In april the Big Blue announced that it would be investing an additional $100 million into a recently formed marketing consulting division IBM Interactive Experiences. The division brings together IBM’s digital marketing and related businesses such as data analytics and design under one umbrella, all of which are aimed at helping companies target and market to customers more effectively.
IBM’s this initiative puts it directly against the ad companies. Does this indicate that the traditional agency model is ready for disruption? Does this mark a definitive shift where marketing is increasingly becoming a technology function? Is the “mathman” taking over the world of “madman”?
To understand the implications lets look at one of the Starbucks’ recent marketing success; tweet-a-coffee campaign. If you are the campaign manager, your workflow will look something like this:
- Connect users credit card, twitter and Starbucks account (APIs and programming)
- Setup analytics dashboard to track the first 100k users who link their accounts with credit cards (data analytics)
- An incentive algorithm that sends a $5 gift card based on users’ actions (programming again)
- Measure the success of the campaign on metrics like reach, purchases and loyalty (analytics)
Over 27,000 people have tweeted a coffee, some multiple times. This flurry of activity generated over $180,000 in sales in just a couple of months.
Another example; IBM recently used its software to mine data from social media and customer database to help a large consumer product company to figure out which movie stars they could use as brand ambassadors in their marketing campaign.
The explosion of digital technology is radically transforming the marketing function and the role of marketing professional.
Internet and connected societies are driving a seismic shift in business models. Amazon simultaneously rivals Walmart as a store, Apple as a device maker, and IBM as a data services provider. Twitter’s 40 billion+ valuations is not the work of its 2000 employees, but of its more than 200 million contributors. Brands that once sought advantage based on the strength of their internal resources now face competitors that harness the power of connected users and ecosystems of external resources.
Changing consumer behaviour as a result of being location agnostic and constantly connected is transforming marketing, as we knew it. Although up to this point, most of the impact has been tactical; we are now at tipping point of major strategic transformation. At the centre of this transformation we have fast evolving technologies such as big data, analytics, cloud, social and mobile. These capabilities are not an area of traditional strengths within ad agencies, marketing departments or even digital agencies. As per a recent online marketing institute study; skills are inflated and talent is slim.
Marketing now relies upon software at an unprecedented scale and with massive implications to identify, anticipate and satisfy customer needs, and measure the success of efforts. The two largest sellers of online advertising, Google and Facebook are software companies at their core and produce no content of their own. This is a paradigm shift, as all traditional advertising channels are content producers.
Similarly, programmatic media buying or using software to automate the process of buying and/or selling digital advertising is bringing significant efficiencies to advertisers in terms of workflow, pricing and the avoidance of waste.
To survive and thrive this digital shift in consumer behaviour, the smart agencies will redefine their core competencies to help brands succeed in what Forrester Research calls the Age of the Customer. As data, analytics, cloud, social and mobile technologies see a greater role in marketing, the technology skills organic to systems integrators will become more and more critical must have marketing competencies.
The new challenges aside, there’s never been a better time to be a marketer. Brand perceptions are formed and purchase decisions made before a customer even talks with sales or sees a product in a retail setting. Study by Ford suggests 87% of car buyers use web for research resulting in average number of dealerships visits before purchase decline from 8 to 1.2. It’s a huge opportunity to get there first and forge long-lasting relationships. This is a time for re-invention of philosophies, methodologies, and develops new competencies that affect how we engage with consumers across digital and physical touch points.
In conclusion, I agree that advertising & marketing, like any other industry is at the cusp of fundamental disruption. However the core marketing skill set still remain relevant. We are in a transition phase where we have traditional players with digital arms, native digital agencies and technology companies starting to offer marketing solutions. Going forward the separation between digital and traditional will increasingly blur. At the end of the day we will still need an integrated full service agency that is relevant in todays context.
Over the coming years there is the opportunity not only for marketing to reinvent itself but for marketing to be the change agent that transforms the whole business. And while we are at IBM; let’s not forget to keep an eye on what Cisco is brewing for marketers with its Internet of Everything.