The new ecosystem for marketers

Geoffrey Precourt

"The marketing and media system is at an inflection point," was the jarring warning that introduced an element of electricity into the last session of the 90th annual conference of the Association of National Advertisers (ANA) in Orlando, FL.

Christopher Vollmer Booz & Co. vp/partner and head of that company's U.S. media and entertainment practice, cited five factors that have combined to create a pressing need for change for marketers, media companies, and advertisers:

  • Massive audience fragmentation.
  • Blurred boundaries between media companies, agencies, and marketers.
  • A sharper focus on measurement of business impact - and, in turn, for a realistic understanding on the return on marketing investments.
  • An "arms race" for consumer insight and big ideas.
  • More choices for marketers that lead to more marketing models.

Before a Sunday-lunch assembly, Vollmer reviewed the final results of a "Marketing & Media Ecosystem 2010" (MME) study sponsored by the ANA, the American Association of Advertising Agencies, the Interactive Advertising Bureau (IAB), and consultancy Booz & Co.

"By the year 2010, marketers will have to speed up - to turn on and turn off more quickly - as they learn to process more data and more feedback from their consumers," said Vollmer. Media companies and agencies can expect a shift of dollars to online media as such vehicles continue to provide increased insights into consumer behavior.

"Our marketing/media ecosystem is a complex," Vollmer continued. "For it to function efficiently, all the major elements need to be operating efficiently. And that's going to mean a lot of change."

Citing an "arms race to see who can come up with the biggest ideas," the Booz & Co. partner emphasized, "there has been more advertising innovation in the last 10 years than there was in the previous 50. And it's going to take an enormous amount of insight and energy to keep up with the information."

The "arms race," he said, represents an on-going competition between marketers, media, and advertising agencies to stay ahead of - if not lead - the information curve. "There's been an enormous amount of audience fragmentation in recent years, and with it, movement among very elusive consumers." To understand that movement," he continued, "there needs to be a much greater focus on measurement and impact."

Such concentration, Vollmer continued, will mandate more precision in the investment of media dollars and more reliable standards on how the returns on those dollars are measured.

The change agent that will have the most immediate impact is the marketer's insistence on "more two-way media," according to Vollmer. "It's all about listening, about learning, about being always on, about being with the consumers, knowing what they're doing, and trying to discover the best ways to connect with them."

And, as marketers begin to use such interactive data, he predicted their expectations from media companies and agencies also will change. "There is certain to be more accountability, more platform integration. Agencies will have to become more creative in their media buying and planning.

"We're moving to a much more transparent marketplace around media, a marketplace that's much more exchange-driven. In truth, many marketers do not consider themselves digitally aware. They'll be relying on agencies and media companies to provide them with that expertise. That's an essential part of how the ecosystem must come together."

A critical finding of that process of maturation, Vollmer explained, was that agencies needed to step up to the challenge of delivering more insight and more analytics. And, in turn, media companies need to deliver new solutions. The needs for collaboration and synchronization, in fact, are bringing "more complexity and more tension" to the ecosystem. "The new playbook is not well established. Agencies are frustrated by the [relentless] pace of marketers. And they're quickly trying to diversify and take on roles traditionally assumed by publishers and media companies."

To take on new roles, Vollmer said that agencies need to find new ways to manage digital and online media. "They'll be challenged to attract new kinds of talent - people with backgrounds in creative analytics and technology, in trafficking, billing, and order entry - that are not very sexy." Moreover, such services, however, are not easily monetized and agencies may find themselves "providing a lot of new services without much return."

Because they're "sitting on top of a lot of information ... they have just the kind of conversations with audiences" that marketers want. "Media companies have the ability to gather more granular data and that can be a key to [marketers'] sales efforts. Agencies would like to be on top of such behavioral study, but the real question is whether they can ramp up quickly enough to get access to the data.

For just those reasons of turf, Vollmer added, "media companies are rethinking their arrangements with agencies. Even though it may cause friction, they need to work directly with marketers if they're going to help grow those businesses, if they're going to deliver full value."

There is a premium on role-determination; the changes are coming sooner than later. Ninety% of the interview subjects in the ANA/AAAA/IAB/Booz & Co. study report that they expect to spend more on digital initiatives; another 82% say that consumer insights will become more important to their brands; but 62% of the sample reported that the "inability to measure effectiveness is a barrier" to bringing that insight into practice.

And that failing is transparent: Only 24% of the surveyed marketers believe their organizations are skilled enough to manage the digital challenges by themselves. And 53% say that the current models for creative, strategic, and media-buying capabilities need to be rebundled.

While the change is sudden, there seem to be no surprises for any of the participating parties. In fact, 71% of the agencies contacted for the MME study report that they expect digital to be a quarter of their media mix; and an overwhelming majority (85%) reported that they'll be using digital media to understand their customers better.

Similarly, 73% of the media companies in the MME survey said that they expect that their existing advertisers will shift advertising dollars to online opportunities. And exactly two-thirds reported that they expect that the quality of digital advertising measures up to other media.

Most importantly (largely because they're the source of the products, services, and the funds used to support them), 88% of the marketers participating in the MME program agreed speed of marketing execution will become more important due to digital. And, 80% said that they believed that insights into consumer's digital behavior - and the targeting that results from that activity - will become a more important part of their programs.

Marketers, said Vollmer, seem to understand that "leadership requires different DNA" and that willingness to collaborate with a number of marketing-services providers is evident in 81% of the MME participants. Nearly the same percentage of agencies (82%) recognized the need for new partnerships to access new data sources, and two-thirds of the participating media companies recognized that new partnerships were required across the entire value chain.

But, Vollmer acknowledged, the best intents do not always play out in the best practices and the realities of partnerships within the marketing ecosystem are not so promising. "Cross-industry efforts around metrics are a hindrance to both agencies and media companies," he asserted.

Some 62% of marketers, specifically, complain about the "weak" ability to measure digital effectiveness. And, when results come across their desks, 44% of the MME participants said that the metrics were not comparable from one program to the next. For their part, 64% of the agency MME representatives said they were still trying to understand marketer needs for measurements; another 59% put the cause of their discomfort on the shoulders of the advertisers, with 59% claiming that, if they're to improve their ability to provide effective metrics, marketers need to do a better job sharing targets and objectives.

For media companies - the enterprises with endless streams of data growing stronger and stronger - 98% agree that the absence of standardized metrics gets in the way of increased digital advertising. And 78% echo the out-of-the-loop complaint of agencies and report that they need to have a better understanding of what marketers want before they can begin to provide those results.

Ask agencies and 88% of them will tell you that marketers don't have the systems in place to manage a multi-agency program and 47% readily will admit that working with other agencies is difficult. When the study group is media companies, the results are no more encouraging: 65% admit that they're already "rethinking" their relationships with agencies and 53% say they're working "more directly" with marketers, effectively eliminating the agency intermediary.

In the new marketing/media ecosystem, Vollmer said, "there will be an evolution. Some companies will make it, some will not." Survival, he said, will be grounded in a four-point program that includes integration, collaboration, restructuring, and new offerings/capabilities.

As a model of integration and collaboration, he cited Nike's collaboration with Apple in the creation of Nike+, a program that "synchronized the marketer as a media company - in effect, it marketed itself as not just as a product but as a service as well." Supported by a global program that relied on two brands, the Human Race 10K "provided a strong tool of advocacy to build word of mouth advertising" over and above the paid-for media portions of the effort.

Restructuring was the driver for WPP when it took at look at Dell's marketing needs and essentially created a new agency to meet the company's specific needs for creativity, efficiency, and proof of performance. "WPP looked at what was at stake," said Vollmer, and created Enfatico, a bespoke agency with a strong emphasis on analytics and measurement.

Meredith Corp., Vollmer added, has steadily increased its presence beyond publishing and broadcasting to absorb 21st-Century media services that include word of mouth advertising (with its acquisition of New Media Strategies), database marketing (with its purchase of Directive), online marketing (O'Grady Meyers, an interactive agency now owned by Meredith), online marketing (Genex Technologies regularly provides content analysis), and new market opportunities (its purchase of BIG Communications brought it a presence in custom-healthcare marketing). "This is a media company that has learned the value of serving customers end to end.

"The marketing ecosystem is reorienting around performance, relevance, and interactivity," Vollmer said, allowing, "ideas and creativity still matter a lot, but they need to be connected to technology, consumer insights, and analytics."

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