- Power Has Changed Hands
- How Has the Brand/Customer Relationship Changed?
- New Competitors + More Noise = Need for Relevance
- How Does the "Flood" of Customer Data Impact the Marketer's Role?
- The Democratization of Your Brand
- Not Everything Has Changed: The Fundamentals Remain the Same
- The New Customer Contract: Authenticity, Relevance, and Transparency
- How ART Will Impact the Future of Marketing
New Competitors + More Noise = Need for Relevance
The growing power of digital communications has presented two other challenges to marketers. First, it has lowered the barrier to entry for smaller, more focused competitors. Those companies have begun to compete with established brands through an elevated customer experience in all sorts of industries.
Just look at Marc Speichert, who was the CMO at beauty giant L’Oreal when I spoke with him:
“You have lots of little brands that are appearing, and that are, in aggregation, becoming a pretty big chunk of the overall market.”10
That means L’Oreal and their ilk are facing competition not only from the big brands they’ve historically been competing with—and with whom they have a well-established playbook for that competition—but also with smaller, more nimble competitors who bring with them a whole new set of challenges. It’s a process that’s not going away any time soon.
Thanks to digital distribution and promotion mechanics, a company can start in someone’s bedroom and quickly begin to eat into the market share of companies that have boardrooms in the world’s major cities.
Those small competitors don’t have shareholders. They don’t have diversified product lines. And they certainly don’t have any of the internal challenges inherent in a company with hundreds of thousands of employees and marketing teams spread around the globe.
What these companies do tend to have is focus on one, or a small number of, products. They also have the ability to ensure that those products are exceptional. In a world increasingly drawn to the artisanal, to craftsmanship and locally sourced goods, the keywords are authenticity and experience (concepts more fully introduced in the later section “The New Customer Contract: Authenticity, Relevance, and Transparency”).
Social media, or “word of mouth on steroids,” can help these companies quickly build passionate, engaged audiences. No longer, then, does a company need scale or a multimillion-dollar marketing budget to make a dent in the bottom line of the biggest companies, the biggest advertisers in the world.
These smaller companies tend to be closer to their target audience, with less barriers between employees and customers. That knowledge is put to work to develop products that are more focused, relevant, and attractive to that user base.
When competing with a plethora of small brands like this, the challenge for the multinational company is clear. Where digital marketing has begun to neuter the built-in advantages of scale that previously gave large brands an edge, that large brand must now beat the smaller company at its own game: The larger entity must become as nimble, relevant, and focused on the customer as its competition.
Companies must build processes and systems to be as close to their customers as the brands that live next door to them, regardless of whether they’re even on the same continent. They must build products—and marketing campaigns—with the same level of authenticity, focus, and relevance that these smaller companies have as inherent facets of their existence.
Noise Levels Are Increasing
So a legion of smaller competitors is beginning to crowd into already busy marketplaces. At the same time, the marketing landscape is expanding.
The fragmentation of that landscape (first adding channels such as banner ads, pop-ups, and email lists, and now adding social ads, PPC, native, and even programmatic advertising options), not to mention the plethora of platforms springing up in the space between media company and technology provider (Facebook, Twitter, Snapchat, Pinterest, and so on), results in many more opportunities for engaging a customer.
Customers no longer rely on four TV channels; they have access to hundreds. They no longer visit one social network; they split their time across several social and, increasingly, private messaging platforms. That means the places where a brand can contact a consumer are growing.
Marketers are grabbing this opportunity with both hands. Unfortunately, they’re grabbing a little too tightly, and they’re beginning to throttle their subjects. Customers are now exposed to 577 marketing messages per day. They retain less than 1% of them.11 And they can increasingly pick and choose what to watch—and what to skip.
This phenomenon puts increasing weight on the importance of relevance. If a brand is to stand out in an ever-more crowded landscape, it must convince customers that it’s worth listening to. It must speak to them in the right place, at the right time, with the right message. Otherwise, the brand is just adding to the background noise.
Digital Has Changed the Game Marketers and Consumers Are Playing
Perhaps more than anything else, the rise of digital technologies has led to a redistribution of power from brands to consumers. The Internet, social media, and digital platforms have ushered in a new era of dialogue, information, and transparency. Customers can easily understand both companies and their competitors. Customers have become more discerning as a result.
Thanks to social media, online reviews, and the resulting increased power of word of mouth, the size of your marketing budget will never again make up for poor products and services.
The shift of content distribution to an increasingly digital landscape gives customers more power to choose what to watch—as well as what ads to skip.
The capability of smaller brands (with built-in advantages of customer understanding and relevance) to reach large numbers of people has eradicated the benefits of scale to a significant extent. The exponential growth of locations in which one can market has increased the noise to a deafening degree. If your message isn’t valuable or relevant, it will be drowned out.
Customer attention is indeed becoming increasingly scarce. The power is definitely in their hands. This redistribution of power has led to heightened expectations from customers and a change in what they expect from their relationships with major corporations.
But we’re not done. Customers aren’t the only factors that have fundamentally changed the marketer’s role over the last decade or so. Digital models have heralded two other major shifts in the customercorporate relationship:
- The media landscape has begun to fragment at great speed.
- Digital footprints are everywhere. The savvy marketer can use them to hunt their prey more effectively than ever.
How Has the Changing Media Landscape Changed the Marketer’s Role?
Unless you’ve been living under a rock somewhere on the dark side of the moon for the last decade, you’ll know that the media landscape has been deeply affected by the changes that a new digital world has wrought.
The impact of digital distribution models, in which content can be transmitted effectively for free to screens as small as new Apple Watches, has shaken up the media industry. Like their peers in marketing departments across the world, media pros have been forced to cede power to their customers.
Digital distribution has led to an explosion of user-generated content and given consumers an unprecedented ability to choose what media they consume, where they do so, and how they do it. This, in turn, has led to an “unpackaging” of subscriptions, an increasing preference for online viewing, and a series of platforms that allow customers to watch what they want, when they want to, and in a location that’s convenient for them, whether on the sofa or on the subway.
What does this mean for the marketer? Well, all the traditional marketing channels are undergoing massive disruption, and it’s impacting the role those channels play in marketing strategies for companies large and small.
Look at the rise of Internet TV viewing. By the end of 2014, 34% of Millennials12 said they were watching more TV online than via their television set; 24% of the U.S. population reported watching TV online at least once a day13, with 19% going without cable subscriptions entirely.14 In mid-2014, total TV viewing over the Internet grew by 388% versus the same time a year earlier, with the number of unique viewers growing 146% year over year.15
Typically, TV provided online gives customers more choice. Not only can they choose when they watch a show (witness the slow decline of the phrase water cooler TV), but in many cases, they can choose to do so without ad breaks—or they can at least skip through them. Advertising in a primetime slot during NBC’s The Voice currently costs about $275,00016—that money could buy a whole lot of YouTube, or Facebook, or Google ads.
TV’s troubles are somewhat dwarfed by the obvious problems we see in print media. Local papers are shuttering every week; the Boston Globe sold itself for $70 million to Amazon founder Jeff Bezos in the same month Pierre Omidyar pledged three times as much to found a new digital-only venture titled First Look Media.
Magazine circulation is decreasing, and even the venerable New York Times is finding it hard to move as quickly as the Buzzfeeds and Huffington Posts of this world. Those competitors are growing faster than the New York Times itself, according to the company’s own leaked Innovation Report.17 (The report also highlights the Gray Lady’s declining website performance, from 140 million visitors in 2011 down to 80 million in 2013.)
The print advertising industry has revenues of $36.8 billion forecast for 2015, down 9.9% since 201418 and representing about 20% of all U.S. ad spend for 2015. Yet according to eMarketer, the average time a U.S. adult spends using print media is falling off a cliff. In 2008, the average U.S. adult spent 63 minutes per day on print media. By 2014, that had dropped to 26 minutes, down nearly 59%.19 The problems for print aren’t over yet.
At the tail end of 2014, even radio had begun to feel the impact. Digital radio has been around for more than a decade, but by the end of the year, the media press was abuzz with commentary on the renaissance of the podcast. Consider breakout series Serial, which garnered 1.5 million listeners per episode.
Podcasting, which incorporates “listen when you want” elements mimicking the core USP of TV delivered over the Internet, has grown 25% year on year from 2013 to 2014.20 Almost 40 million people currently listen to some form of podcast. Thirty-six percent of all Americans age 12 and older (94 million people) listen to some form of online radio.21
How Media Disruption Has Impacted Marketers
These developments have certainly impacted the media industry, and they’ve had an effect on the marketer’s operating environment, too.
Look at Super Bowl advertising costs. A 30-second spot during the Super Bowl cost $4.5 million in February 2015,22 up 50% from $3 million in 2012. At first, this seems counterintuitive. Surely this proves that TV advertising is in rude health? No—scarcity costs money, and that’s the mechanism at play here.
Live sports are one of the last bastions of the age in which families, friends, and communities gather around the television to watch programming communally. They do so at a set time—live viewing is inherent in watching big sporting events (a fact that anyone who has watched a recorded sporting event and felt the peculiar lack of intensity will attest to).
Hence the skyrocketing Super Bowl prices.
It’s a reflection of the fact that consumers can skip advertising with the click of a button. Indeed, they can (and do) skip regular scheduled programming altogether. In most cases, a marketer can no longer be sure when or where a particular advert will be viewed. And remember, given the sheer amount of marketing a person is now exposed to, this is a consumer base primed for skipping advertisements.
The explosion of new content distribution channels, coupled with an Internet business model based on free services supported by advertising means, as we’ve seen, that consumers are hit with an average of 577 individual marketing messages per day. Somewhat unsurprisingly, only 1% of those messages are retained, and consumer appetite for advertising continues to shrink.23
An Increasing Need for Relevance
Not only does this shift show that it’s somewhat harder to make sensible decisions about ad buying, but it also highlights, again, the need for marketing to be relevant in two ways:
- It needs to be valuable to the customer: useful, engaging, or entertaining—whatever it takes to encourage people not to skip it.
- It needs to be visible in places where customers now spend their time. You’ve got to know the right platforms and channels to put your marketing on, ensuring that the ad is placed in one of those fragmented channels and platforms that customers are actually using.
Forward-looking marketers know that their world has changed irrevocably. In the course of researching this book, I not only spoke with many CMOs personally, but I also surveyed many hundreds of other executives for their views on how marketing has changed, how they’re responding, and what the future holds. (Any statistics drawn from the results of this survey will be referenced in the footnotes as “Future of Marketing Survey.” The full survey results are available online at www.nickjohnson.co.)
When I asked those executives about their views on traditional channels, the responses were striking: 54% of respondents said that traditional marketing channels (TV, radio, billboards) have definitely become less important even over the last five years; another 29% said that’s probably the case.24
The process isn’t over, either: 63% of respondents were relatively confident that traditional channels would continue to diminish in importance over the next five years.25
The Rise of the Second Screen
Remember the rising cost of those Super Bowl advertising slots? Well, imagine that you’re peering in on a family of Seahawks fans at 4:30 p.m. on February 1, 2015. What do you see?
You see the Millennials in the room watching the TV but also trash-talking their Patriots-supporting friends over Twitter. During the 2014 Oscars, 5 million people sent 19 million tweets, seen by 37 million people—considerably more than the viewership of the ceremony itself.26 Twitter itself has made a great play of wanting to be the “synchronized social soundtrack for whatever is happening in the moment, as a shared experience.”
And that’s why even with this last bastion of traditional ad models, the 30-second Super Bowl spot, you can see the change that’s afoot. Increasingly, Super Bowl advertisements serve as a tent pole for a broader, omnichannel, “transmedia” campaign. In 2015, 50% of all media27 is now a multiplatform affair: 66% of Americans and 61% of the global population use a “second screen”28 (typically a phone or tablet) while watching TV. Also, 72% of Twitter users tweet during a live broadcast.29 The new episode of the British iteration of X Factor is accompanied by tweets from more than 1.2 million viewers.30
All this brings us to the second great shift in how media is consumed in the twenty-first century: fragmentation.
A Fragmented, “Transmedia” Landscape
From the embers of the traditional marketing landscape has arisen a new type of phoenix—new channels, platforms, and other services that consumers now frequent to get their media of choice. This has led to two fundamental shifts for marketers.
The first is the fact that, as outlined earlier, for a campaign to be truly pervasive, it must increasingly spread itself across multiple platforms and services to engage customers where they are, not where a business would like them to be.
Second, the sheer number of new platforms and services on which your customers spend time is fragmenting every few days. The challenge, as later chapters discuss, is to assess which of these options you could and should use for your next campaign.
New Platforms Grow Fast
On Valentine’s Day 2005, YouTube launched into an unsuspecting world. By July 2006, users were viewing 100 million YouTube video clips daily, with 65,000 new videos uploaded in that same time frame.31
YouTube (and other user-generated content sites like it) got so popular that the 2006 Time Person of the Year was “you”: The magazine’s cover featured a YouTube screen with a large mirror, highlighting the rapid growth of user-generated content.
At the time of this writing, more than one billion unique users visit YouTube each month, and almost 6 billion hours of video are watched in that period. That’s almost an hour for every person on earth, according to official YouTube figures.32
In April 2014, Google (which bought YouTube in 2006) launched a marketing campaign to promote the service, with ads placed on Google services, TV, print, and billboards. The transport network in London, New York, and similar cities was filled with advertisements, and TV networks from ABC to the CW ran ads highlighting the network’s roster of stars.
When you look closely at the ads, you might wonder why Google bothered. There, in relatively small type, was a number—a big number. It denoted the number of subscribers the profiled personality had on YouTube itself.
Three personalities initially were chosen for the campaign. Michelle Phan, a beauty “vlogger,” had 7 million subscribers in late 2014 and secured a recent cosmetic partnership with L’Oreal as a result of her success. Bethany Mota, a stylist, had more than 8 million subscribers in late 2014 and boasted a clothing line co-designed with Aeropostale. The third star profiled was Rosanna Pansino, who had a comparatively paltry 3 million subscribers to her online cookery show.
Given those numbers, it’s unsurprising that YouTube is now an established location for brands to allocate their marketing budgets: A hefty $5.6 billion was spent on advertising on the platform in 2013.33
New platforms and sites are springing up constantly. For many Millennials, the 30-minute TV program is an alien concept; they prefer the 4-minute clip. Indeed, even these short bursts of entertainment are being superseded. Consider Vines, capped at 6 seconds, or even the increasingly popular 1SecondEveryDay app (with the most backers ever for a Kickstarter campaign and a profile raised through placement in the recent Hollywood film “Chef”), which allows users to shoot and then share 1-second video clips.
In other areas, new platforms are springing up almost daily. Flipboard, a news aggregation app, has 90 million active users. By contrast, the newspaper with the highest circulation, the Wall Street Journal, has just 2.4 million subscribers. Online, the New York Times home page traffic has shrunk from 140 million in 2008 to less than 80 million by 2013.
The launch of a viable new advertising channel used to happen rarely. The launch of an entirely new advertising medium was even more infrequent. Yet in these early years of the twenty-first century, both phenomena are occurring fairly often.
The Millennial generation, of which I am a part, is nothing if not fickle. Check out MySpace, Bebo, or, further back, Geocities. They’re almost quaint in how passé they now seem.
In August 2006, the 100 millionth MySpace account was opened; by 2007, MySpace was valued at $12 billion. Now it’s a depressing procession of empty profiles, flashing text, and autoplaying pop songs. At the time of the latest site redesign in 2013, users there to see it had plummeted to 36 million.
But then check out the growth numbers of Ello, Snapchat, and WhatsApp. This is where customers are moving this year. Last year, it was Pinterest, Tumblr, and Vine. Next year, who knows?
Ninety-four percent of marketers think that the pace of change in their role has increased.34 One of the most common comments I hear is that this pace of change is terrifying and almost unmanageable, certainly within current corporate structures and processes. Yet adjusting to this speed is a critical part of the marketing campaign of the future. According to a recent study by Rishi Bhandari, Marc Singer, and Hiek van der Scheer for McKinsey, the best-performing marketers reallocate up to 80% of their marketing spend while a campaign is in progress.35
There’s no sign of things slowing down anytime soon.
Things Are a Lot Harder Than They Were Back in the 1990s
The relationship between marketing budget and marketing reach was once somewhat simple: Pay more money, get in front of more eyeballs (notwithstanding John Wanamaker’s oft-repeated aphorism “Half the money I spend on advertising is wasted. The trouble is, I don’t know which half”36). Nowadays, complexity reigns.
As Barry Wolfish, CMO at Land O’Lakes, told me, there’s “an incredible fragmentation of ways to reach the end user.”
Of course, another challenge is that whereas TV advertisements were relatively uninterrupted, nowadays every message is competing with many others—at the same time. This is largely due to the second screen phenomenon in TV and the multitude of other content (and ads) presented on the same page online.
The uninterrupted TV spots of old are no more. Your new video ad, playing in Facebook’s news feed, is presented alongside messages and photos from your potential customer’s friends and family. Your online banner ad is located on a page within an article your viewer has actually decided to read. Your Twitter campaign is surrounded by tweets from news organizations, celebrities, and friends that your customer has actually chosen to follow.
People have an unprecedented amount of “noise” blaring at them daily. For brands, becoming the signal in that noise is getting ever more challenging.
Michael Zuna, CMO of insurance giant Aflac, asked me some good questions: “How do I reach Nick Johnson? How do I engage with you and connect with you in the most effective way, given the proliferation of media opportunities you’re engaged with on a daily basis? That challenge is multiplying at a significant rate.”
His concerns add weight to the theory that, for marketing to be successful, it must be both valuable to consumers and relevant to their needs and interests.
It’s Not All Bad...
Of course, this coin has another side. If marketers use this plethora of options well and coordinate campaigns across many channels with consistency, providing value and relevance, these changes become an opportunity. Victoria Burwell of McGraw-Hill put it best when alluding to Wanamaker’s famous aphorism:
“Before, it was much more spray and pray. You put up one ad that you hope got folks across the nation. Now, I can send not only distinct messages to distinct people, but using a vehicle I know they’d prefer. While they’re searching, I can catch them. I think we just have so much more data that we can actually personalize the message, because we understand the customer so much more.”
For marketers to run successful campaigns, it’s essential that they provide relevant, valuable creative material across a plethora of channels. Those channels change fast, so it’s essential to pick the ones where your customers hang out. And people tend to be doing two things at once now—second screens are the new norm—so the campaign must be multifaceted and available across multiple channels.
Fundamentally, brands must understand customers—their habits, their needs, and their usual behaviors—better than ever if they want to flourish in this challenging and rapidly evolving space.