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Published: February 24, 2009

 
 

Digital Darwinism

To compete, agencies need to restructure their organizations to reduce or eliminate costs, a particular challenge when marketers are demanding both more custom-tailored solutions and more innovation. In response to this imperative, nearly two-thirds are upgrading their technology systems, and almost half plan to fundamentally restructure their business. Beyond defensive maneuvering, the most forward-thinking advertising agencies are making their own incursions into new areas of the value chain. Seventy percent are taking on roles traditionally played by media companies, creating branded entertainment and other media assets for marketers. Equally important, many agencies are seeking to expand into other high-value offerings, especially in technology, consulting, and media services. And two-thirds are hopeful that future business models will permit greater monetization, perhaps via licensing fees, of the intellectual property that agencies create for their clients — including new product lines or brands, original digital media, or proprietary software applications developed for a campaign.

Survival of the Fittest
The five behaviors that all players — marketers, agencies, and media companies — must display to perform at a high level in this ecosystem are now evident. They revolve around getting closer to consumers, engendering conversations, mastering the context of marketing messages, making better use of consumer data and insight, and building new and more collaborative relationships across the value chain.

Turn consumers into “prosumers.” Recognizing the power consumers hold, marketers have gone to great lengths to understand and connect with them. Four out of five marketers we surveyed believe consumer insights are more important than they were five years ago and will be even more important in the years ahead. Roughly half of the ad agencies are deepening their commitment to delivering proprietary insights into consumer behavior. And an overwhelming 87 percent of media companies believe that providing unique consumer insights creates competitive advantage, distinguishing their media properties from the glut of other options for advertisers.

One new aspect of this connection is the growth of conversations among consumers about brands. By both prompting and monitoring these dialogues, marketers are identifying and drafting “brand advocates”: people who enthusiastically recommend products and services to others. More than half of our marketer survey participants agreed that advocacy is a more important marketing objective than awareness. Dave Morgan, founder and chairman of Tacoda Inc., the world’s largest advertising network that specializes in targeting consumers based on their behavior (acquired by AOL in 2007), stresses this point. “Marketing will be about leveraging and activating consumer groups,” he says, “turning consumers into prosumers.” Brand evangelists, equipped with the right tools and motivation to extol brands to family, friends, and casual acquaintances, can be core elements in a campaign, and leading marketers like Nike Inc. and Procter & Gamble Company (P&G) are fully focused on converting these consumer advocates.

To “activate” a consumer, you must understand the consumer. To understand a consumer, you must listen and observe. When you listen and observe, you drive insights. Traditional marketers have extensive experience in observing consumers in conventional settings. P&G understands, for example, how consumers interact with its products at the retail shelf. Johnson & Johnson has the same read on patients in the doctor’s office. But marketers are still struggling to identify the equivalent “moment of truth” on the Internet. Does a parent searching for diaper rash remedies start with a Google search or a visit to a discussion board, or instead go right to www.babycenter.com or www.pampers.com? Companies throughout the marketing and media eco­system continue to scan the horizon for the insight that will allow them to better target, cultivate, anticipate, and cater to the consumer.

Build bilateral brand experiences. Brands today must go beyond simply broadcasting their message; they must beckon the consumer into a conversation. When consumers use digital media to search, shop, blog, socialize, or seek entertainment, their actions create opportunities for marketers not only to gain insight but also to gather ideas to improve their brands, marketing messages, and media mix choices.

 
 
 
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Resources

  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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