In 2007, Hewlett-Packard Company (HP) sponsored an online contest to design the skin of HP’s new special-edition entertainment laptop. The company promoted the contest selectively in 13 countries via the television, Web, and mobile channels of its media partner, MTV Networks. But word spread virally, and more than 8,500 entries poured in from 112 countries in just over a month. The contest site got more than 5 million hits, prompting HP to re-forecast sales to five times its original estimate. And it was “all because we opened the doors and allowed our customers to design our products,” says Mike Mendenhall, HP’s chief marketing officer.
As someone who has dedicated 50 percent of his company’s marketing budget to digital media — compared with an average among national advertisers of 5 to 10 percent — Mendenhall is keenly aware that digital platforms and capabilities are transforming the ways in which consumers experience advertising. What’s more, they are dramatically reshaping the relationships among marketers, advertising agencies, and media companies.
This shift, which has become increasingly apparent in the last few years, has been confirmed by “Marketing & Media Ecosystem 2010,” a landmark cross-industry study that Booz & Company recently completed in partnership with the Association of National Advertisers (ANA), the Interactive Advertising Bureau (IAB), and the American Association of Advertising Agencies (AAAA). An ecosystem is an appropriate metaphor for today’s marketing environment. It is a dynamic, complex, and interconnected community in which marketers, advertising agencies, and media companies depend on one another, to a certain extent, to survive and thrive. But it is also a brutal, competitive arena, where a kind of “digital Darwinism,” or survival of the fittest, holds sway, rapidly distinguishing winners from losers. Companies that possess certain preferred traits in their organizational DNA or that have superior skills of self-adaptation are positioned to flourish in this ecosystem. Those without either face almost certain extinction.
The marketing and media ecosystem has arrived at an evolutionary threshold. Old structures and ways of working persist but are fundamentally challenged by newer, more dynamic, more innovative alternatives. Numerous developments have brought the industry to this transition point. Consumers have more control and choice. Their media usage has fragmented. Many more advertising platforms exist. And marketers are insisting on greater precision in targeting and accounting for their ad spend.
The recent economic turmoil only accelerates this evolutionary transition. Companies across the ecosystem have to acquire or develop three dominant traits to survive: relevance, interactivity, and accountability.
Mammals among Dinosaurs
HP’s Mendenhall sums up the nature of this new environment best. At the ANA’s annual conference in October 2008, he declared, “Web 2.0, which enables multiparty, multimedia, simultaneous, digital conversations, has completely upended the traditional relationship between companies and consumers. The power of a single individual to shape perceptions on a massive scale is a dramatic and fundamental shift. It is no longer just about where businesses put their ad spend. A comprehensive digital media strategy across all operations of a company is required. As marketers, we need to ask ourselves, ‘How can we drive efficiency and stakeholder engagement in this interactive environment…while still managing the reputational risk to our brands?’”
HP has navigated this challenging environment well, if advertising awards and sales results are any measure. Its successful TV and Web campaign, developed with ad agency Goodby, Silverstein & Partners, features such cultural icons as self-styled CEO of hip-hop Jay-Z, tennis champion Serena Williams, and Olympic snowboarder Shaun White showing off the contents of their personal computers. With its launch, HP stopped engaging Dell Inc. in a price war it could never win and changed the terms of the PC marketing debate: Your personal computer is not a bargain, it’s your autobiography, and it matters that it’s an HP. Within months of the multi-platform campaign’s launch in 2006, the company officially passed Dell in global sales and market share, and it has remained in the number one position.