Tag Archives: economic

Winning in the New ‘Marketing Democracy’

Imagine for a moment that you moved to a new home located right next door to a train station. It’s noisy at first. But after a while, you get used to the noise and barely notice it. That notion captures “exactly how consumers feel about marketing and advertising — as if it’s not even there,” said Tim Suther, chief marketing officer of Acxiom, the world’s largest processor of consumer data, at a recent Wharton Marketing Conference. Such consumer numbness has profound consequences — $112 billion in major brand advertising is wasted every year, while eight out of 10 online ads fail to reach their desired audience. “A truly awful, awful performance,” noted Suther.

With the right strategies, however, Suther said companies can successfully navigate this tumultuous world to reach their target customers. He cited a few of the most well-known strategies. For one, they should personalize their marketing to consumers instead of blasting them with broadly targeted ads. They should also identify those customers who spend the most money on their products and services, and invest more in marketing directly to them. Companies should craft a multidimensional profile of their customers, Suther advised, looking not only at what they are buying, but also what they are thinking and how they are behaving online. Moreover, companies should better coordinate their different sales channels to deliver a seamless experience for the customer wherever he or she chooses to shop.

“Einstein famously said that insanity is doing the same thing over and over while expecting a different result,” Suther said. Likewise, companies need to begin thinking differently about how they do marketing, especially in an increasingly connected world. With the expansion of sales and media channels, consumers can shop online using their computers or phones or make traditional bricks-and-mortar store purchases. This increased number of options presents marketers with tremendous opportunities to understand and reach the right audience — if they are savvy enough to do it correctly. “Those [consumers] who engage in multiple forms of media or channels are four to five times more valuable” than those who only participate in one, Suther noted — yet two-thirds of senior executives do not have insight into their consumers across all of these channels. For instance, while people spend 42% of their media consumption time online, advertisers shell out only 11% to 12% of their total advertising budgets on the web.

For marketers, the stakes have never been higher, especially in a world where, via the Internet, consumers can instantly judge a company and convey their opinions to fellow shoppers. This “consumer-to-consumer” trend is a “powerful force affecting the business of advertising and marketing,” and has created what Suther refers to as a “marketing democracy.” “Elections, if you will, are being held every day. Consumers are voting … and they are determining winners and losers. You’ve got to pay attention to this, because they will vote you out of office.”

Suther, who joined Acxiom in 2005 and became an officer in 2007, is responsible for the company’s product marketing, communications, sales support, strategy and business development efforts. Previously, he served as a senior vice president at Metavante, a banking and technology solutions firm, and as president of Protagona Worldwide, a marketing software company. He has a degree in finance and marketing from Loras College in Iowa.

So how can a company fine tune its marketing? The first step, according to Suther, is reaching and engaging the firm’s target customers. The company needs to know who its customers are and what their needs are. “Life is like a box of chocolates. You never know what you’re going to get,” he said, quoting from the movie Forrest Gump. “A lot of marketing and advertising is like that. If you don’t know who is on the other end of the equation, you’re going to have a very nasty problem.” Marketing efforts may be over-invested in relationships of low value and underinvested in those with high value. About 20% of a company’s customers bring the greatest portion of profits, Suther noted, while about half are only marginally profitable. Dividing customers into these groups and marketing appropriately to them makes a material difference in performance. “The future of marketing and advertising will be about reaching just those customers who are likely to drive the maximum value to your organization.”

Second, companies need multidimensional insight into their market. While some firms rely mostly on past purchases or online behavior in determining buying patterns, Suther said there are pitfalls in relying on only one facet of a customer. “If you’re relying just on a single dimension [of a consumer], you’ll get it wrong. You need to have a multidimensional view.” That means taking into account consumer action in different sales channels, behavioral changes over different life stages and other external information. It is a complex process with “no silver bullets.”

The third facet of smart marketing is best shown by what Suther considers “the greatest marketing movie of all time,” Groundhog Day. In the movie, Bill Murray plays a character who relives the same day endlessly and learns as much as he can about the people around him so that he can anticipate their needs the next time he sees them; his tireless work gets him the girl of his dreams.

“Remember me [i.e., the customer] and treat me like a friend. Wherever you see me, anticipate my needs and what I don’t need,” Suther said. “The notion of remembering every interaction and learning [from it] is an important part of being a marketer.” Once a company collects all the insights it has gathered about a particular customer, and implements a marketing plan, the firm then arrives at what Suther referred to as “the moment of truth: Getting [the plan] right can drive a five- to 10-fold return on investment.”

According to Suther, companies should deploy a strategy that encompasses all facets of smart marketing. By doing so, a firm will be able to reallocate 15% to 30% of its marketing budget into higher-performing options; such changes lead to real profits, he said. For example, a major global technology company looked at the pattern of calls coming into its call centers. Many of the calls were questions that the company’s online FAQ section could answer, or orders too small for sales representatives. The company ended up sending out a personalized newsletter to fill information gaps, and it enabled electronic handling of the small orders, saving money and boosting profits.

The economic benefits of smart marketing are real, but there are real-life roadblocks, Suther warned. Changes aren’t easy to implement when employees are used to the status quo. “Your [ad] agency of record will be all over the persona of your customers, while those in digital will be exclusively focused on digital. If you rely on just one of those dimensions, you will get it wrong.” He advised firms to find a way to help both sides collaborate more closely. In addition, senior management often can be impatient about the payoff of such changes and put pressure on the person who recommended the new policies. “It’s really important to show results along the way. [We advise doing] that every three months or so to remind those who you have convinced about your noble ambitions that you are making progress against that investment.”

In the end, the hard work of navigating the new world of advertising will be worth the trouble, according to Suther. Paraphrasing a famous quotation from the 1949 film The Third Man, Suther noted that, although Italy suffered constant warfare and bloodshed for 30 years under the Borgias, that era also gave birth to Michelangelo, Leonardo da Vinci and the Renaissance. “The point of all the tumult that exists in the marketing and advertising world is that goodness will come out,” Suther said. “We will have our Renaissance.”

Article courtesy of: The Knowledge Behind The News

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Double-dip Recession?

The economy seems especially fragile these days, as if the United States is teetering on the edge of recession. That’s the way it is when GDP is gaining at a rate of 2% or less, as it has been for some months: There are stronger areas — Texas, North Dakota, Milwaukee, Washington, D.C., and San Jose, Calif., for example. And some weaker areas, including much of California as well as Nevada, Phoenix, Atlanta and Tampa, Fla.

With industries, the same spotty pattern prevails. Orders roll in for makers of medical devices, earth-moving equipment and a variety of exports. But housing and real estate are still in deep distress. Similarly, job seekers face a mixed picture: More than enough jobs for petroleum engineers, accountants and medical technicians. But teachers and other public sector employees are being laid off. And for the 7 million workers who lost their jobs during the downturn and still aren’t able to find work, the recession hasn’t ended. They continue to suffer.

But the odds of actually returning to recession — at least six months of declining national production — are still relatively low. Many of the economic hits this spring were one-time events and aren’t likely to be reprised — or at least they aren’t likely to pile one on top of another again. The combination of tornadoes ripping through broad swaths of the country, widespread Mideast turmoil sending gasoline prices near $4 a gallon, and the one-two punch of disasters in Japan was extraordinary.

The next few weeks will provide key signals about what’s ahead — indications of whether growth is in real danger of reversing course or will just continue weakly. The July 8 employment report for June, for example, needs to show much more vigor. Sustained economic growth requires net job gains of about 150,000 a month. So far this year, the average is just 72,000; for May, it was only 54,000. Also critical: no further slowing of manufacturing. (A July 1 purchasing managers survey will tell the story.) And an upward tick in June auto sales indicating that Japan’s economy and supply lines are coming back.

The best to expect is probably continued wobbly, weak GDP gains, with three or four more years to go before the economy begins to feel a great deal better. It’ll take that long for employment to again reach the prerecession high-water mark of 138 million and for unemployment to fall below 6% or so.

The fact is, this last recession was different from most. It was born in a housing bubble and sparked by financial crisis. It typically takes longer to recover from downturns arising from financial crises. And housing is usually one of the chief engines of growth following recessions; the Federal Reserve lowers interest rates, encouraging demand for mortgages and housing and spurring growth. That can’t happen this time.

Recovery will be slower, as the economy shifts to rely less on consumer spending and more on exports and business investment. It’s a worthy destination, but the trip won’t be a pleasant or smooth one.

FROM: http://www.kiplinger.com/columns/dekaser-practical-economics/archives/it-just-feels-like-a-double-dip-recession.html#ixzz1QNnITcm9