THE DIGITAL TRANSFORMATION OF MARKETING - … · execution, the ADMA Think Tank participants identified the three Ps of digital marketing transformation; (1) Positioning ... We got

THE DIGITAL TRANSFORMATION OF MARKETING

TABLE OF CONTENTS

1. Introduction......................................................................3

2. Digital Transformation......................................................5

3. Customer Experience.......................................................9

4. Budgeting........................................................................11

5. Skills and Training............................................................13

6. Marketing Technology.....................................................15

7. Conclusion.......................................................................19

8. Acknowledgements.........................................................20

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And with those few words Wired and AT&T ushered in the world’s first display banner advertisement on October 27, 1994.

In a little over two decades, not only has digital advertising emerged as the killer category for marketing, but the very nature of what it means to market and be a marketer has undergone a significant upheaval.

There is little to suggest that this change will do anything but continue, most likely at an accelerated pace.

The contemporary CEO must navigate a complex ecosystem of demand side and supply side advertising systems, invest in complex analytics, and develop skills in product development and customer advocacy.

They must forge a path to the C-Suite and probably the board in order to ensure they can drive through not only budget reallocations but also the wholesale cultural change needed to re-orientate their organisations around the whims of the modern consumer.

There is a long way to go.

Recent research by ADMA and Oracle Marketing Cloud, published in our recent CMO of Tomorrow Report, reveals that budget, management buy-in and a scarcity of understanding of digital capabilities remain key impediments to further change.

1. INTRODUCTION

3 THE DIGITAL TRANSFORMATION OF MARKETING

INTRODUCTION“Have you ever clicked your mouse right here? … You will.”

1. INTRODUCTION

• What does digital transformation mean for marketers?

• How have marketers had to rethink budgets?

• What does it mean to put customer

experience at the heart of the marketing conversation?

• On the marketing technology front what are the trends in attribution and programmatic?

Among the themes explored;

These and other issues were covered in detail during a series of roundtable (this is how ADMA uses roundtable) and Think Tank discussions held with ADMA members during October.

This whitepaper explores several key digital themes investigated by the marketers who participated in the sessions.


Despite the diversity in the group across industry, organisation size and even between B2B and B2C, many of the issues and solutions were remarkably consistent.

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Previously the big reengineering projects tended to the inward facing and focused on efficiencies (these are also easier to justify under traditional business model planning).

But the web allowed marketing to turn its focus outwards.

The earliest websites were simple content sites. As soon as digital advertising appeared – first as display ads and later more successfully as search, marketing found the reason it needed to jump on board.

As a result, during the first 20 years of the commercial internet marketing largely co-opted the digital conversation inside many companies. Boards might be interested in cyber security risk management, but other than that until very recently if they cared about digital and marketing at all it was around the very narrow field of brand risk on social media.

It is no coincidence that in 2013, after Gartner came out with its infamous prediction that marketers would spend more on tech than CIOs within a few years (it says this has now happened), the push was on for the CMO to assume greater control of technology.

The more extreme versions of this argument saw a push in some quarters for the CIO to report to the CMO. Luckily that idea, steeped in ignorance about the sheer scale and mechanics of internal IT infrastructure, never took hold.

2. DIGITAL TRANSFORMATION

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DIGITAL TRANSFORMATIONMarketing was one of the last big organisational departments

to be reengineered using technology.

2THE DIGITAL TRANSFORMATION OF MARKETING

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More commonly however marketing departments started building their own technical expertise around cloud based software-as-service packages and other marketing technology opportunities.

But genuine instances of marketers assuming the digital leadership position are rare. Instead we saw either the emergence of chief digital officers, or the re-emergence of CIOs as digital players.

In truth, the CEO became the real owner of digital. Management consultants like McKinsey & Company, and Bain argued that the transformative necessity of digital required aggressive top down leadership.

PRACTICALITIES

But moving the conversation from the abstract idea of ownership to the practicalities of execution, the ADMA Think Tank participants identified the three Ps of digital marketing transformation;

(1) Positioning – how do you sell in the change? Marketers who have been through the exercise say the way you discuss the digital transformation conversation internally is important. Many preferred to describe it as innovation rather than transformation in some cases because this reflects the ongoing nature of the world.

There is a danger that people say: “Oh we are transformed now”


Even in a digital environment there is a high degree of uncertainty. Medium term plans are necessary and need to be articulated, and these can provide confidence as employees move through the process.

It is also important however to recognise there are many moving parts. Those with experience say it is important to focus on low hanging fruit. And, on a cautionary note one of the big weaknesses identified by the Think Tank participants is that companies do not think enough about the skills and capabilities required.

You don’t want to scare people but you do want them to be aware of the impact on everybody`s jobs.

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“There needs to be a prioritisation in the process – so we have to choose

the priorities that make the difference”

“We have run workshops for the majority

of our partners and we will soon roll them

out for all of them. We need the partners

to be comfortable and to recognise that

we know what we are doing.”

- Global Consulting Partnership

(2) Prioritising – Knowing where to start. This is one of the biggest problems for many companies, especially large incumbents assailed on all sides, and who often have dozens of legacy systems with which to contend. You can’t afford to do everything you want to do with digital transformation so it is better instead to just deal with those experiences that will actually make a difference.

The advice sounds like the kind of wisdom project managers have always been famous for; start with small achievable goals and aggregate your successes.

Ask yourself – what is the simplest, easiest use-case to go after before you go down this giant transformation journey?

(3) Politics - Getting buy-in. Getting buy-in from fellow executives is crucial, but it is still an area where marketers struggle according to the CMO of Tomorrow study. CEO engagement is the gold standard say marketers who understand that top down support is crucial for success (and for knocking a few heads together).

Of course the scale of the organisation also informs the challenge as these observations from companies at very different ends of the spectrum attest;

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The idea of digital transformation can confuse people and scare them. The reality however is that a well run program is about employee empowerment.

This means having the confidence to push decision making to the boundary of the corporation and equipping staff to become decision makers. And they need to be equipped both with tools and with training.

“We are a small enough organisation

where it can just happen organically.

Rather than call it digital transformation

which nobody on the digital team wants

to do, we position it as just an innovation

program that the whole organisation is

going through. Due to our scale, we don’t

feel we need a change management

program. It just happened organically

once our CEO bought in to it.”

- eCommerce Company

That may seem to be a very unfair and unachievable benchmark but it is one that is very familiar to marketers.

And there is a simple reason – the data clearly indicates that leaders in customer experience deliver stronger financial results.

Research released earlier this year by Sitecore and Avanade found that for every dollar invested in improving the customer experience, businesses generated three dollars in return. In addition, they said, companies could expect to see an 11 percent increase in revenue in the next 12 months.

According to the authors of that study, “A full two-thirds of respondents said that competition made their organisation realise the need to prioritise customer experience, while 52 percent of global respondents and 60 percent of Australian respondents reported customer feedback as the driver.”

Meanwhile a separate study, this time by the Australian Marketing Institute (AMI) and Vision Critical revealed 89 percent of organisations intend to compete primarily on customer experience in 2016.

It is little wonder then that transformation programs are often couched in the need to recalibrate the organisation’s operations to put the customer experience at the heart of its behaviour.

3. CUSTOMER EXPERIENCE

CUSTOMER EXPERIENCECustomers take their very best experience in any context

and apply it to every context.


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Almost every organisation says it puts its customers first and yet over time sometimes the needs of the customer become lost as executives grapple with day to day concerns.

KPIs become misaligned and the interests of departments or even individual managers can start to skew the agenda.

Programs like Design Lead Thinking which seek to strip a product or service back to basics and rebuild it from the ground up are becoming increasingly popular.

Traditional management consulting companies like McKinsey have become acquirers of design specialists while some of the top tier consulting companies are investing heavily in capabilities by propagating the approach across the organisation.

3. CUSTOMER EXPERIENCE

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“We have a lot of old school people who think that if they create the perfect physical experience then digital doesn’t really matter.”


There is one big cautionary note however. Too often customer experience is considered only in the context of digital channels. Marketers were adamant that genuine world class experiences needed to incorporate all the touch points between the brand and the consumer.

Others faced the opposite problem;

Marketers also warned there is a requirement to educate executives on the need for on-going investments. Management often accepts the need to create great digital experiences but struggles with the reality that you have to constantly evolve to stay ahead of the customer expectation curve.

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Partly it’s a matter of competing priorities but it’s also about the ability of the CMO to understand and describe ROI.

However, the good news is that companies are starting to build innovative new approaches.Thankfully the days of boiling the ocean for management on a 100-page business plan are fast receding. The reality in the agile world of digital marketing is that such acceleration in approvals is essential.

Take the example of the ANZ Bank. Outgoing COO, Alistair Currie, told Which-50.com earlier this year that the bank is getting much better at breaking down larger projects into smaller consumable chunks.

Just as importantly, the bank believes, it is getting better at picking winners and losers early.There are still problems of course. Some marketers point to innovation fatigue among senior managers.

4. BUDGETING

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BUDGETINGAccess to budget is the single biggest impediment to accelerating the digital

transformation of marketing, according to many CMOs and digital marketers.

“Budget approval remains a big issue. We got agreement for $3.3 million in funding and the bidding process was much lighter. It was

much easier and only needed sign off by the retail director. Once you get sign-off, you can move forward.”


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4. BUDGETING

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ARE WE THERE YET?

There is an initial burst of excitement which locks in interest from the CEO and other executives but that can fade over time.

It is not even about the amounts of money being spent, say CMOs.

A company might happily sign off on a million-dollar television advertising budget without scrutiny but respond suspiciously to a request for a $100,000 dollars for a mobile app development.

And marketers say, as they assume more control over customer experience, they need to start making choices between investment in physical customer experiences such as buying new carpet in a hotel lobby or a digital experience such as a website refresh.

Marketers are used to letting other people see their work in a very physical way through the big advertising campaigns. When the money is spent on software in the cloud the results are not as visible.

“Over the last three years we have moved from 90 percent traditional to 75 percent digital - people say `where’s my advertisement?`

– It’s out there but they can’t see it.”


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As marketing technology becomes more ubiquitous; advertising becomes more programmatic; and analytics becomes more central to every decision, finding staff with the right skills becomes critical. Marketers say a flexible approach to learning and development is critical.

But there are major concerns.

Universities are turning out students whose skills are better suited to an old way of marketing. And tight labour markets make finding and keeping the best new talent problematic.

Marketers struggle with the problem of keeping everybody’s skills up to date and they argue you will never be on top of it.

5. SKILLS AND TRAINING

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SKILLS AND TRAININGOne area of investment that seems to be lagging based on the input from

Think Tank participants is in the area of skills and capabilities.

“We have invested in a marketing cloud but sometimes I feel like

there is a Ferrari sitting in the garage and I might go out there and

polish it once in a while but there is nobody to drive it.”


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5. SKILLS AND TRAINING

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Among the issues they identified;

• People need to re-skill much more quickly.

• Employees leave when they are not challenged so you have to keep them engaged.

• Millennials change jobs so frequently that skills often just walk out the door, which makes the company skeptical about training.

• Often the best approach is to find the best person for the role and then commit to training them up.

• New employees often come into an organisation knowing more than the people in the department which is the reverse of what happened it the past.

“ We are going through a

big digital transformation

internally which impacts the

way we work with our IT

department and the internal

tools we use. There is a

huge education piece to go

with this and a relocation

into a new purpose built

environment. But we

need to get the level of

understanding and comfort

up about the issues.

It’s a huge shift.”

The bottom line, however, is despite frustration over churn and the concern of HR and finance departments that employees will take their newly acquired skills and leave, companies need to continue to spend money on both internal and external training for their people.


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CONTENT MANAGEMENT.

Content may be king but it is a cruel and demanding ruler. Marketers are struggling with the sheer scale of the content task they confront, how they can best segment and personalise content for consumers, how they manage and distribute it and how they use the analytics they garner from their content programs to inform future activity.

And the marketers say at a basic level one of the biggest problems they face is simply knowing where all that content is in their organisation.

A strong governance framework is important if brands want to quickly take their content and get it out to their web channels and other third party systems.

6. MARKETING TECHNOLOGY

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MARKETING TECHNOLOGYFour issues dominated the ADMA Think Tank

discussions on marketing technology;


CONTENTMANAGEMENT

MARKETING & ADVERTISING INTEGRATION

PROGRAMMATIC ADVERTISING

ATTRIBUTION

“All kinds of problems from conceptualising a piece of content to

getting it out into a platform can take weeks and sometimes months.”

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MARKETING AND ADVERTISING INTEGRATION.

Our recent CMO of Tomorrow study revealed that marketing executives are still grappling with integrating their marketing technology and advertising technology platforms.

Historically these two related technologies evolved in parallel with little or no sense they were both trying to achieve the same outcomes.

In the simplest terms marketing technology tends to be used on owned media and advertising technology, as the name suggests, on paid media. Brands typically had more control over marketing technology and were more reliant on their agencies for advertising technology (although this is starting to change).

And to make matters more complicated the pricing models tend to be different. Marketing technology will often come with monthly annuity fees on the cloud whereas as advertising technology tends to lend itself to ticket clipping, although again the rules are not absolute as anyone with an enterprise email package knows.


The vendors themselves, particularly marketing cloud vendors like Oracle, Adobe and Salesforce have been acquiring ad tech and building it into their platforms in recent years, while traditional ad tech companies such as AdRoll have now broadened into marketing technology fields like email.

The reason is simple. Brands get a better response when they coordinate between marketing and advertising technology-based campaigns.

Furthermore, analysts like Gartner say that marketers must consider advertising technologies as integral to, rather than segregated from, their main operational technologies. (Indeed the analysts have now combined their marketing and advertising hype cycle report into a single view).

Participants at the Think Tank confirmed that for now at least the distinction remains.

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“There is a big difference between CRM or customer data marketing or

prospecting, or anonymous browser based behavioural targeting. And

we the banks are extremely cautious about any personally identifiable

information (pii data).”

While you may have a marketing campaign that is content driven, because of internal silos nobody thinks to link that together with their online advertising at a campaign level because it runs through a different silo. And yet when they do the evidence from companies like Salesforce is that brands can get 20 to 25 percent higher returns.

The issue more advanced companies often run up against when they try to combine the two is ownership of data and – especially for companies like banks – what they can do with that data.

A connected experience between advertising and marketing is a challenge for many because structurally the data, the content and the people are separate and in many instances are located at other companies altogether.

Marketers talk about one single digital ecosystem but it’s a long road. There is an aspiration to connect those two worlds and to unify the experience. The need for more control and greater visibility is leading more marketers to look at bringing more of their digital programs back in house, wresting control from their agencies.

PROGRAMMATIC

Australian brands were very early and very fast adopters of programmatic advertising. But in the rush towards adoption, the quickest and most convenient path to marketing was often through a media agency.

Over time the agencies started capturing an increasingly large share of their profits from their trading desks and a lack of transparency meant that brands became uncomfortable with the situation.

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“It was cost and data that drove the decision. Even with social we couldn’t see our own results and the costs were too high. Media agencies get a bad rap for digital costs but once you realise how much the direct partners charge them you understand why they have to clip the ticket.

And often they are not clipping it as much as you might think.”

More to the point the need for visibility and control over data has seen a push to bring programmatic in house in many companies during the last year.

Bringing programmatic in house is not for everybody. The range of skills required can rarely be found in a single employee. That makes staff an expensive investment. Brands then need to run campaigns at sufficient scale to justify the ROI.

ATTRIBUTION

The final area, and one of the most vexed in marketing and adtech is attribution. How do you know what worked and to what extent it influenced a sale? While there is plenty of discussion about new attribution models and the promise of machine learning and AI, here is the reality of what we found when we asked marketers a very simple question…

“How many of you still rely primarily on last click attribution?”

Every hand in the room went up. Every. Single. Hand.

Beyond simple models like first and last click, attribution can become complex and expensive. The storage alone can run into huge numbers for a big campaign, and then there is the cost of finding the data scientists and analysts to make sense of the outcome.

The prevailing view is that a market opportunity exists somewhere between the kind of free attribution modelling a company like Google provides (which coincidentally always seems to suggest the best answer is ‘Google’) and the giant corporate programs that can run as high as $50,000 a month. And there is a final problem.

Even when the investments are made in attribution, marketers and their peers in the business need to be able and willing to act on the insights gathered from the program.

That, according to marketers, is not always so.

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7. CONCLUSION

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And like markets such as the UK, it will not belong before it represents the majority of the advertising spend.

At the same time there is a growing parallel investment in marketing technology to allow the brands to take more control over their own destiny.

At a platform level these two technologies are being drawn together in a manner which suggests there is more disruption ahead for the contemporary CMO.

Marketing leaders will need to transform their departments to reflect the rapid changes in the market while at the same time transforming themselves.

CMOs are now increasingly expected to act as the customer voice in their companies not only fighting for that voice to be heard but actively engaging at a design level for product and service evolution.

Budget remains the biggest impediment to faster development of digital marketing platforms and programs. The most successful marketers are likely to be those who can win such battles internally, probably as peers in the C-Suite, and eventually as contributors at board level.

It won’t get any easier. Technology solutions are still emerging rapidly even as marketers try and make sense of current solutions. Attribution remains immature to a large extent and many brands are only now getting control back (from the agencies) of the trading desks that place their paid media.

Skills and capabilities are the other significant point of tension. As platforms proliferate, brands will need to continue to invest heavily in staff capabilities and talent retention will remain difficult while those skills remain in high demand.

CONCLUSIONIn Australia digital accounts for close to 40 percent

of the total advertising spend.


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8. ACKNOWLEDGEMENTS

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The Association for Data-driven Marketing and Advertising (ADMA) is the principal industry body for data-driven marketing and advertising. ADMA is also the ultimate authority and go-to resource for effective and creative data-driven marketing across all channels and platforms, providing insight, ideas and innovation for today’s marketing industry. The largest marketing and advertising association in Australia, ADMA has over 600 corporate members including major financial institutions, telecommunications companies, energy providers, leading media companies, travel service companies, airlines, major charities, statutory corporations, educational institutions and specialist suppliers to the industry including advertising agencies, software and internet companies. As marketers, we’ve faced unprecedented change over the past few years. New channels, new technology, new consumer models have accelerated. It’s moving faster than the speed of life. ADMA exists to help members navigate the rough terrain of this change.

We support our members with advocacy to Government and regulators, we provide 24/7 opportunities for education, host events and awards, and help marketers understand and apply codes of practice to help them comply.

Further, we are a rich source of online and offline tools and resources to help marketers be better marketers now and into the future.


ACKNOWLEDGEMENTS

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8. ACKNOWLEDGEMENTS


Chris Maloney Head of eCommerce Moet Hennessey

Chris Tew EVP Asia Pacific 3radical

Chris GrossHead of Social Media & Digital Marketing

Fox Sports

David Hirsch Head of Financial Services Bupa

Gavin Merriman Global Head of Digital Nude By Nature

Darren WatkinsChannels & Partnerships

DirectorAcquia

Jules Hall CEO The Hallway

Bonnie Thorn Head of Digital Metlife

Anthony Mansour Mobile Expert Anthony Mansour Consulting

Brittany WongDirector, Marketing -

Asia Pacific Vision Critical

Thanks to the members of the ADMA digital Think Tank and Andrew Birmingham, Which-50 Media.

8. ACKNOWLEDGEMENTS


Simon Marks Head of Digital Marketing Westpac

Sarah Peacock National Digital Marketing

LeaderPwC

Willem PalingHead of Online

Performance & Analytics Foxtel

Tim Lovitt Head of Digital PWC

Tim Bostrgidge Group Project Director Cebit

Rebecca NewtonGroup Head of Digital,

Marketing Operations & Comms

Crown Resorts

Paul Bennett Marketing Director MetLife

Nicole McInness Marketing Director Australia e-Harmony

Narelle Riley Head of Marketing Trafalgar Tours

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THE DIGITAL TRANSFORMATION OF MARKETING - … · execution, the ADMA Think Tank participants identified the three Ps of digital marketing transformation; (1) Positioning ... We got