By Richard Kunz, Principal Consultant
No longer the “ugly stepsister” in most organizations, marketing has been elevated—thanks almost entirely to the wealth of new technologies spawned by the internet—from black art to scientific practice. The typical “gotcha” objection of CEOs and CFOs the world over, that “if you can’t measure the outcome, marketing is a necessary evil, not a strategic necessity,” is now answered by a vast array of tools that measure, connect, personalize, analyze, and customize the offers companies present to their customers.
The opportunities created by this new marketing are as great as the challenges that must be overcome, and legacy Customer Relationship Management solutions from the ‘80s and ‘90s won’t do. How do you effectively and efficiently market in this complex and fragmented marketplace? How do you develop compelling and sustainable personalization strategies that meet the needs of each of your customers? How do you decide which sales channels to prioritize with your marketing decisions and dollars? Where and when is the best time to target customers? What about mobility? And how is ROI now determined?
The interplay between these questions and their answers is at the heart of what many experts are calling Marketing 2.0. Paul Barter, Vice President of Strategy at T4G, describes the transformational opportunity (and crushing burden) placed on marketers as “participating in the conversation” rather than dictating the terms of consumer engagements.
This paper traces the history of Marketing from its inception to the crossroads we find ourselves at today. Central to the discussion is how the challenges and opportunities of today require a new kind of solution, Enterprise Marketing Management Solutions (EM2S), to enable this new realm of marketing science.
Of all the corporate functions affected by the arrival of the public Internet in 1994, none has benefited more than marketing. Before the Internet, marketing was considered by most firms to be an external function—one best left to outside experts and their mastery of the classic “Four P” model (Price, Product, Promotion, and Place). Sales channels were straightforward and manageable, and customers were viewed through “aggregated demographics,” like age, gender, income, and geography. A marketer’s greatest challenge was typically quantifying the return on investment (ROI) of their specific efforts—especially difficult for advertising, direct mail, and in-store promotions. On the whole, marketing seemed to work, but a grey cloud of skepticism loomed over its successes and failures.
The skies began to clear for marketing in the mid ‘90s when consumers flocked to the Internet where they quickly established quantitative, one-on-one relationships with the savviest firms. The Internet also introduced completely new marketing tools: Search Engine Optimization (SEO), Pay-Per- Click (PPC), web advertising and e-mail campaigns all brought with them the benefits of data-based feedback. While these tools all still have a place in any marketer’s toolbox, the customer-facing nature of the Internet has changed since its inception, and social networking is now all the rage.
The Internet has gotten so interactive that it’s not an exaggeration to say that if you’re not participating, you can’t fully appreciate what’s really going on. For a marketer this could be disastrous. Internet users have fully embraced blogs, wikis, and social services to stay in (if desired) constant contact with one another, and the burden is now on marketers to catch up with consumers, and construct new messages for these new venues.
Erik Qualman writes online and in print about how social media is ready to transform our lives and businesses. Will it? Certainly it is changing where and how we interact, but whether it will be socially transformative is still debatable. Social media has radically changed the buying process for many goods and services: online, consumers have become vocal in sharing their experiences, and have a huge appetite to read or listen to the experiences—good and bad—of others. The viral nature of such commentary and the number of participants suggests a huge shift is occurring on how purchasing decisions are made. Leading marketers today have said, “your brand is the sum of the conversations that consumers are having about your products and today those conversations are happening online.”
This shift has resulted in the empowerment of consumers: through their social communication channels - Facebook, MySpace, Twitter, texting, audio and even video –they’re able to voice displeasure or delight to their extended networks. Throw in a large dose of mobility and you have almost perfect consumer empowerment. Customers also now have tools that let them decide what is signal and what is noise, thereby exercising near-total control over which brands and products enter their lives. Relationship marketing will survive this shift, but not without a dramatic redefinition. Customers are going to expect customized, personal offers that offer them value as individuals—and firms that can’t deliver this value will be replaced by ones that can. While this might be one marketer’s dream it may just as easily be another’s nightmare.
But this newfound empowerment isn’t confined only to consumers: marketers are now benefiting greatly from something we call Marketing Measurability, articulated by Dave Sutton and Tom Klein in Enterprise Marketing Management: The New Science of Marketing, as “a deep understanding – a scientific understanding of your market and your customers. Only then can you develop your brand’s value proposition.” We said that marketing was moving from black art to science; Marketing Measurability is a blanket term for the mechanisms and tools that gauge our process as we work towards a purely scientific understanding of the customer.
While such a silver bullet may not (yet) fully exist, marketers can now use a variety of tools to measure outcomes of their marketing programs quite accurately—in some cases in real time. And these tools also make one-to-one relationships with consumers affordable while providing actionable, data-rich feedback into the effectiveness of individual marketing efforts. It is this combination of Social Media and Marketing Measurability, which are creating a new era for relationship marketing and allowing firms to establish truly relevant, experience-based relationships with consumers—while confidently applying ROI measures to marketing processes.
There is however a downside with Social Media. The marketing organization is limited by its ability to manage the volume of one-to-one consumer relationships created by the Internet and other channels. If your potential market size is only limited by the number of online users, and you still need to market your products and services through traditional sales channels, are you equipped to manage and measure your marketing processes? If your answer is yes, read no further: you are already in the Marketing 2.0 Promised Land. If your answer is no, we suggest Enterprise Marketing Management Solutions, or EM2S. To understand the relevance and importance of EM2S a quick look back over the past 30 years of marketing is required.
A BRIEF HISTORY OF MARKETING, THE EARLY YEARS
Marketing spent most of history as an undefined but ever-present social process, but it was only in the early 20th century that it became formalized as a school of thought.2 As the United States and the rest of the developed world hit the ceiling of what a production-based economy could provide, it became necessary to differentiate homogenous products by way of branding, and marketing, then in its infancy, was the art of convincing consumers that your brand was superior to your competitors’. Eventually branding wasn’t enough, and consumer choice was the new norm. Henry Ford’s marketing world of “the customer can have any color he wants so long as it’s black” was gone.
Automobiles, appliances, fashion, consumer packaged goods, and financial services all quickly became venues for customer choice. Marketing began to mature, and the “art of marketing” became commonplace business processes— complete with aggressive selling practices, widespread advertising, sponsorships, and promotions. The arrival of mass-market television in the ‘50s did nothing to slow this growth and companies enjoyed an incredible new channel to present their products and services. Television (and radio before it) brought with it the first marketing assessment tool, the Audomiter, courtesy of the A.C. Neilson Company, which could measure radio and television audience size.
By the ‘60s marketing had carved out a niche for itself, but failed to become a core internal business function in most firms. The Audomiter might be able to tell marketers how many people heard or saw an ad, but the connection between that number and actual ROI was tenuous at best. Many CEOs questioned the value of marketing; it was possible to justify an advertising budget, but customer preferences or satisfaction levels still eluded quantification. As John Wanamaker, famed American department store merchant, aptly quipped: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
This lack of accurate measurements to validate the cost benefits of marketing tactics was a huge reason why marketing remained the “ugly step sister” in most firms—kept at arm’s length from core, measurable business functions. Where marketing was allowed “in” it was usually only in the form of rudimentary “advertising departments” — groups who looked after media advertising of the day.3
FROM BLACK ART TO NEW SCIENCE
Between 1950 and 1994, the only real change in marketing was the slow and steady evolution towards more sophisticated ways of surveying consumers and on-going refinements to psychographic analysis and segmentation processes. This incarnation of marketing was succinctly described by Dr. Philip Kotler as “a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.” 4
In tune with this vision, marketing became more sophisticated with new tactics like sports marketing, programming sponsorships, contests, and integrated advertising campaigns—but at best these tactics offered only minor gains towards a tangible, scientific validation of the marketing department’s contribution to the firm’s margin or market share. It is only the past fifteen years that have brought about technological changes powerful enough to recast marketing in the minds of many skeptics.
By way of looking at what has changed, contrast Kotler’s original description of marketing with the language he uses today:
“Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures, and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.” 5
What, if anything, has happened to change his definition so drastically? In a word: the Internet.
MARKETING, MEET THE INTERNET
Since the introduction of the public Internet in the mid-nineties, the number of us who spend time online has grown to over 1.4 billion worldwide. The sheer size of the user base alone makes it the most important sales channel, but the Internet’s very nature changes the game for some core components of marketing.
Figure 1, Global Internet Users
Soon after the Internet started picking up steam, a handful of visionaries gathered in San Francisco in November, 1994, to share their vision of its commercial potential. They envisioned a world-wide marketing medium linking buyers and sellers, and spoke of banner advertising, digital catalogues, keyword ads, viral marketing, click-through rates—radical ideas at the time, but now staples in any marketing toolkit.
Those tools were quickly put to good use, and Internet-based advertising in the U.S. grew from $0 in 1994 to $300 million in 1996, to $23 billion in 2008 (see Figure 2, ). In fact, based on the 2008 Internet Advertising Revenue Report, Internet advertising revenues are now larger than radio advertising, and are quickly overtaking TV distribution and newspapers. The reasons for this shift in advertising spending is straightforward: advertisers are finding the Internet to be an effective medium to engage consumers interactively and to measure results scientifically. In the 2008 report, Randall Rothenberg, president and CEO of the Internet Advertising Bureau, stated:
“We are seeing an ongoing secular shift from traditional to online media as marketers recognize that ad dollars invested in interactive media are effective at influencing consumers and delivering measurable results. In this uncertain economy, where marketers know they need to do more with less, interactive advertising provides the tools for them to build deep, engaging relationships with consumers.”
Figure 2, U.S. Advertising Market-Media Comparisons
For marketing, the Internet promises more than highly efficient and effective advertising. At its core, the internet is about connections, and savvy firms will leverage this fact to forge one-to-one marketing relationships with their prospects and customers, and for the first time ever, truly “listen” to what each individual buyer wants. The online channel, regardless of the device by which it is accessed, establishes a direct and personalized dialogue between the corporation and the customers.
Some marketers recognized this potential early on by using click-through ads, which would bring consumers to a firm’s website where consumers would exchange their name and address for sample products or services. A great example of effective click-through marketing was a campaign by Bristol-Myers Squibb Co., who in 1997 sought to build brand awareness for Excedrin. They launched a 30-day online campaign enticing consumers to click on their banner ads—which were promoting Excedrin—and in exchange for registering their name and address with Bristol-Myers, the consumer received a free sample of the product. According to Business Week, “The response was as good as any elixir. In just one month, Bristol-Myers added 30,000 new names to its customer list—some 1,000 per day and triple the company’s best-case scenario. What’s more, the cost of obtaining those names was only half that of traditional marketing methods.” Clearly click-through could be used to generate tremendous results, but it was by no means the only first-generation Internet marketing approach.
Equally popular at this time was email marketing. Essentially an electronic form of direct mail, this approach proved quite popular initially. This new and powerful twist on an old technique proved to be a sales channel, allowing cost-effective “one-to-many” communications that bolstered brand-building tactics and even established valuable one-to-one conversations with consumers. Sadly, the heydays of email marketing have passed, and email overload (and spam) has reduced email marketing’s effectiveness in recent years.
THE INTERNET TURNS SOCIAL
Increasingly the Internet appears to be one large, multifaceted, social conversation which consumers are participating in from their desktops, laptops, and increasingly, mobile devices. This has added two new layers of complexity for which marketers must account: that of social networking, and of convergence.
Convergence is a powerful force that is pushing us all into a world where we are always connected, while social networking empowers consumers to use convergence to share their opinions and experiences in real time. This is a potential game changer for any marketer’s products and services. If you don’t monitor, participate and shape the conversation, consumers will take control and define your products and brands unilaterally. It is unlikely that even the sharpest marketers in 1990 imagined that they would one day have this degree of visibility into the lives of so many consumers, their preferences, and their buying habits.
Before the Internet, corporations maintained a strong grip on most of the buying stimuli – the price, accessibility, product features, product quality, and brand identity. Most firms concentrated their resources on strengthening their strategic position over their rivals by exploiting any advantages they had around quality, cost, price and distribution. Most firms, other than their “orphan” marketing departments, paid more attention to their competitors than their customers.
Since the Internet’s arrival, the marketing department has been grappling with new challenges, namely channel conflict, commoditization, and brand loyalty erosion. Thus, as the Internet’s importance has grown, many marketers have recognized three things: first, that more technology is required so that marketing operations can manage the breadth and scope of Internet-related marketing; and second, that only technology will allow marketers to effectively engage with large numbers of consumers and maintain on-going “conversations,” whether it be online or through “old fashioned” channels (call centers, direct mail) or “old style” advertising (print, TV, radio); and third, (and perhaps most importantly) marketers realize that only technology can support brand building efforts and keep them out of the commoditization trap caused by consumer bargaining power over the Internet. It is in response to these three realizations that Enterprise Marketing Management Solutions were developed and deployed.
THE RISE OF ENTERPRISE MARKETING MANAGEMENT SOLUTIONS
The Internet now weighs heavily on the marketing process. Enterprise Marketing Management Solutions, or EM2S, is the umbrella term that covers the tools and practices that can make sense of all the data generated when marketing through digital channels. The seeds that eventually grew into modern EM2S were first sowed during the dot-com boom of the 1990’s. Savvy firms began offering marketing-related software solutions like Web Analytics, Digital Asset Management, Web Content Management, Marketing Resource Management, Analytical Tools, and Event-driven Marketing.
Most of these firms did not survive, but those that did were typically acquired by larger firms in the pursuit of creating fully integrated marketing platforms. It is these platforms that were the first comprehensive implementations of EM2S, and some of the more prominent EM2S vendors today include Alterian, Aprimo, Infor, Oracle, Portrait, SAP, SAS, Teradata, and Unica.
Today, these vendors strive to deliver an integrated platform that automates the marketing process from end to end. Kimberly Collins and Adam Sarner of the Gartner group offer an excellent definition:
“Enterprise marketing management [systems] encompasses the business strategies, process automation and technologies required to effectively operate a marketing department, align resources, execute customer-centric strategies and improve marketing performance. From a technology perspective, [EM2S] is an integrated, enterprise-wide platform for marketing, including all roles, functions and processes.” 6
This description conjures images of a tightly integrated, IT-based marketing process and IT system that sits very near the core of the company. Certainly a radical departure from how marketing was viewed in the past, but one that is sought by today’s marketers, and why we believe EM2S systems will become a strategic asset with most firms in order to maintain a competitive position.
WHAT CAN EM2S DO FOR YOUR COMPANY?
There are two ways to answer this question as EM2S systems can be different things to different people. From a strategic perspective EM2S can be defined as a series of modules. Collectively, these modules:
- Turn marketing from a black art into a measurable, predictable process.
- Manage the complexity of a multi-channel marketing arena.
- Empower effective and efficient communications with millions of consumers.
From a functional perspective, EM2S can be defined as an integrated toolkit for marketers. This toolkit includes functions such as:
- Reporting & Analytics – Customer analysis through data mining and predictive analytics, and tools for tracking customer segmentation and purchasing trends.
- Lead, or Demand Management – Customers can be acquired and managed through campaign tools including personalized batch, transactional, event-triggered, and real-time communications. It can also include behavioral targeting, personalization, and recommendation technologies.
- Process Management – Operational tools that help marketers create plans, manage the process workflows, manage budgets and activities, centrally store marketing information and analyze results.
This list is by no means exhaustive, and new modules can be created or added to increase and expand strategic capabilities on demand. Be careful with the Process Management tools such as planning, budgeting, collaboration and workflow.
They can be quite important, but many larger organizations have already implemented enterprise solutions which incorporate many of these functions. It may cause unnecessary conflicts if you were to introduce similar functions exclusive to the marketing department, so tread carefully before investing in these areas.
PICKING THE RIGHT EM2S
EM2S can deliver a lot of value to your marketing department—but no solution is perfect. There are many vendors with solutions catering to many priorities. To narrow down the search, where do you start? First, you need to define or validate your marketing objectives and business goals. These are crucial in order to understand how an EM2S can assist you. As an example, a recent T4G client defined their marketing objectives and business goals as follows:
Drive revenue to our industry partners by connecting consumers to their products.
Put consumers in contact with the product(s) that meets their needs while encouraging purchases through the channel of their choice.
Connect consumers to products through triggers and highly personalized content.
Turn anonymous visitors to our website into known customers.
Grow our campaign conversion rate by X%.
Evolve the current database into a comprehensive knowledgebase, which will coherently store data and form the basis of an integrated marketing intelligence system.
Create a cohesive user knowledge system, through which ad hoc and other structured reports can be created immediately and inexpensively.
Enable the use of data to drive highly personalized marketing.
Reduce our average campaign cycle time from three months to three weeks.
These are strong example goals, but might not reflect the specific direction of your firm. In each case, the specific goals have a well defined scope, and whether or not they’ve been achieved is straightforward to determine.
Once you’ve defined your marketing objectives and business goals you can now take the next step towards assessing your EM2S options. In our experience, there are two important things to keep in mind while evaluating your EM2S options.
First: will the EM2S support a “single version of the truth” regarding your customers. A single version of the truth means an integrated database that everyone references and maintains; it removes versioning errors and cross-departmental inconsistencies, ensuring that everyone is basing their information on the same (correct) data. Without this your EM2S will ultimately fail.
Second: the technical architecture. Notwithstanding all the great functionality a particular EM2S can provide, you must be prepared for future changes. This means selecting an EM2S that has a technical architecture that is flexible and extensible so as new data sources become available, you can maintain consistency of data and process.
While we believe that these are the two most important considerations to keep in mind, there are other factors that may weigh heavily in favor of one solution or another, depending on your company’s current technical and operational landscape. In a typical customer engagement T4G spends significant time with our client defining these criteria, against the business goals and marketing priorities. It is an important step in defining the right EM2S for your needs.
TYPICAL EM2S PRICING
Since most firms are in the small to medium (SME) category the cost of acquiring EM2S may look daunting. Or, if budgets are not an issue, you may be tempted to relegate EM2S into “nice to have” discretionary spending category. We assert that EM2S will soon be a strategic necessity, one that (both now and in the future) can typically be acquired one of two ways: either via a traditional licensing model, or via a “software as a service” (SaaS) solution.
TRADITIONAL LICENSING MODEL
The array of applications can be confusing and costly, however, most EM2S vendors offer an a-la-carte licensing model which helps customers minimize costs. The choice of functional modules will dictate the price but as with most decisions of this importance, stick to the basics initially. For example, at the heart of any firm’s marketing strategy and business goals there will always be a foundational set of EM2S applications focused on database and analytical tools. Well designed EM2S solutions will allow you to choose your preferred database application – which you may already have in place. Similarly, many EM2S vendors will offer their own BI tools for predictive modeling, dashboards, KPIs and advanced segmentation, Again, you may have some of these capabilities already.
Other tools will include Outbound Marketing functions such as self-serve reporting, multi-channel campaign management; and, inbound marketing functions such as personalization and behavioral targeting.
The number of users will also affect your pricing as will the amount of integration work with other applications your firm may be running.
SOFTWARE AS A SERVICE
Many EM2S vendors are now introducing SaaS versions of their applications either directly or through third-party partners (typically referred to as Marketing Services Providers). This approach is built on an affordable “pay as you use” pricing model—one that offers the same functionality without the IT infrastructure and support costs.
One such company, Aprimo, recently introduced the Aprimo Marketing Studio, a relatively inexpensive, SaaS solution that offers most of the same functions as their enterprise solution. Pricing is typically based on an annual subscription fee based on a cost per thousand emails (CPM) model—or a cost per customer record for B2B marketing clients.
TAKING THE FIRST STEP
The first step towards any enterprise marketing solution is to assess the state of your marketing landscape. When T4G is engaged in the process we typically start by developing a questionnaire suited to your business. Our questions are designed to allow us to categorize your needs and priorities. Typical questions include:
How many e-marketing campaigns do you conduct each year?
Do you engage in social media campaigns?
Do you also utilize multi-channel marketing tactics, such as direct mail?
Are you experiencing challenges with managing your customer data base?
Are you lacking the proper analytical tools to conduct customer segmentation?
Are your campaign cycle times longer than 30 days?
How accurate are your ROI stats for campaign response rates?
The answers to these questions inform our understanding and articulation of your needs across four strategic priorities:
Marketing Leadership – improving processes such as collaboration, productivity, integrated marketing,
Relationship Marketing – focusing on customer insight and value management,
Marketing Operations – handling the growing complexity of multi-channel marketing, managing marketing budgets, maintaining marketing content and coordinating relationships with vendors, distributors, and other stakeholders.
Interactive Marketing – focusing principally on your web channels by offering integrated web analytics, ad targeting, search marketing, and other typical 2.0 technologies.
At this point we will have the necessary information to produce a high-level plan that will guide you towards selecting the most effective EM2S.
The Internet has dramatically transformed the nature of marketing over the past 15 years. No longer a black art, it has moved squarely into the realm of science thanks to the introduction of technologies that allow marketers to analyze consumer data, segment it, and respond surgically with relevant offers on a personalized level. These tools will not remain amenities for long, and will soon be strategic necessities for any firm wishing to thrive in our inter-connected world. Consumers are seeking relevant, compelling, and timely information. But because there are more and more competing products and services, individual firms need effective tools to make themselves stand out in the crowd.
We believe that enterprise marketing management solutions will dramatically improve your firm’s brand building efforts, enhance your marketing processes and most importantly, drive increased sales.
1 Socialnomics ™ www.socialnomics.net
2 Bartels, Robert (1976) The History of Marketing Thought, second edition
3 Even today, few organizations have integrated marketing into their overall company processes, but you can easily tell when they have done so. These are usually the firms who have developed competitive advantage through product and marketing innovations. Proctor & Gamble and Apple come to mind.
4 Page 6, Eight Edition, Marketing Management, Analysis, Planning, Implementation, and Control, Philip Kotler, 1994
6 Gartner Magic Quadrant for Enterprise Marketing Management, July 2009 by Kimberly Collins, Adam Sarner