The name of an Advertising Week presentation about the priorities for CMOs this year said it all: “Not for the faint of heart.”
On Thursday, David Court, director of McKinsey & Company, gave a wide-ranging talk on what his clients—usually CEOs or CMOs—should consider given the current consumer climate. He touched on everything from evolving marketing plans to match the evolving consumer decision journey to how to harness “big data.”
To kick things off, Court spoke of how today’s consumer decision journey has changed. He said people now start with an initial consideration, and then once they decide they want a product they flow into “active evaluation,” which is followed by closure and then post-purchase experience.
He also pointed out the large jump in brand awareness that happens as people go through the decision journey these days. For example, when people are shopping in the automotive category, they are aware of 2.8 brands to start with, and when they start actively evaluating options that goes up to 3.8. When it comes to personal computers, the figure jumps from 1.7 brands that people are aware of to 2.7 when they start evaluating options. And telecom saw an especially large rise from 1.5 to 3.
Court also addressed the area of ROI, which he said has gotten more attention in the last four or five years because of the increasing importance of CFOs. He referenced recent stats from the U.S.: 63% of CMOs said “ROI will be the standard for performance by 2015” and only 44% said “I can measure my ROI.”
He also spoke about three key challenges to get maximum usage from the seemingly limitless amounts of data available in a super-connected world: the ability to manage large data sets, sophisticated analytic techniques and technology. He added that the power of big data is that you’re optimizing and also better at predicting what consumers will do (like the way Amazon recommends other books you may like to purchase).
Another major issue Court touched on was the increasing complexity within marketing organizations. Long gone is the era of only four main communications vehicles: TV, print, radio and billboards. Internet was added to the mix about a decade ago and now he said there are more than 10 vehicles to consider. As organizations get more complex, Court said their “organizational health” can slip.
CMOs are challenged with finding the strategy that fits for their organization, but Court warns that they shouldn’t try to take on all of a group’s analytics on themselves, or handle all of ROI, or expect to be good at all the new media platforms out there.
He shared some revealing numbers about the reasons strategies fail: only 15% of the time it is because the strategy itself was wrong; 40% of the time it was because the team was not aligned (for example, “You incent them to do X but tell them to do Y,” said Court); and 45% of the time the company lacked the skills.
He offered these parting tips:
1) Align the management team. Define the role for marketers and agencies in the context of the overall business strategy.
2) Rethink the work of marketing. Specify the new “work” of marketing that is required to execute the strategy.
3) Define new organization elements. Design a holistic marketing organization model through which the work can be executed.
4) Build new capabilities (and hire the right people).