Nonlinear Thinking

The Inevitability of Digital Marketing and the Digital CMO

A favorite debate focuses on the ascension of digital marketing over traditional marketing in today’s marketing model. Too many companies, even in the technology sector, still seem unable to grasp that such a transformation is taking place.

Perhaps the issue is that, even now, spending on analog/traditional marketing continues to exceed spending on digital marketing by a significant ratio according to Gartner Group’s 2013 U.S. Digital Marketing Spending Survey.  Based on the survey, average marketing spend as a percent of annual revenue, across all industries, is 10.4% while digital marketing spend is 2.5%. 

It should be noted that analog marketing tactics continue to be more expensive than digital options – media advertising being just the most obvious example.  Had the survey been broken down between B2C and B2B companies/industries, my guess is that analog and digital spending would be on a more even spending arc.

A related trend - how the advent of the digital marketing technologies that are reinventing much of the marketing model have altered the dynamic between CMO and CIO – is also highlighted by the results of the survey.  The CIOs of those same companies have seen their budget decline to 3.5% of annual revenue and with digital marketing spend at that 2.5% level, parity in technology-related spend seems not too far away.

In fact, in a 2012 report, Gartner predicted that by 2017, the CMO's technology budget will exceed the CIO's.  Pretty much every business should broadly consider itself a digital business but, right or wrong, marketing has emerged as the de facto owner of digital.  That makes the CMO responsible for driving the organization’s digital transformation, which clearly is built on many of the emerging technologies that are changing the conduct of business – mobile, social, cloud, SaaS/PaaS/IaaS.

SaaS and cloud technologies have had much to do with the changing balance of power between the two functions.  The ability to bypass the CIO organization to access key marketing technology platforms/solutions with ease in the new environment allows marketing leadership, or any other functional leadership, to avoid the traditional IT development/procurement queue and execute much more quickly on critical initiatives.

This would all seem to set the stage for the emergence and confirmation of the digital CMO, a marketing leader that not only recognizes the inevitability of this transition in the marketing model, but embraces and builds an organization to take greatest advantage of the new digital/social/mobile media.  Marketing strategy is still marketing strategy.  It is the tools, technologies, and channels that have been disrupted.  If there is a crossing of the Rubicon occurring in marketing today it is probably better to start thinking and acting digitally now than learn in some harder, and perhaps more final, way.

Demand Response and Learning Thermostats

In the electricity distribution world, demand response (DR) represents a dynamic demand mechanism for managing customer consumption of electricity during traditional heavy load or other critical times via incentives based on price. Solution, software and hardware providers have been attacking this space for over a decade in North America.  That includes incumbent providers (meter companies), electric utilities themselves, and a newer generation of startups building on increasingly sophisticated connectivity platforms (cloud, Wi-Fi).  One of those startups is a company in Palo Alto that has been generating some significant “buzz”.

Nest Labs designs and manufactures a sensor-driven, Wi-Fi-enabled, learning, programmable thermostat that is now in its second generation.  Nest is led by Tony Fadell, a former Apple executive with a stellar pedigree, having helped bring the iPod and iPhone into the world. He and co-founder Matt Rogers recruited an A-list team from Apple, Google, Microsoft, and Logitech, to drop but a few names.

With some solid market success selling the thermostat under their belt, Nest announced this week an expansion of their solution to incorporate DR as part of the overall value proposition, using the Nest thermostat as a platform for managing energy during peak times.

 

Whether the DR solution from Nest (called Rush Hour Rewards, BTW) is materially different than some of the other offerings already in existence is not yet clear.  However, the announcement included the creation of  new residential demand-response programs with Austin Energy, Green Mountain Energy and Southern California Edison, along with an existing one with Reliant Energy.  Combine that with the founders Apple heritage and the current Nest buzz could begin to make DR more top-of-mind with consumers.

Compendium/Miscellanea/Almanac 01.12.2011

Stuff that I find interesting.  Maybe you will too.

• Budgets, Innovation Squarely in CMOs' Sights in 2011 (Advertising Age) 
• Clouds, big data, and smart assets: Ten tech-enabled business trends to watch  (McKinsey Quarterly) 
• How Tech Will Be Critical to Corporate Sustainability in 2011 (Greenbiz) 
• Light My Fire: The Matchbook Makes a Cultural Comeback (Fast Company) 
• How Aha! Really Happens  (Strategy + Business) 
• Swimming Against the Tide: How Technology, Media, and Telecommunications Companies Can Prosper in the New Economic Reality  (Boston Consulting Group) 
• Eric Berlow: How complexity leads to simplicity  (TED)  
• The AI Revolution Is On  (Wired)  
• The Battle for Control of Smart Cities  (Fast Company) 

Goin' Mobile

With over 2.6 billion mobile devices world-wide, mobile is poised to become the most widely utilized media channel in the world!  Always on, always available and everywhere - mobile provides the unique ability for a brand to connect with their consumer like never before.  The brand can now create a dialogue of engagement with the consumer, whenever and wherever they are.

 

It is not difficult to envision an endless variety of creative messaging models that will take place in the mobile/wireless universe.  The Mobile Marketing Association has emerged as a unifying force the industry to promote discourse and aggregate insight around the challenges and opportunities in marketing via the mobile channel.  The MMA Website includes this view of the world.

Marketing through the Mobile Channel, “Mobile Marketing,” consists of a unique, complex, mix of technologies, business skills, and marketing expertise. It is a child born of the Internet revolution, and it is critical that today’s marketers grasp its significance. It is one of the first new channels to arise in over 50 years, and will quickly become a primary means of reaching out to our customers.

People have become more and more comfortable with and reliant on digital communication solutions, including the mobile phone. In fact, there are now more mobile phone subscribers in the world than there are landline phones subscribers. The mobile phone is becoming a primary means of communication, not only for voice but also for digital services, email, digital photos, navigation, etc. Worldwide over 350 billion text messages, also known as “SMS Messages,” are exchanged across the world’s mobile networks every month, with over 15% of these messages, according to the Yankee Group, being classified as commercial, or marketing, messages.

The objectives of mobile marketing campaigns are straightforward: increase brand awareness, generate a customer profile opt-in database, drive up attendance to events or visits to a store, improve customer loyalty and increase revenues. Mobile Marketing does not stand alone; rather it leverages traditional promotional channels, such as the recent Mobile Marketing Campaigns associated with American Idol, The Apprentice, and the 2004 Superbowl MVP campaigns. The traditional marketing promotional value chain consists of campaign sponsor (the brand), marketing agency, content provider, and traditional promotional channel such as TV, radio, paper media or even the Internet, as shown below in Figure 1.

Figure 1.
Source: iLoop Mobile