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 / Spring 2009 / Issue 54(originally published by Booz & Company)


Digital Darwinism

To maintain momentum and tap into the prodigious energy and input of its 18- to 35-year-old target consumers, HP has since worked closely with MTV Networks on several marketing and brand entertainment initiatives. But HP’s experimentation is not lim­ited to its marketing. Gary Elliott, HP’s vice president of corporate and brand marketing, said during a panel discussion at the 2008 ANA conference that HP is also trying out new models for its relationships with agencies and media partners, including pilots that bypass agencies and work directly with media companies.

Mendenhall noted that digital formats and platforms are redefining not only HP’s relationships with its external marketing partners, but also its internal organization and capabilities. HP is building its own networks and forums such as IdeaLab, a Web site that offers visitors demos, downloads, descriptions, and videos of HP’s emerging innovations, so consumers can test-drive them and help the company refine them. “As marketers, we have an opportunity and a responsibility to drive change within our companies, because all public touch points — increasingly digital — now impact our brand and our revenue,” Mendenhall says. “Brands aren’t defined by campaigns anymore, but by the consumer ecosystems we nurture to support them.”

As digital platforms and capabilities redefine what it takes to succeed in advertising, certain characteristics, consequences, and casualties are already apparent. The impact and potential of those platforms and capabilities are now evident in every aspect of the marketing process and brand experience, redefining the very nature of com­mercial messages and audiences.

But it is not necessarily clear what marketers, agencies, and media companies need to do about it. Hence the “Marketing & Media Ecosystem 2010” study, which has yielded valuable insights on the gaps and gold mines in today’s landscape. More than 450 professionals in the relevant fields responded to the survey’s questions about the trends that would reshape the industry by 2010; more than 75 senior executives, including CMOs and CEOs from many leading marketers, agencies, and media companies, granted in-depth interviews. Taken as a whole, their observations bring into focus the priorities, capabilities, and partnerships that will transform the value chain of the three parties.

Adaptation and Collaboration
The rise of digital advertising has triggered many of the mutations we are now witnessing. Already, the shift in advertising dollars to online media is pronounced. Whereas newspapers took 127 years to reach US$20 billion in ad revenues in the U.S., and cable television took 25 years, online media have garnered that amount in just 13 years. In fact, at roughly $21 billion in 2007, online advertising spending now exceeds spending on outdoor media and the Yellow Pages — and it is ap­proaching the level spent on radio and cable television.

It is clear that most marketers have moved beyond their early view of online and other digital media as “experimental” when allocating ad dollars. In fact, 88 percent of marketers expect to spend more on digital ads, and 82 percent believe insights into consumers’ digital behavior and related targeting tools will only become more important.

Marketers are not alone in recognizing this digital tidal wave. Nearly three-quarters of media company respondents said they expect their existing advertisers to shift more money online. And 71 percent of agency re­spondents said they expect online ad spending to experience significant share growth in the next two to three years. Many, in fact, acknowledged that digital ad platforms better address marketers’ desire for accountability, and a majority said they believe traditional media are no longer the most effective way to build brand equity.

Marketers understand the urgent need to adapt quickly; roughly 90 percent of them recognize that the speed of marketing execution itself has accelerated because of digital advances. Their focus is increasingly on creating campaigns that are integrated and that include digital media — which, in turn, requires more active collaboration across multiple agencies and media companies. These circumstances are compelling agencies to change, too. They are being asked to partner with other service providers as never before. And they themselves are initiating new partnerships to access deeper data and analytic capabilities and expand into high-growth platforms such as mobile and social networking.

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  1. Booz & Company, “Marketing & Media Ecosystem 2010: ANA Annual Meeting CMO Roundtable (PDF),” October 2008: Presentation detailing the survey data.
  2. Matthew Egol and Christopher Vollmer, “Major Media in the Shopping Aisle,” s+b, Winter 2008: Overview of new marketing initiatives in retail locations showing how one corner of the ecosystem is being transformed.
  3. Leslie H. Moeller and Edward C. Landry, with Theodore Kinni, The Four Pillars of Profit-Driven Marketing: How to Maximize Creativity, Accountability, and ROI (McGraw-Hill, 2009): Detailed guide to practices and organizational processes needed to implement marketing metrics and increase accountability for marketing spend.
  4. Christopher Vollmer, with Geoffrey Precourt, Always On: Advertising, Marketing, and Media in an Era of Consumer Control (McGraw-Hill, 2008): How the digital age has reshaped all marketing imperatives and the industry as well.
  5. HP advertising campaign (video)
  6. Nike Web site: Online community for runners that gives Nike key insights into that target market.
  7. For more articles on marketing and sales, sign up for s+b’s RSS feed.
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