications of these trends for agencies — how agencies can better support large global brands; it also points out major areas where they are currently failing. Together, these pieces represent our perspective on the future of global marketing. While it is a challenging future, it also is full of opportunities for innovative,?! adaptable, and entrepreneurial leaders and businesses.
  • 3. INTRODUCTION architect copy writerGlobal agencies continue to grapple with a digital world requiring DEVELOPEr storyteller anthropolist MARKETEER engineer DESIGNERglobal consistency, but local articulation. Despite repeated efforts STRATEGISTover the past two decades, agencies have been unsuccessful at fullysolving the problems inherent in global account management in thedigital age. Our research revealed the damage it has done to CMOs— just 8% of CMOs feel that their global agencies are supportingthem successfully. When we looked at marketers who identifiedthemselves as technology savvy, the number dropped to zero (0%).SapientNitro’s recent research found five major problem areas,which agencies must address: increased specialization, a lack ofdeep country-specific knowledge, a lack of strategic digital thinking,a lack of omni-channel global concepts, and a lack of investmentinto skills and digital tools.1. Struggles With Agency SpecializationSenior global marketers deal with the daunting challenges of managing multiplecountries every day. Too often, they are not getting multi-channel, global thinking One solution CMOs are using is to consolidate their agency partners centrally. Our research found that nearly 50% of marketers are seeking to consolidate their Brands need to find the right Tight integration is particularly important for large, globalfrom their fragmented agency portfolio. The growth of disruptive technology has agency partners at a global level. strategic partners to get the accounts for four main reasons:fueled a proliferation of new types of specialized agencies. But it comes at a cost — the importance of country-particularly for complex global brands. Top agencies recognize the problem of specialization and separate P&Ls, and right ideas. I’ve seen brands specific knowledge, the riskAs we mentioned in the introduction, the research shows that just 8% of senior various solutions have been proposed. One option is to create “mini-agencies” for big clients. WPP CEO Sir Martin Sorrell’s experiment at Dell — a $4.5B global with 30 people from different of a cacophony of noise if not properly organized, the difficultymarketers believe their agency partners are succeeding in their support of global account — is an example of the benefits and pitfalls in this approach. In this case, agencies. in identifying team resourcesbrands. In our study, roughly 60% of senior marketers characterize themselves they attempted to attract the stars to the account from across WPP. But separate in global accounts, and theas tech-savvy. Among those who are technology savvy — presumably the group P&Ls and the loyalty to the agency — not to the holding company — impeded the Former Unilever SVP Brand Marketing growing emphasis on multi-best able to understand the opportunities of this new disruptive technology — the ability to create the best-in-breed team structure. Dell quickly reverted to an “ad channel experiences.number believing their agencies were successfully supporting global brands hoc” set of agencies, and ultimately moved the account to three smaller agenciesdropped to zero (0%). We believe these data show that even the most sophisticated — none of which were part of WPP. Increased specialization represents a challenge for which agencies — particularlymarketer will struggle with too many specialized agency partners. large, global agencies — continue to seek solutions. Clients are increasingly looking for the integration of teams across multipleAnother aspect of the problem is that many digital agencies don’t offer end-to-end disciplines — design, architecture, engineering, anthropology, and storytelling cansolutions. According to a 2010 survey, 80% of those surveyed in the UK feel that all play a role. Some of the best thinking comes when these skills are united under 1 Costa, Marylou. “Remodelling the Agency Relationship for the 3.0 Age.” August 2010digital agencies are too fragmented and specialized, and want digital agencies to a single roof, not spread around the world.grow their service to provide a fully integrated offering (such as design and build,development, email, eCRM, search, data, display, and social media).” 1
  • 4. Figure 1:CMOs Report That Agencies Are Not SucceedingIn Their Support Of Global Brands % of respondents who agreed or strongly agreed Agencies today are succeeding in their support of global brands. 8% 2. Local Needs and Tastes Remain Under-Explored Our current global agency partners have the necessary global footprint to support our 12% brands. One big surprise from our research is the gap between the promise of local And there is substantial budget being spent locally; nearly a quarter (23%) customer understanding and the reality. Agencies realize the importance of companies spend more than 50% of their marketing and merchandising of localization, yet just 11% of their senior-most clients strongly agree that budgets at the local level. 3FIGURE 1 To survive in the new marketing world, marketers must be flexible. Yet a minority of marketersfeel prepared to deal with integrating their marketing activities to reach these consumers. global agency partners have a deep understanding of local needs and requirements. We also know that deep customer insight helps win pitches. According to ourSource: Q2 2012 online survey to 114 senior marketers with global responsibilities survey, deep insight into changing customer behaviors is the number one The core problem is that many agencies’ global footprints are insufficient, capability for choosing agency partners (see sidebar). And this local insight according to clients. Just 12% of CMOs strongly believe their current is critical for both tech-savvy marketers and less tech-savvy marketers; both agencies possess “the necessary global footprint” to support their brands. 2 scored “deep insights into changing consumer behavior” in their top three selection criteria for new agencies.Figure 2: This local knowledge is growing more important in the digital age; 92% ofCMOs Prioritize Knowledge About Local Needs respondents responded that the importance of tailoring campaigns to local 2 Costa, Marylou. “Remodelling the Agency Relationship for the 3.0 Age.” August 2010And Tastes In Choosing Agencies values, customs, and norms is going to be the same or more important in 3 October 2011 CMO Council study titled “Powering Performance on a Field Marketing Level three years. Through Localized Content, Advertising, Promotions, Search Contacts, and Cyber Community % of respondents who agreed or strongly agreed to the question Connections” Q: What are the most important global trends in marketing that will impact your business in the next 3-5 years? Ability to provide deeper insight into changing consumer behavior 36% 53% 89% How do large multi-nationals choose agency partners? Top 3 selection criteria for: #1 Best-in-class creative 33% 54% 88% technology savvy marketers non-tech savvy marketers Brand stewardship (e.g. brand strategy, etc.) 38% 49% 87% 95.7% Brand stewardship (e.g. brand strategy, etc.) Best-in-class creative 88.3% VS 87% Ability to drive cost efficiencies by utilizing fewer agencies across multiple geographies /capabilities Significant amount of local expertise in our key markets (e.g. agency having physical offices in key markets) 88.3%FIGURE 2 Managing global campaigns in the new global and digital world was identified as a key challenge.In particular, social media, and blending online / offline experiences were key global marketing challenges. 82.6% Ability to provide deeper insight into changing consumer behavior Ability to provide deeper insight into changing consumer behavior 88.2%Source: Q2 2012 online survey to 114 senior marketers with global responsibilities 82.6% Best-in-class creative Brand stewardship (e.g. brand strategy, etc.) 88.2%
  • 5. FIGurE 3:Agencies setting up a global campaign HOW DO TECH-SAVVy MArKETErS THINK ABOuT AGENCIES DIFFErENTLy? FIGURE 3 The new CMO - one who is asfor a global organization must have How important are each of the following TECH-SAVVy1 % who strongly agreed NON-TECH SAVVy % who strongly agreed DIFFErENCE comfortable talking CMSs and multi-variate testing as brand tracking studies – has verya presence and/or experience in the capabilities when selecting agency partners? Is online an important revenue channel for different expectation on the role of agencies. What we found was that they are much more likely to expect multi-channel thinking from 74% 47% +27.1%markets they are focusing on. An agency your business (i.e. selling products or services online)? their global partners, much more likely to choose agencies which offer depth andwith one office in NYC cannot serve the Our current global agency partners push us to think across all channels, not just one or two. 24% 0% +23.7% breadth – and hence be satisfied with that breadth – and also to believe agencies are succeeding. Agencies which can connect toneeds of our organization in Bangalore. Significant amount of local expertise in our key markets (e.g. agency having physical offices in key markets) 44% 24% +20.6% these types of knowledgeable leaders – and provide the right mix of services – seem to be performing better than those who are not.Senior Global Marketer from 2012 Survey Ability to provide deeper insight into changing consumer behavior 61% 41% +20.2% Source: Q2 2012 online survey to 114 senior marketers with global responsibilities I am satisfied that our current global agency partner(s) depth (e.g. deep marketing insights) and 17% 0% +17.3% breadth (a mix of digital and traditional) of skills. Ability to drive cost efficiencies by utilizing fewer agencies across multiple geographies/ 39% 24% +15.3% capabilities Agencies today are succeeding in their support 14% 0% +14 % of global brands. Cross-channel expertise in both digital and traditional commerce 46% 24% +22.7% 4 Tech Savvy is defined as those who agreed or strongly agreed to the statement ‘I consider Best-in-class creative myself to be very knowledgeable about 52% 71% -19.0% technology (e.g. the back-end infrastructure for marketing programs)’ The research also revealed that this local knowledge gap among And if you need more validation of the emphasis on local expertise global agencies appears to be driving the usage of local agencies by global CMOs, respondents to our online survey also were clear — agencies that often lack the technical depth to build game- about this need. changing digital platforms at scale. Two-thirds (67%) of senior marketers agree that local agencies are an essential part of their Agencies setting up a global campaign for global, go-to-market strategy. The result is that game-changing digital or cross-channel experiences may never get built. a global organization must have a presence and/or Digital pure-plays, which traditional agencies have developed over experience in the markets they are focusing on. the years, were also singled out as missing the global footprint. An agency with one office in NYC cannot serve the A former CMO of a global CPG corporation summed it up: “My experience has been that a number of digital agencies lack a needs of our organization in Bangalore. global perspective. They don’t have a strong [global] footprint.” senior global marketer from 2012 survey
  • 6. insigHT There are very few agencies experiencethat can truly operate at a globallevel and provide equally goodservices in different markets. markeT knoWleDgeThis is particularly true in the researcHemerging economies. This trend culTural aWareness experTiseis exacerbated once you startto work across multimediachannels … relevant marketingis done on the ground and isculturally specific. local neeDssenior global marketer from 2012 surveyThe solution that many agencies look for is to operate as a global network;it should be a network where any region can connect with and bring in the Two-thirds of senior marketers a feature phone (non-smartphone) nuances include variation in the support of texting plans, or the rising role of Wi- Fi in lieu of voice plans in developing countries from Mexico to Brazil. This levelglobal perspective and insight. But the reality is that the success of this (67%) agree that local agencies project in Southeast of local understanding is helped by geographic proximity.approach depends on the effectiveness and quality of the global managementteam. Deep consumer insights on the global level are key to developing great are an essential part of their Asia. Only the India team got it right — The bottom line is that many global pitches are made — and won — based onglobal experiences. global, go-to-market strategy. the London team the strength of consumer insight in multiple regions. yet a great challenge didn’t embrace remains in how to operationalize strategic insight across different P&Ls,For example, mobile technologies vary by market. One story we heard was the limited technology of feature phones, while the India team developed a cultures, and languages. The research shows that too often global agencyof a client who tapped top creatives at agencies in London and India for groundbreaking campaign using the available features. Other global mobile partners are not bringing deep local understanding.
  • 7. FIGurE 4:DESPITE COST PrESSurES, LACK OF LOCAL KNOWLEDGEIS DrIVING CMOS TO LOCAL AGENCIES % of respondents who agreed or strongly agreed 3. GAPS PErSIST IN THE STrATEGIC MIx Our current global agency partners In an environment of disruptive technology, CMOs are demanding Over the past five years, both groups have continued to invest to try to have a deep understanding of local 35% 11% 46% needs and requirements. more from their agencies. Agencies are increasingly being tapped for close this gap. For example, agencies are shifting from a “big idea” deep strategic insight across both traditional and digital. According to an organizing idea — one that defines a brand experience across Local agencies (i.e. those operating in just one country) are an essential part to our survey, however, few agencies (just 10%) are fully integrating channels, countries, and platforms. And it is even more important for 51% 16% 67% of our global, go-to-market strategy. digital and traditional strategies for their clients. global accounts than domestic accounts, as it can provide guidance to local partners and allow them to extend and improvise on their own. In the agency world, both traditional and digital agencies share the In our experience, the home office tends to want to be more brand- blame. For traditional agencies, our survey found that just 11% of oriented, while local markets want tactical, short-term activities with aCOST EFFICIENCIES DrIVE CMOS TO WANT TO global CMOs strongly agree that traditional agencies have a good defined rOI. An organizing idea allows you connect these two goals.CONSOLIDATE understanding of how to leverage digital. While digital agencies are hardly exempt: less than half (43%) of CMOs agree or strongly agree The bottom line is that while traditional agencies particularly are % of respondents who agreed or strongly agreed that their digital agency partners have a leading strategic role in the strong at developing ideas, which map to an overarching strategy, marketing decision-making process. both groups need to do a better job of integration and working across Ability to drive cost efficiencies channels. by utilizing fewer agencies across 46% 32% 78% multiple geographies/ capabilitiesFIGURE 4 Less than 11% of CMOs strongly agree their global agencies have a deep understanding of localneeds. The result is that CMOs continue to look elsewhere for this critical capability, often to niche, localshops which in the long run increase brand, management challenges, and increase ‘silos’ of expertise.Source: Q2 2012 online survey to 114 senior marketers with global responsibilities 4. CHALLENGES IN DELIVErING GLOBAL MuLTI-CHANNEL IDEASFIGurE 5:COST EFFICIENCIES DrIVE CMOS TO WANT TO Multi-channel consumers spend more — up to 400% more — compared with a single-channel consumer 4. yet in our discussions Campaigns should be developed to beCONSOLIDATE with company and agency marketers, too many described situations channel agnostic. [The] going assumption is where global silos within organizations and agencies prevented the % of respondents who agreed or strongly agreed development of effective cross-channel experiences. that it has to go anywhere and everywhere. Our marketing activities are fully The research is clear: in this new multi-channel world, just 16% of On the POS physically and digitally. On TV. Online. If you start with a channel in mind, it integrated and working together (e.g. digital activities are in sync with 9% senior marketers strongly agree that their global agency partners are traditional media campaigns). pushing them to think across all their channels, not just one or two. will be very difficult to have global ideas.FIGURE 4 Less than 11% of CMOs strongly agree their global agencies have a deep understanding of localneeds. The result is that CMOs continue to look elsewhere for this critical capability, often to niche, local 4 “Multichannel At The Heart: Lessons From M&S On How Multichannel Is A Part Of Everyone’s Job” Laura Wade-Gery, Executive Director, MultiChannel eCommerce – SVP Global Media, CPG, Experience: North America,shops which in the long run increase brand, management challenges, and increase ‘silos’ of expertise. from Marks & Spencer South America, W. Europe, S.E. AsiaSource: Q2 2012 online survey to 114 senior marketers with global responsibilities
  • 8. FIGurE 6: MuLTI-CHANNEL CAPABILITIES ArE IMPOrTANT… % responding moderately or extremely important Cross-channel expertise in both digital and traditional 39% 46% 85%Furthermore, when we studied non-technology-savvy marketers, they reach these consumers. Agencies will be doing their partners a disservice marketingappeared particularly likely to minimize multi-channel. In our survey, if they don’t bring these ideas to the table.none (0%) of the non-tech-savvy marketers strongly believe they arebeing pushed to think across channels. This is clearly different from the And CMOs realize it. As one respondent noted when asked what was thetech-savvy marketers, who indicate that roughly a quarter (23%) of their most important characteristic of their best global agency relationship: …BuT TOO FEW AGENCIES ArE HELPING CLIENTSagencies push them to think multi-channel. “the ability to help with the strategic application of brand to a multi- THINK ACrOSS CHANNELS channel and multi-country environment.”In the face of the latest in disruptive technologies, the ability to go outside % of respondents who agreed or strongly agreeof traditional channels is critical. For example, many 18- to 25-year old The implications of this gap are significant. Agencies have a responsibilitymen targeted by marketers are very difficult to reach using traditional to help their clients envision and then deliver global multi-channel ideas, Our current global agency partners push us to think 47% 10% 57%media buys. One senior leader noted that “ultimately, traditional channels even if it means we must fight to overcome outmoded organizational across all channels, not justare not the only or even the best way to reach these segments.” Social structures, practices, and partnership models. one or two.media, in-game media purchases, and other tactics should be applied to FIGURE 6 Deep consumer insight emerged as the most important single capability for selecting agencies. yet too many agencies are failing to invest in research and consumer insights. The result is that local knowledge lives in local agencies, while global agencies have the budget and technology capabilities to create the strong experiences which CMOs are demanding. Source: Q2 2012 online survey to 114 senior marketers with global responsibilities FIGurE 7: DIGITAL AGENCIES, IN PArTICuLAr, ArEN’T BrINGING THE rIGHT STrATEGIC MIx % of respondents who strongly agreed I’m satisfied that our current global agency partner(s) depth (e.g. deep marketing insights) 10% CMOs Aren’t Satisfied and breadth (a mix of digital and traditional) of skills. Our digital agency partner(s) has a leading role in our marketing decision-making 6% And Digital Isn’t yet Leading process. FIGURE 7 Great global strategy requires a mix of depth and breadth, yet few agencies are excelling. And though they specialize in the major area of growth for agencies, many digital firms aren’t taking a leading role in delivering great strategy. Source: Q2 2012 online survey to 114 senior marketers with global responsibilities
  • 9. FIGurE 8 :DIGITAL AGENCy PArTNErS ArE ONLy ADEQuATE IN DIMENSIONS OFSCALE AND MuLTI-CHANNEL COMMErCE % of respondents who strongly agreed Our digital agency partner(s) have the ability to scale and handle large engagements of any scale. 47% 10% 57% Our digital agency partner(s) have deep expertise in commerce (i.e. kiosk, online, mobile 43% 7% 50% and in-store digital commerce experiences). 5. rIGHT SKILLS AND ASSOCIATED TOOLS rEMAIN CHALLENGINGFIGURE 8 The ability to scale, and the ability to provide deep commerce expertise are core elements of delivery for digital agencies Agency leaders know that their clients struggle with a important. This data is fundamental to executing multi-in the new world. yet too few are delivering at the level they should. lack of skills in digital — especially globally. In our survey, channel marketing campaigns so critical in reaching theSource: Q2 2012 online survey to 114 senior marketers with global responsibilities over three-quarters of senior marketers (77%) noted that new consumer. it was moderately or extremely challenging to gain access to the appropriate skills and people. And nearly a third of Tools among companies and agencies are another gap: respondents (32%) believe it will get more challenging in the lack of a single, cross-channel digital marketingFIGurE 9: the next three years. platform was identified as the number one obstacle toDIGITAL SKILLS rEMAIN A CHALLENGE FOr CMOS – AND AGENCIES the growth of digital marketing among 350 enterpriseArEN’T PrOVIDING THE SOLuTION Clients rely on agencies to provide these skills. yet the skill decision makers. 6 requirements at many global agencies haven’t kept up. In a recent CMO Council survey, just 9% of senior marketers The research confirmed this: traditional agencies are likely Q: How challenging do you consider each of the following for your marketing organization? believe traditional ad agencies are doing a good job of to be challenged. In fact, 47% of client marketers plan Is this less challenging, more challenging, or about the same as it was 5 years ago? In 3-5 years? evolving and extending their service capabilities in the to build internal capabilities and use incumbent agency digital age. 5 New sets of integrated tools — and the proper services less. Furthermore, 45% are bringing in outside TODAy ExPECTED CHANGE IN 3-5 yEArS training — in analytics, localization, and multi-channel consultants to help set up and structure digital programs. 7 % responding moderately campaign development and delivery all take time to learn. or extremely challenging LESS MOrE And, it can be quite difficult for an agency to combine Gaining access to the regional knowledge with these new digital skills. 5 appropriate skills and 51% 26% 18% 32% CMO Council 2012. http://www.cmocouncil.org/press-detail.php?id=2943 people across the 6 organization Skills such as real-time data that measures social media http://www.dataxu.com/news/press-releases/digital-marketing-study- cmos-believe-big-data-is-a-game-changer/ chatter or digital media performance are incredibly 7 CMO Council 2012. http://www.cmocouncil.org/press-detail.php?id=2943 % of respondents who strongly agreed Our traditional agency partners have a good understanding of how to 11% leverage digital.FIGURE 9 As we reported in an earlier article on this subject, access to the appropriate skills and people across the organization isquite difficult for CMOs. But Agencies are not doing their part. In particular, gaps in analytics, localization and multi-channel campaigndevelopment were identified in our research.Source: Q2 2012 online survey to 114 senior marketers with global responsibilities
  • 10. About our research Building on our team’s three decades of multi-channel marketing experience, SapientNitro conducted a series of 20+ detailed interviews with senior marketers within and outside of SapientNitro, and followed it up with a far-reaching survey to 114 senior global marketers and global CMOs. We also reviewedConclusion existing literature related to this topic. The majority of the research was conducted in Q2 2012. We have captured this research in three articles — the first focused on new global marketing challenges, and second on keyThe rapidly evolving world of marketing poses new and dynamic challenges for agencies. Tasked with elements of the global marketing mindset, and the third on fivepartnering with CMOs and their marketing teams globally, agencies have an opportunity to be a trusted ways agencies are struggling with global brands today.partner managing an ever-increasing number of marketing channels, and rapidly changing consumer About THE AUTHORSdemands.Yet what we found in our research was that many CMOs remain dissatisfied by their partners. Despitemultiple attempts, more hard work remains for agencies to build the right team and assets to deliver FREDDIE LAKER – is VP of Globalsophisticated global accounts that balance local articulation with global consistency. Marketing Strategy and has extensive experience working across a broad range of global clients. He actively speaks atFor more research on how CMOs and organizations are changing the way they think about global leading conferences around the worldmarketing, be sure to see the other articles in SapientNitro’s Global Marketing Series: “CMOs Reveal on topics ranging from global marketingObstacles to Successful Global Marketing” and “The New Global Marketing Mindset.” The first is focused on trends to emerging disruptive technologies.identifying the obstacles, and understanding the implications of new challenges of globalization and the rise HILDING ANDERSON is a Sr. Managerof disruptive technology. The second posits a new “Global Marketing Mindset” of future CMOs — one more of Research + Insights, and focuses oncomfortable with technology, consumer insight, analytics, and multi-disciplinary strategy teams. digital strategy and the emerging digital consumer for SapientNitro. He is also the editor for Insights 2013, Sapient’s annualWhile the five areas covered in this paper demonstrate major problems for both marketers and agencies, digital trends report.they also represent an opportunity for forward-thinking agencies to set themselves apart from the pack —for the ultimate benefit of agencies and marketers alike. © Sapient Corporation 2012