Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 2Executive SummaryIn May 2011, Webtrends commissioned Forrester Consulting to study the phenomenon frequently referred to as the“Splinternet.” In conducting in-depth surveys with 210 global, senior-level digital marketers across industries, Forresterfound that many marketers are struggling with the fragmentation of technology standards and customer touchpointsacross proprietary digital platforms and devices.Key FindingsForrester’s study yielded three key findings: The Splinternet disrupts the marketing landscape. Technology and channel fragmentation are a very realphenomenon; marketers know that adapting to a multichannel environment is critical and are racing tounderstand the effect of the Splinternet. Marketing strategies need a reboot. Firms must take a fresh look at their foundational strategies to evaluate howthey will create mutually beneficial relationships with customers in light of new channels, technologies, and theexpectations of sophisticated consumers. Multichannel success requires mastery of multiple disciplines. Firms must take a multidisciplinary approach toharnessing the opportunities that the Splinternet presents. Technology, organization, process, and measurementare all interrelated contributors to a marketing organization’s effectiveness.The Current State Of Digital MarketingMarketing is going through a period of rapid and significant evolution. The era of an easily compartmentalized Internet— comprising the web browser, well-defined touchpoints, and open technology architectures — has been usurped bythe Splinternet, a large-scale fragmentation of devices, data access, and technology standards. The Splinternet has anexpansive effect because it breaks many of the foundational assumptions upon which digital marketing is based: Connected devices go beyond the PC. Smartphones, Internet-connected devices, and new devices such as tabletcomputers create a diverse world of connected, overlapping devices. Customers are now capable of being online24 hours a day, raising the bar for original and creative marketing content, but also providing firms with ampleopportunities to establish a relationship. Social media inverts data ownership. Consumers generate more data than ever, but they are retaining control ofthat information. Social networks retain control of data based on personal networks and password-protectedsites, ultimately withholding massive sources of insight from digital marketers. This changes the balance ofpower for the control of data. Marketing standards shift. As touchpoints diversify and platform vendors assert control over access andtechnical standards, marketers must adapt to a strategy of marketing in a world of walled gardens. Eachtouchpoint requires its own technology, processes, and measurement strategy.
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 3 Everyone is an analyst. As channels and customer touchpoints increase, marketing has become a highlycollaborative environment. More stakeholders in the business need access to marketing insight than ever before.Firms need to provide marketing stakeholders with relevant and timely reports and analysis to supportdecision-making.The Splinternet Is An Equal Opportunity DisruptorThe survey findings make it abundantly clear that the Splinternet is a real and pervasive phenomenon that affects firmsof all sizes, geographies, and industries. As a result of this great equalizer, nearly all firms are affected by technology andtouchpoint fragmentation, and they face a marketing landscape of remarkably similar challenges and opportunities: Multichannel marketing is critical. Firms reported a high-level understanding that multichannel holds value.This recognition extends to both benefits for companies in terms of sales and profits as well as satisfyingcustomer expectations (see Figure 1).Figure 1Firms Grasp The Importance Of Multichannel Marketing, But Big Changes Are A Bit Harder To MakeBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011“To what extent do you agree or disagree with the following statements about multichannelmarketing?”19%23%30%26%27%37%31%37%36%33%37%38%46%48%42%50%47%49%33%27%20%19%22%18%16%13%11%14%11%10%8%3%3%1%3%4%2%1%2%1%0% 25% 50% 75% 100%Our organization must change dramatically to enable becoming amultichannel companyA multichannel customer is worth substantially more to us than asingle channel customerOur company must rethink how it services customers to become a truemultichannel companyIn the future, our multichannel strategy will be a key factor in how wedevelop products and servicesIn the future, our multichannel strategy will be a key factor in how weinvest in technology to support our channelsBeing an effective multichannel company will be critical to our long-term successCustomer expectations for cross-channel or multichannel relationshipswith companies and brands have changed dramaticallyWe will drive more sales and profit by becoming a multichannelcompanyTo serve today’s customers, we have to improve our multichannelcapabilitiesCompletely agree - 5 4 3 2 Completely disagree - 1
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 4“Customers want everything to be the same across all touchpoints and devices. Customers also expect everything tobe available instantly. They send an email and expect a response within hours not days.” (Marketing Executive,Retail)“It is starting to get to the stage where we offer promos and marketing campaigns to individual people inorganizations. That segmentation becomes incredibly complicated. Some want an email, some want text, some wantto do collaboration sessions online. Channels have become incredibly complicated. If you connect to people throughthe wrong channel, it can be a relationship breaker.” (Marketing Manager, High Tech) Social media dominates share of mind and wallet. Emerging channels are a major fixture and cause offragmentation driving the Splinternet, most notably social and mobile. Firms reported that they are most activein social networks when expanding beyond traditional interactive channels, often at the expense of otherchannels such as mobile (see Figure 2).Figure 2Social Is Soaking Up Marketers’ AttentionBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011“As far as digital marketing, generally I direct digital marketing that supports our stores from [microblogging sites],[social media sites], email, and website enhancements. We do not do mobile at all currently. It’s beyond our currentcapacity. We don’t have the staffing for it. It is literally beyond our capacity.” (Marketing Manager, Retail) Measurement issues create a self-defeating cycle. Firms reported that measurement is a top challenge foradapting to fragmentation. The failure of measurement to keep pace creates significant barriers to adoption for“Beyond traditional interactive channels such as search and website marketing, in which emergingchannels is your company currently conducting marketing activities?”79%56%54%52%41%34%30%26%13%12%2%Company presence in social networksCompany advertising in social networksUser generated content such as blogs, reviews, ratings, etc.Mobile applicationsMobile web browsingMobile messaging such as SMS2d barcodesTablet computingGamesKiosksOther
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 5marketers because respondents simultaneously indicated that uncertain ROI is the top barrier to adopting newchannels in their organizations (see Figure 3). The source of this issue lies in the fact that most firms onlymeasure basic metrics rather than deep, business-oriented key performance indicators (KPIs) (see Figure 4).Figure 3Proving ROI And Lack Of Budget Create A Vicious Cycle Of BarriersBase: 210 North American and European marketers (multiple responses accepted)Source: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011"Please indicate the barriers, if any, that prevent your marketing organization from adopting newchannels?"49%31%31%23%22%21%19%13%12%12%11%4%3%1%Uncertain ROINo budget allocationCompany bureaucracyCost is too highUnfamiliarity with appropriate technologies and vendorsData security risksLack of skills and resourcesDifficulty working with ITor external partners for…Legal issuesLack of executive support/sponsorConcern about negative feedback from customersNone. There are no barriers.Negative feedback from within the companyOther
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 6Figure 4Firms Are Measuring But Long-Range Key Performance Indicators LagBase: 210 North American and European marketers (multiple responses accepted)Source: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011“We don’t have specific metrics at this point. The driver to our social work is that you know you need to be in certainplaces, targeting certain group of consumers, just haven’t figured out if we’re reaching them thoroughly andmeasuring if impact is turning into sale or brand awareness. We’re seeing where our brand awareness is, but it ishard to break out which part of our marketing dollars are pushing those levers.” (Marketing Executive,Manufacturing)“I don’t think we know what constitutes success with our social programs. We don’t have any traditionalmeasurement tools beyond measuring activity on pages. We have not been able to link activity to sales in any way.”(Marketing Director, Consumer Packaged Goods)“Online marketing is being used more and more to justify offline marketing. This is a resource drain to the digitalmarketing team, and it isn’t an exact science, also it creates more arguments over attribution. Brand marketers seetheir budgets dropping and are desperate to justify their activities.” (Marketing Executive, Retail) It is easier to buy technology than to develop organization and processes. The survey found that firms are mostlikely to invest in technology and third-party services to support emerging channels, above skills and staff, andfar above creative development (see Figure 5). This data suggests that firms are pushing to enter emergingchannels as quickly as possible, potentially at the expense of long-term success built through the development ofin-house intellectual property and holistic programs."What metrics does your organization currently use to measure the success of emergingchannels?"57%52%50%43%41%37%35%35%31%30%28%20%19%15%5%1%Click-through rateConversion rate (orders, leads, applications, etc)Lift in brand awareness or affinitySales or revenueOverall return on marketing investment (program dollars)Customer satisfactionCustomer retentionReturn on ad spendCost per Sale/Customer/OrderShare of customer walletCost per leadCustomer life time value (LTV)Average order valueImproved internal efficiency/productivityWe do not have specific metrics in placeDont know
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 7Figure 5Firms Will Spread The Money Around To Fill Numerous Holes In Their Emerging Channel CapabilitiesBase: 210 North American and European marketers (multiple responses accepted)Source: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011“Our company struggles to recruit the right people who can manage marketing in a fragmented environment.Traditional marketers lack the skills to succeed. We also need the right data analysts. Our teams need to cope with arapidly changing environment.” (Marketing Executive, Retail)The SolutionBy universally disrupting nearly all markets, the Splinternet creates a tremendous opportunity for those organizationsthat learn to transform the challenges of fragmentation into productive customer engagement capabilities. Channelsand technology are finally able to support truly mutually beneficial relationships between firms and customers.Marketers agree that fragmentation presents significant opportunities to firms, spanning the customer life cycle andproviding increased communication relevance (see Figure 6)."Where will your firm invest to support emerging channels?”53%51%47%47%37%35%28%27%1%Technology to execute activities in emerging channelsThird party services such as agencies and consultanciesTechnology to track and measure activities in emerging channelsSkills and staff to develop and manage activities in emergingchannelsCreative development to support activities in emerging channelsTechnology to manage processes for marketing in emergingchannelsMedia placement or messagingTechnology to manage data from emerging channelsOther
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 8Figure 6Fragmentation Is An Opportunity For Segmentation And Targeting To Drive A Variety Of ObjectivesBase: 210 North American and European marketers (multiple responses accepted)Source: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011Rather than ignore or resist fragmentation, firms must take advantage of this opportunity by embracing and aligningthe following components: Use strategy as a foundation. First and foremost, firms must develop an overarching strategy from which todirect the tools, organization, processes, and measurement capabilities that are necessary to succeed in afragmented marketing ecosystem. Survey respondents indicated that strategy is the number one skill they needin the next five years as media fragmentation occurs (see Figure 7)."What opportunities does media fragmentation present to your organization?”79%62%61%57%56%50%50%47%42%40%40%34%31%25%24%14%Ability to deliver more targeted or relevant communicationsIncreased customer engagementNew customer acquisitionIncreased customer loyaltyAbility to meet customer preferencesMarket research and/or customer intelligenceBrand buildingIncreased revenueCustomer serviceReduced reliance on mass media to drive businessIncreased market shareSupporting other channelsProduct innovationDriving traffic to storesSupporting partnersTo maintained parity with competitors
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 9Figure 7Strategy And Campaign Process Skills Top The Wish ListBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011“With these emerging channels you can focus so much better. You can get down to the micro level. You can talk toconsumers at a level you can’t engage in when doing mass media. You can send them content or make them aware ofcontent that is of interest to them. You can segment them. You can find folks that are passionate and followers andsupport you along the way. Grassroots campaigns. Question is you have to find it and how to use it, it’spowerful.”(Marketing Executive, Manufacturing) Expand your toolkit. Successful adaptation to the Splinternet requires a range of technical capabilities. Firmsshould aim to create a well-balanced, holistic technology portfolio addressing analytics, execution, content, andoptimization. To streamline processes and resources, technology assets must be integrated into a unifiedsolution where possible. For example, when considering social engagement solutions, marketers should ensurethat their solution of choice combines app creation, content management, and tracking capabilities. Surveyrespondents indicated that execution technologies such as content management and campaign managementwill be the most critical to their marketing organization over the next five years, followed by analyticstechnology such as web analytics, targeting, and mobile analytics (see Figure 8).“As media fragmentation occurs, what skills do you predict will be most critical to your marketingorganization over the next five years? Rank up to 5 in order of importance”50%13%8%4%5%6%3%3%3%2%1%7%15%10%13%12%6%10%6%6%10%4%6%14%11%13%9%7%12%7%8%6%5%9%6%13%11%8%14%9%8%6%11%3%5%5%9%9%12%10%5%14%15%7%7%StrategyCampaign planningTechnology integrationCampaign analysisSkill with online applicationsData management and segmentationCommunicationsBudget managementCross functional coordinationCreative designAgency managementRanked 1 Ranked 2 Ranked 3 Ranked 4 Ranked 5
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 10Figure 8Execution And Analytics Capabilities Are Key To Coping With FragmentationBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011 Build for scale. Marketers are not strangers to substantial amounts of data, but the Splinternet’s diversity ofdevices, touchpoints, and technologies drives massive growth in data volumes and the number of data streams.As data output continues to grow at an exponential rate, it is vital that firms focus on managing datamacroscopically. Organizations must adapt their infrastructure and data management strategies to ensure aholistic approach to collecting, processing, and storing data as well as making that information availableefficiently for marketing analytics and operations. Develop the organization. Adapting to the Splinternet requires a concerted effort to build up organizations withthe skills, structure, and bandwidth to operate in a high-speed, fragmented environment. Along with focusingefforts internally, firms should consider leveraging the operational and strategic expertise of external agenciesand consultancies. Firms reported that they are developing centralized marketing teams to consolidatecapabilities across channels, lines of business, and products to facilitate multichannel marketing (see Figure 9).Organizations also extend beyond in-house capabilities, as many firms reported that they employ third partiesto support emerging channels and adopting technology for multichannel marketing (see Figure 10).“As media fragmentation occurs, what technologies do you predict will be the most critical to yourmarketing organization over the next five years? Rank up to 5 in order of importance.”Note: Top 10 technologies shown.28%10%4%11%3%3%4%3%3%3%9%7%3%10%7%9%5%4%7%6%5%9%10%3%8%5%5%5%2%7%5%4%10%3%8%9%6%6%5%3%6%8%6%5%5%4%8%8%4%2%Web content managementMultichannel campaign managementSocial media analyticsMobile content managementWeb analyticsSocial media/online community managementData management and integrationTargeting and personalizationVisitor/Customer databaseData mining or predictive modelingRanked 1 Ranked 2 Ranked 3 Ranked 4 Ranked 5
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 11Figure 9Multichannel Marketing Requires A Focused Organizational ApproachBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011Figure 10Firms Rely Heavily On Services To Support TechnologyBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011“The days when marketers could sit in their own little silo are over. These new touchpoints aren’t just a marketingactivity, they involve IT and many parts of the organization.” (Marketing Executive, Retail )“Because of technology changing so fast, having 1-2 people who are familiar with it is not possible. It’s better to rely onoutside resources.” (Marketing Executive, Manufacturing)"Please describe your firm’s organizational approach to support marketing across multiplechannels.”49%26%15%10%Centralized marketing team, consolidating all technologyand services across channels, products, and corporategroupsDecentralized marketing team, brands, product teams,corporate groups have independent marketing capabilitiesHub and Spoke – certain capabilities are centrallysupported but product teams or corporate groups havesome autonomyMarketing is organized by channel"Please describe your firm’s technology approach to support marketing across multiple channels.”25%24%17%16%14%3%1%We have a hybrid approach of working with technologyinternally and external providersWe have a primary technology platform that supportsmost functionsWe have an agency or service provider that provides amanaged service for technologyWe have built our own technology to support marketingWe use best-of-breed technology for most functionsWe have a hybrid approach of working with third-partysoftware providers and internally developed technologyOther
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 12 Measure the right things, not everything. Fragmentation is a double-edged sword in terms of measurement: Itgenerates massive amounts of data from which to perform measurement, but the sheer volume of potentialmetrics can cause paralysis or misdirect unsuspecting marketers. Fortunately, firms do not need to measure allthe data, they just need to measure the right data, shifting from breadth-based approaches to focus on depth inmeasurement strategy. This entails defining KPIs at multiple levels: first for channel-specific activities todetermine tactical success, and second, a set of global KPIs to support standardized measurement andattribution across channels.“Success is really hard to measure. One of the biggest challenges. The vast majority of our measurement is in terms ofinquiries, leads, pipeline driven and it’s really difficult to measure a social network in that way. How do you measure?Numbers of members in the community? Or getting the CIO of the biggest company in the country rather than 15smaller CIOs? It’s about quality and quantity of people in the community.”(Marketing Director, Consumer PackagedGoods)“It’s being able to attribute all pieces of marketing and sales engagement in one inquiry that leads to opportunity.”(Marketing Manager, High Tech)
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 13KEY RECOMMENDATIONSWithout a doubt, the fragmentation that is central to the Splinternet creates challenges to marketing organizations. Butmore than disruption, fragmentation embodies a once-in-a-generation opportunity for marketers to engage withcustomers in more ways, and more productively, than ever before. To make the most of this opportunity, organizationsmust take a holistic approach to addressing the Splinternet — starting with a cohesive strategy, and then addressingsubsequent technology, organizational, and measurement components. To put a comprehensive approach to harnessingthe benefits of fragmentation into effect, proactive organizations should take the following steps: Experiment then operationalize. Take a structured, experiment-oriented approach to adopting new channels.Fund a formal test program or support low-cost, minimal resource, informal participation to evaluate new channelsand determine whether to proceed with a full-scale rollout and allocate significant budget and resources. Thisapproach permits organizations to explore channels while limiting risk. Don’t go it alone. Based on an inventory of your current capabilities, prioritize initiatives to fill in gaps based onyour short- and long term goals and determine if additional skills or bandwidth from third parties is needed.Leverage agencies, consultancies, and vendor professional services to complement internal core competencieswhere needed. When considering external support, always ensure that potential partners have a perspective onmultichannel marketing that is consistent with that of your organization. Prioritize measurement. To avoid uncertain ROI and to develop performance benchmarks, no activity should beexecuted without a measurement plan in place. In addition to channel specific metrics, utilize business-orientedKPIs across all channels to ensure that tactics are delivering suitable performance within the context of the entiremarketing plan and support the firm’s strategic goals. Make analytics actionable. To take full advantage of the data generated by interacting with customers acrosschannels and devices, take analysis beyond static reporting and translate insights into actionable strategies.Feeding the output of marketing analytics back into content and execution strategy allows firms to proactivelydrive the customer experience with tactics based on user behavior and preferences. Leverage data-driventechniques such as online targeting, triggering, and segmentation to optimize marketing activities. Democratize data insights. Beyond the expansion and fragmentation of channels, the Splinternet also reducesdependence on discrete channels in favor of multichannel marketing. To excel in this environment, marketers needvisibility to the entire engagement funnel. When developing the measurement strategy, consider how analysis willbe distributed to marketing and business stakeholders beyond channel owners and analysts to ensure that theyhave a comprehensive view of customers and prospects. Get ready for mobile now. Social is very popular with consumers and marketers today, but the mobile revolutionis under way. Begin evaluating mobile channels and establishing benchmarks to ensure that your organization isready to expand into mobile once it hits the tipping point with your target customers. Market your presence in emerging channels. The social and mobile ecosystems may be emerging but they arerapidly getting crowded. Simply creating a presence in these channels is no longer enough to ensure adoption.Firms need to market their emerging channel presence to create awareness. Promoting participation in digitalchannels via the website is an obvious tactic but also consider referring to social and mobile capabilities in print,additional interactive media, and via customer-facing staff. Successful firms must also undertake specificpromotional campaigns to notify customers and prospects about online channels and emerging media.
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 14Appendix A: MethodologyIn this study, Forrester conducted interviews with five marketing decision-makers along with an online survey of 210North American and European marketers to evaluate the industry pain points, trends of the Splinternet, the future ofweb analytics, and recommend strategies for optimizing marketing within this rapidly evolving environment. Surveyparticipants included decision-makers in marketing and management-level practitioner and managers and above.Questions provided to the participants asked about the benefits, trends, and opportunities that face marketers todayaround the fragmentation of the internet and best practices on what marketers are doing today to measure and analyzetheir consumers and brands. The study was completed in July 2011.Appendix B: Demographics/DataFigure B1Revenue And Company SizeBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 201128%21%20%18%14%$10 billionor more$2 billion to$4.9 billionLess than$1 billion$1 billion to$1.9 billion$5 billion to$ 9.9 billion"What is the total annual revenueof your company?”"Using your best estimate, how many employeeswork for your company worldwide?”36%36%14%10%3%1,000 to 4,999employees20,000 employees ormore5,000 to 9,999employees10,000 to 19,999employeesLess than 1,000employees
Forrester ConsultingThe Implications Of The Splinternet And Future Of Web AnalyticsPage 15Figure B2RegionBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011Figure B3Job Level And Decision-MarkingBase: 210 North American and European marketersSource: A commissioned study conducted by Forrester Consulting on behalf of Webtrends, July 2011"Where is the primary market you are targeting with your marketing efforts?”United States,50%United Kingdom,25%France, 5%Germany, 20%"Which of the following best describesyour job level at your firm?”51%34%8%7%ManagerDirectorC- level or senior-mostexecutiveVice president, seniorvice president, orexecutive vicepresident"Which of the following most closely describes your role inyour organization’s interactive and multichannelmarketing? "41%24%18%18%I’m directly involved in myorganization’s interactive andmultichannel marketing strategyI’m the key decision-maker inmy organization’s interactiveand multichannel marketingstrategyI manage a team that is directlyinvolved in my organization’sinteractive and multichannelmarketing strategyI’m indirectly, but significantlyinvolved in decisions around myorganization’s interactive andmultichannel marketing strategy