Reinventing the Marketing function

Of all the corporate functions, marketing is probably the one that has been the most radically transformed by digital technologies. All of them have, of course, been changed: some, such as IT – previously often seen as a “support function” – have risen to new prominence, and now plays a driving role in digital transformation, as technology lies at its very heart. Others, such as HR and Finance, have been empowered by new tools, even if their vocation remains unchanged. Marketing, however, has seen a drastic change in its landscape over the last ten years.

At the same time, the way marketing departments are organized has hardly changed at all. It remains heavily inspired by the principles introduced by Procter & Gamble in 1931. As often as not, a small “digital” cell has been grafted onto the Media department or, for smaller groups, attached directly to the CMO (Chief Marketing Officer), while structures centered on brands or product lines continue to predominate.

But recent changes of paradigm in the Marketing function are bringing such models into question. Many CMOs are now having to rethink the function’s role, the skills it requires, and the way it is organized, both internally and as part of a wider ecosystem of partnerships.

Paradigm shifts in consumer relations

Consider, to begin with, some of the major digital-driven changes that CMOs are now facing.

Firstly, the proliferation of channels and messages. The consumer is constantly bombarded with demands for attention, a phenomenon that is hard to measure (between 5,000 messages a day according to US market research firm Yankelovich; 15,000 according to KR Media) but nonetheless very real, as we all know from experience. The corollary is that the competition for a few precious seconds of the consumer’s attention is fierce.

Secondly, the reinforced power and scope of action of consumers, who are now center field – for better or for worse. For better: they can help create products (for example, Lego Ideas); they can act as an ad-hoc “digital labor force” (for example, tagging photos or performing geolocation); thanks to network effects, they can multiply the value of a service; and through positive word-of-mouth, they can become brand ambassadors. For worse: by generating “bad buzz” they can destroy, in a few hours, the result of years of marketing investments (as a number of recent high-profile cases have shown).

Then there is personalization. For a long time, this was an unattainable promise: what we called “personalization” was basically just finer segmentation. But the tools available today mean that the marketers’ ideal of the “segment of one” can now be made reality. Not only can we send messages tailored to fit the customer’s attributes (gender, age, centers of interest, etc.), we can even record their reactions (reading the e-mail, clicking the link, visiting a certain page, performing a certain action, etc.). From there, we can customize the approach to optimize its impact on a particular customer by adjusting the frequency of sending, the content, offers, etc. Artificial intelligence – with its capacity for “machine learning” and ”deep learning” – will accelerate this trend still further.

Finally, we need to recognize that the distinction between the “real world” and the digital universe is now almost meaningless – at least from the customer viewpoint. The consumer decision journey has become more complex and, whether or not the final transaction is made online, digital platforms now exercise considerable influence over the consumer. As part of the purchasing cycle, consumers receive and send messages in both real and digital worlds: they will hear about a product for the first time on an influencer’s blog, find out about it and assess its look and feel in a store, before comparing prices and ordering it on line, picking it up from a store, and recommending it to their friends on a social network… Three years ago, McKinsey conducted a study – the iConsumer survey – of consumers in the digital age. It showed that 45% of French consumers checked the availability of products online before buying them at a store, 35% bought online and collected their purchases from the store, 30% contacted After-Sales via social media, and so on. “Real life” and “second life” have indeed begun to merge, and the movement will pick up speed as mixed reality technologies and the Internet of Things start to kick in.

A new profession…

These developments are bringing about radical change in the content of the CMO’s role, with a stronger technological component. It is no longer only about analyzing a “market” and designing the right marketing mix with which to target it. The CMO has a new, broader vocation: generating growth for the company by optimizing the “3Ds”: data, decision-making, and distribution of content.

The problem with growth – the primary objective of the CMO in most cases, implicitly coupled with an objective of profitability – is that it has become so very hard to attain in the majority of mature markets. Innovation in products and services is one key to achieving it. But beyond that, the only way, in these markets, is through an ever-finer understanding of customer segmentation – an understanding that is constantly updated and perfected in real time by means of the “3Ds”.

For data, first of all, the challenge is to go beyond traditional CRM tools: relational databases that only exploit a limited set of customer data, often separated into silos between the company’s different divisions or functions. The aim is to leverage “CDPs”, customer data platforms, which are far more flexible, capable of collecting activity traces as well as data, both structured and unstructured, and above all, open to the outside. This means that third-party or public data can also be used. Here, the CMO’s mission is to identify and source the most useful customer data.

For decision-making, the aim is to increase the ROI of marketing spend by approaching things, as we said, no longer segment by segment, but individual by individual. By leveraging the detailed profile of each customer, we can decide what message to send them or which product to offer them at each step in their decision journey. Advanced analytics not only identifies correlations (“the customer looked at this product, so is likely to be interested in this other product”), it also predicts consumer behavior and tests out different approaches to identify the most effective one. Here, the role of the CMO is to optimize the quality of decision-making, drawing on analytical tools to model the customer journey and define the rules.

As for the distribution of content, finally, this involves “programmatic platforms” which help decide, in real time, which advertising spaces should be bought and which messages will be sent to the web user. This is, therefore, a form of automation, but one that needs to be constantly calibrated – and that is where the CMO steps in; as well, of course, as in the initial choice of platform.

… requiring new skills and a new operating model

To fulfill their new role, CMOs will – in many cases – need to renew their skill set, and that of their teams.

First of all, they will have to be “literate” in a large number of technical fields (not necessarily specialists as such, but certainly capable of conversing with specialists): information systems, statistics, data, artificial intelligence and machine learning, design and UX, online media platforms, etc. This culture will be a pre-requisite for effective dialogue with the IT department and with external technical service providers.

They will also need to master agile methods. The time when marketing was exclusively a long-term affair – with weeks for budget rounds, months for ad campaigns, and years for product cycles – is behind us. Strategic marketing has not gone away, but it is now supplemented by “agile” marketing. We have entered an age of iterative marketing, where ideas must be able to be tested out within weeks, if not days. A number of advertisers are now seeking to apply agile methods to their operating models. They have set up “war rooms” where small multi-disciplinary teams (data analysts, developers, media specialists, product managers) experiment with approaches and roll them out rapidly.

… and a new partner ecosystem

CMOs used to rely chiefly on three types of partner: a creative agency, a media agency, and in some cases a “lead” agency tasked with selecting providers to execute specific marketing operations such as product launch events and “street marketing”. Though they often opt to keep the same partners, CMOs are increasingly calibrating their use of these agencies in terms of impact – once again drawing on technology and data, which are constantly getting better at measuring the precise value created by each marketing operation. The choice of one channel rather than another is determined by criteria of impact and effectiveness.

CMOs may well also need to call upon other sources of cutting-edge expertise to help them manage technological complexity and the rapid pace of innovation. The fastest-growing players in the world of marketing technologies and advertising are those that combine creativity, data and technology. This new ecosystem may simply be too much for any CMO to handle; they will probably need to bring in outside support to master its various dimensions.

Finally, CMOs more than ever need advice on strategic marketing – but this advice must be “holistic”, grounded in a very detailed analytical understanding of the end customer. In this case, the CMO’s partners will increasingly position themselves as “growth providers”, with an appropriate form of remuneration.

***

Ultimately, brands exist today through a continuous uninterrupted customer experience, both “connected” and “disconnected”, online and off. Managing this multitude of touch points while leveraging data to sustain the customer relationship over the long haul is – in this “connected” economy – the new mission of the Chief Marketing Officer.