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The Age of New Reality Marketing Is your marketing capability fit for purpose? Tony Mooney Singapore, May 15 th 2009

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Agenda <ul><li>What is the new reality for marketing? </li></ul><ul><li>What are the key skills and capabilities marketing requires? </li></ul><ul><li>Options for getting FIT </li></ul>

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Primary Consumer Market Drivers: 2009-2012 Consumer markets are set for significant changes in the next 3 years “ Watch some Prison Break on Sky+. Fast forward the ads. There's no need to bother these days, is there?” (Campaign 15/08). <ul><li>Evernet sees a world 10 years hence compromising: </li></ul><ul><li>‘ pervasive computing’ </li></ul><ul><li>‘ ambient intelligence; </li></ul><ul><li>‘ anytime, anywhere computing; </li></ul><ul><li>‘ things that think’ </li></ul>“ 65% of UK adults would leave their ISP if it adopted ISP-based behavioural targeting, and 81% wanted the ability to opt-out.“ New Media Age Consumers face a world of greater uncertainty, globalisation and convergence “ The first global recession of the 21 st century is the biggest threat to companies” The Economist. Global recessionary pressures Convergence Increasing cynicism Increased Velocity

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Continual shift of activities to interactive and digital However, measurement remains an issue Increasing scope of the Marketing EcoSystem Issues <ul><li>Move to mobile, locational web, cloud computing and social networks. </li></ul><ul><li>New modes of computer interaction are emerging </li></ul><ul><li>Imminent changes in the nature of the web - Google and Apple setting the pace </li></ul><ul><li>Increasing level of information available - huge opportunities but privacy concerns. </li></ul>Trends Implications Changing Infrastructure . Changing Devices Changing Search Measurement of clicks not customers Digital channel silos Poor ergonomics & usability Electronic Billboards . . . Consumer Privacy

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Media convergence is re-writing the rules for Advertising Converged media is driving the need for a more data driven approach Convergence of Media Network connectivity on TV Growth of transaction TV Targeted advertising in broadcast Video moving to web Content mobility Globalisation of media Media Convergence Themes Implications Mass Market take-up of converged media will generate massive amount of data & the demand to analyse this Need for data, systems & insight to target and, more importantly, measure advertising Need for data literacy & measurement & management of Marketing Investment now key Globalisation means the need to organise around consumer segments rather than territories Source: Decipher

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The New Marketing Ecosystem is undeniably complex Call centre Performance Management Strategic Advertising Targeted Advertising Media Expenditure Media Channels Decision Support Propositions Strategy Margin Management Portfolio Strategy Internal Marketing Customer Intelligence Market Intelligence Competitor Intelligence Business Intelligence Messaging Pricing Resource Management Channel Management Content Management Increasing scope of the Marketing EcoSystem Direct Marketing Operational Expenditure P2P Contact Expenditure Capability Expenditure BI Marketing Technology Research Services Brand Consulting Strategy Consulting NPD Services Creative services Research Services Data Services BI Marketing Tech Creative Services CRM Web Tech POS Tech Media Buying Database Tech Database Tech Database Tech Database Tech Database Tech Support Services & Infrastructure Press Print TV Retail Mobile Radio Viral Web Outdoor Product Development Product Management Offer Development Brand Philosophy Brand Model Campaign Planning Budget Management Campaign Management Email

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Convergence of IT, Operations & Marketing Future Marketing will require the collaboration of key enterprise budgets Marketing Budget Operations Budget IT Budget Inter-dependencies of Marketing, Operations & IT Credit Risk Convergent requirements

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Return on Investment becoming a key metric Understanding marketing performance will be a critical competency <ul><li>Board level Marketing roles have fallen 25% in the past 5 years </li></ul>“ CEOs, CFOs, and even board directors, have relentlessly cut costs in every corner of their companies except marketing and are fed up with funnelling cash into TV commercials and glossy ads that they say cost more and seem to do less. Companies in every segment .. have become obsessed with honing the science of measuring marketing performance” Marketing Under Pressure “ Satisfaction with data analytics, measurement and process skills still remains low. The link between marketing and the business remains weak” But (MPM) Survey, USA April 2009

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Internal IT has not delivered for Marketing Increasing demand on technology from future-state marketing Issues with Internal IT Marketing Objectives IT Objectives Goal misalignment Weak marketing business cases IT vendors don't understand marketing “ Only 15% of current CRM projects are successful ” IBM Institute for Business Value “ A survey of companies has found that fewer than half of IT projects have intended, positive business outcomes ” “ Marketing vs. Technology is a fight between ignorant marketing people who expect technological miracles immediately and the propeller-heads who talk only about the benefits of some coding philosophy that no one really understands.” CMO Magazine

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Agenda <ul><li>What is the new reality for marketing? </li></ul><ul><li>What are the key skills and capabilities marketing requires? </li></ul><ul><li>Options for getting FIT </li></ul>

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What Constitutes Capability? “ The power to do something” People Systems Data Process Key Capabilities for New Reality Marketing

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1. Customer portfolio management - not customer product management Key Capabilities for New Reality Marketing

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2. One single customer view Two integrated operating models Analytics Applications Campaigning Applications Channel Applications Source data systems and Dwh Significant focus and expenditure on applications; often (as in the case of analytics) to compensate for poor data configurations Core data management for marketing is missing or inadequate Before After Customer contact process Core customer/prospect data Business intelligence Analytics & Insight Operational domain Customer interaction management Optimization Decisioning <ul><li>Strategy </li></ul><ul><li>Sales targets </li></ul><ul><li>Product </li></ul><ul><li>Operational </li></ul>Single consumer view – transactions, profiles, behaviours, costs, values, needs configured in both analytical and operational modes Business Decisions Key Capabilities for New Reality Marketing Analytical domain

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3. Right-time Decision support for multi-channel marketing Not ‘some-time’ analytics Key Capabilities for New Reality Marketing ‘ Offline’ ‘ Online’ Creative Develop Review Plan Optimise Execute Business & Product Strategy Customer Strategy Planning Decision Management Analytics Data Acquisition Data Management <ul><li>Strategy </li></ul><ul><li>Product </li></ul><ul><li>Proposition </li></ul><ul><li>Offer </li></ul>Base Data Optimisation Reporting & Profiles Opportunity Discovery & Data Mining Value & Performance Improvement Strategies Campaign Evaluation Campaign Reporting Analytical Domain Operational Domain Response Capture & Management Candidate Propositions Budgets Targets Operational Constraints Creative Requirements Rapid Insight Scenario Build Model Build & Maintenance Build Plan Third Party Data Purchase Report & review last cycle, define next steps Optimisation & Iteration Plan Specification Define new inputs, requirements, assumptions Scenario Optimisation Real-time Assignments Decisioning & Optimisation Deployment Creative & Content Management Timing is key

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4. Dynamic Segmentation - frozen state segmentation belongs in the ice age Segmentation is most powerful when it addresses a specific problem. And as most businesses face many problems, segmentation must be multi-dimensional Segmentation isn’t just one approach – it is a tool set. Value Needs Product Behaviour Demographics Customer State Preference Credit Key Capabilities for New Reality Marketing

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5. Sell whilst you service Every touch point is an opportunity to progress customer relationships Enquire Purchase Welcome Bedding In Events Explore Retain Prospects Key Capabilities for New Reality Marketing

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6. Fact-based optimisation of marketing budgets - not guesswork Results Evaluation Objectives Resources Key Capabilities for New Reality Marketing Proposition Media/Channel Timing Customer/Prospect (hundreds) (multiple) (any day/ time) (thousands/ millions) Offer “A” Offer “B” £45,000 budget Product “C” Product “D” 25,000 volume Action “E” 10% ROI Action “F” 1,200 sales Minimum 32,000 leads 100,000 mail volume Contact frequency? Channel usage? Channel preference? Transaction trigger End of term Up-sell opportunity Competitor product renewal Recent contract Preference? Saturation? Wrong time? Missed opportunity?

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7. Test, Learn and Deploy - establishing the customer laboratory Key Capabilities for New Reality Marketing Imagine Design Execute Assess Scale Business Objectives <ul><li>Purpose: better understand customer behaviours in reaction to : </li></ul><ul><li>Product configuration </li></ul><ul><li>Channel experience </li></ul><ul><li>Multi-channel mix </li></ul><ul><li>Customer sequencing </li></ul><ul><li>Messaging treatment </li></ul><ul><li>Segmented offers </li></ul><ul><li>and so on… </li></ul>This requires the establishment of a ‘mini’ Multi-channel Decision Engine capability Discard

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8. Sequenced and integrated, closed loop consumer experience - for decisions and data capture across all channels Uninterested & rejecters Interested Enquirer On boarding Subscribe Establishment In Life Nursery Renew or Cancel Ex Customer Suspect-prospect-customer journey Value-based acquisition Actionable measurement of consumer dynamics Informed Interactions: Recognise, Remember, Value Differentiated propositions and flexible, reactive consumer strategies 4 1 3 2 Marketing ‘with memory’ Key Capabilities for New Reality Marketing

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9. Customer Intelligence not Management Information Insight is a business process supported by technology What has changed ? Why? What to do about it? What is driven by customer behaviour Vs organisation behaviour or process? What will happen? What is important? Key Capabilities for New Reality Marketing

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10. The customer-connected organisation Establish, and manage by, customer metrics Understand the organisational customer-value chain and manage the key levers of the customer process Get up-close and personal – data and market research are no substitute Key Capabilities for New Reality Marketing

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Agenda <ul><li>What is the new reality for marketing? </li></ul><ul><li>What are the key skills and capabilities marketing requires? </li></ul><ul><li>Options for getting FIT </li></ul>

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Marketing is more than just Advertising & Promotion Future-state marketing requires components from a number of disciplines Future-State Marketing Model CRM BI Advertising Marketing Technology Web Technology Consumer Insight & Data Credit Risk Retail Technology Marketing Capability

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The New Reality Marketing Professional How do your marketing people measure up? Future-State Marketing Model Brand Advertising Direct Marketing NPD Sales Promotion Distribution Product Management Portfolio Management Customer Operations Credit Management Real-time Decisioning Data quality Technical enablers Analytics Predictive modelling Channel Marketing Marketing Transformation Performance Management Approved Skill Set

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What are the options? It depends on your business model Frequency of Contact Strength Of Relationship Payment Risk Direct Indirect High Low Low High Future-State Marketing Model fmcg Direct Insurance Post-pay Mobile Retail Banking Pay TV Retailing Pre-pay mobile Utility Insurance Assurance

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How best to acquire the capabilities for new reality marketing? Options include a mixture of in-house and external expertise All In-House Hybrid Service Partnership + - <ul><li>Easier to business case internal assets </li></ul><ul><li>Less resistance from IT </li></ul><ul><li>Internal expertise </li></ul><ul><li>Demonstrates ‘customer focus’ </li></ul><ul><li>Always more expensive than plan </li></ul><ul><li>Hidden Costs </li></ul><ul><li>Slow </li></ul><ul><li>Inflexible </li></ul><ul><li>Difficult & expensive to change </li></ul><ul><li>Cultural fit </li></ul>+ - <ul><li>Speed to execute </li></ul><ul><li>Flexibility </li></ul><ul><li>Agility </li></ul><ul><li>Accountability </li></ul><ul><li>Innovation </li></ul><ul><li>Dependency </li></ul><ul><li>Performance Management </li></ul><ul><li>Visible Costs </li></ul><ul><li>Internal staff development </li></ul>What are the options?

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Speed might well be the most critical factor Benefits of capability often lost due to slow implementation Return 0 Time + - Implementation Phase Cost outweighs benefits No competitive advantage Exploitation Window Benefits Realisation Competitive Advantage Atrophy Phase Benefits wear-out Competitors catch -up What are the options?

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The key questions to consider What is really my core ? What is my true cost of ownership? Where do I get my competitive advantage? What are the options? Press Print TV Retail Mobile Radio Viral Call centre Web Outdoor Product Development Performance Management Media Channels Decision Support Propositions Product Management Strategy Margin Management Offer Development Brand Philosophy Portfolio Strategy Internal Marketing Brand Model Customer Intelligence Market Intelligence Competitor Intelligence Business Intelligence Messaging Pricing Resource Management Campaign Planning Budget Management Channel Management Campaign Management Content Management Email BI Marketing Technology Research Services Brand Consulting Strategy Consulting NPD Services Creative services Research Services Data Services BI Marketing Tech Creative Services CRM Web Tech POS Tech Media Buying Database Tech Database Tech Database Tech Database Tech Database Tech

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Thank You