From CIO to CMO, A Data Story

 

“If you came into marketing because you didn’t like numbers, then you don’t have much of a future.”
-Beth Comstock, CMO at GE

Much has been written about the shift in spending from the CIO to the CMO, Gartner has been out front on this by forecasting that by 2017 the office of CMO will spend more on IT than the CIO function. Whether this proves to be true or not masks a more stark reality for professionals in marketing organizations, which is that their jobs are fundamentally changing.

The era of Mad Men in marketing isn’t over but the creative and communication aspects of the marketing function are diminishing in importance. Marketing can no longer exist as a siloed function, isolated from product, engineering and operations, and more significantly there is a substantial skills gap that marketing professionals will need to fill to respond to a complete shift to digital.  Traditional skills are not going away but the emerging reality is that data-centric strategies for engaging radically different customer behaviors and more complex buyer journeys will not be realized without retooling people.

The other reality that marketing teams cannot escape is that they alone cannot anticipate and develop all of the content that will be required to successfully execute on company objectives. More reliant than ever before on earned and sponsored content, marketing teams will need to better instrument and provide social incentives for the creation and re-use of earned media and that goes well beyond what is the norm today for social media engagements. However, the shift to digital also requires organizations to think beyond text.

Video has rapidly emerged as the new whitepaper, and this should not be surprising given that YouTube is the second most used search engine on the web. If you are tempted to raise your hand and say "hey Jeff you just said Mad Men is over!" let me stop you know and point out that video relies on 2 core strengths in addition to the creation skillset, which is the ability to drive distribution and more significantly instrument video for data collection that enables refinement of creation and distribution. Video is data… and then there is Pinterest which has it’s own unique dynamics but is proving itself to be a powerful contributor to digital marketing success.

Whether text, video or images, the common requirement is instrumentation of the content to measure the interaction and the impact. No piece of content exists in isolation, and just like you measure demand generation activities in the context of a funnel where each stage of development passes through, discards or recycles leads, marketers have to measure content through a parallel funnel that captures people according to interests and things they find curious.

The content funnel is more like publishing than sales development because it is all about building a sustainable audience that trusts you as a source of authority. Measuring the impact of content through social channels, time on site, and referral sources is a valuable technique for sourcing new ideas, concepts, and influencers in your market.

I came across a fascinating post that explores the concept of brand newsrooms as a marketing function. This is something my friend Tom Foremski has been writing about for a long time, the notion that brands are just another form of media entity and this post certainly reinforces that.

In the age of social media, overnight viral sensations and the constant flow of information and multimedia experiences, it’s not surprising that brands find the newsroom idea enticing. In order to keep up with the times and current media-consumption behaviors, brands are starting to shift towards higher-metabolism marketing that responds quickly to culture, much like how journalists in newsrooms act quickly in response to important events.

The Changing Role of Marketing Changes Everything

The fact that IT spending is shifting from CIOs to CMOs is interesting but not a full and complete story, and for vendors who will look at this trend and shift their strategies to selling to a different title miss the point and will ultimately fail. Marketing as a function has to become more integrated with other functions because, like customer service, it is on the front end of business processes that will ultimately prove to be game changers for how companies engage their customers, prospects and ultimately establish competitive position in their markets.

Professionals in the marketing function will need to become more data scientist, looking for every conceivable opportunity to instrument content and then use that knowledge to drive audience and participation. Marketing budgets, as a consequence, will become less campaign and project based, more process and systems based as a result. so while we all may be selling to a different title it may not matter all that much.

Consumers Exert Ownership

I have written on several occasions about how social network users and online community members have exerted their shared ownership of a service to affect changes in policy and feature. This comes about from the reality that a social network without members isn’t much of anything therefore the users in a network have a purposeful sense of shared ownership.

@wendyslea sent me an interesting article in Forbes about how this is spilling over to corporations more broadly. It’s worth the time to read this despite it meandering across a range of topics, although all are rooted in the notion of consumer power through the ability of social networks to form groups.

The one area that I get conflicted on is the notion of showing your weaknesses in order to appear authentic. While there is certainly truth to this, the other truth is that customers want a wide range of things from businesses, but mostly they want to be heard and they seek competence. If all you are doing as a company is exposing the things you are not doing well then you need to ask yourself why that is before you let it all hang out and expect people to just get over it.

Benioff is right, social success is based on trust, much like relationships between people. I think this is where a lot of companies go wrong, they seek trust by attaching people’s names to statements made publicly in an attempt to cloth themselves in the silk of authenticity without actually changing anything else about how they interact with their various constituents… a CEO blog isn’t going to help you if your customers are always pissed off about the customer service they are getting and the quality of your products and services.

The second thing that catches my interest in this is the power of advocacy in an age when the barriers to forming groups in the public space are so low. One person tweeting about the cable guy sleeping on their couch wouldn’t get much attention if millions more didn’t share it, effectively attaching their advocacy to the unstated cause and achieving an exponential effect. Governments in the Middle East would not be falling today were it not for the power of people – everyday people – to connect and organize online (much to the dismay of Malcolm Gladwell).

What does this mean going forward? It’s subject to a lot of interpretation but a couple of no brainer things seem to emerge:

  1. Companies no longer have a behind the firewall presence and a public one. The boundary between employee and customer is very porous so rather than attempting, futilely I would add, to control it the time is right to plow forward and aggressively connect all parts of your company to the customer experience.
  2. Authenticity is critical but so is being good at what you do. Your customers are your marketing team and they don’t care about how efficient your business operations are from a P&L standpoint, they are demanding that you deliver a good product with good service wrapped around it. If your idea of being authentic is to shrug your shoulders, kick the dirt and say “yeah we could do better” without actually making the sincere attempt to change the things that are wrong, then go home now and save us all the trouble.
  3. Connect with your customers where they are because that is where your brand is. Don’t go to Twitter or Facebook or, ultimately, Google + with the idea that you are going to drive that traffic back to your website… engage your customers where they are and if that means you need to invest in technology that connects your front office with social networks, then by all means get it done.
  4. Lastly, and this is the one that will cause the most heartburn in the CEO suite, is that your customers have an interest in your success or failure. Gone are the salad days when all you had to care about were shareholders, now you have to address the needs of customers in ways that go beyond products and services. Customer advocacy is built on the foundation of your customers expressing a deeper connection with you as a company, they care about your values because whether they realize it or not the expressing of advocacy is ultimately the connecting of their personal values with yours as a company.

 

G+, Twitter and Tumblr are Biggest Losers

Like a lot of my peers I have been immersed in Google Plus for the last week and I have to give credit to Google for really getting this one right. The sharing mechanism is very accessible, Circles offer welcome segmentation of your social graph, and most importantly, it’s fun to use.

Much of the commentary has centered on what a successful Google + means for Facebook but I disagree that this is represents a severe near or medium term threat to Facebook. What it does harken is a form of arms race between the two companies that is ultimately good for users.

There are two major losers worth highlighting, Twitter and Tumblr. We won’t see the effects of G+ on either service for some time but I forecast that as G+ mainstreams that Twitter and Tumblr activity will plummet.

Twitter’s defining feature is both it’s strength and it’s limiting factor, 140 characters. Tumblr use over time has grown as Twitter itself grew, and I think a major factor in their growth is the mainstream acceptance of short form sharing. Like a lot of people I started to use my Tumblr blog to share links with short text snippets that provided context, and I enjoyed the photo and video sharing which embeds the media blob rather than link to it.

I wrote about my shift to Tumblr here, saying last year that:

Twitter and Facebook will continue to be important channels to push content through but rather than creating content in those networks I will, whenever possible, post through Tumblr. I will continue to “talk” with people through social networks and Facebook has some unique capabilities that I will take advantage of.

G+ is essentially a better Twitter+Tumblr for me than combining the two services could ever be. I get the realtime effects of an activity stream on top of easy content sharing tools, and I get the ability to provide a high degree of context in both what is shared and in the interaction because there is a threading model for replies.

Lastly a word about Circles. Google is providing a good starting point with Circles but it’s not the end game because being successful with Circles is entirely a function of your discipline in maintaining Circles, it’s like email folders in this respect.

We really need to get to a point where dynamic Circles can respond to a person’s interest graph as well as their social graph. In this model content would be shared not on the sole basis of who I targeted with it but as a response to what people are actually interested in.

I am making an effort to maintain my Circles but I don’t enjoy it nor do I believe that it is a model that the mass market will adopt, even though the notion of segmenting a person’s social graph is entirely reasonable and highly practical.

Voice of the Customer is Dead

Voice of the customer (VoC) programs have been popular from the moment that businesses first started having customers and in recent years the formality of these programs has increased and books have been written and many conference agendas populated with experts on the subject.

VoC is dead and social is the reason.

Paul Greenberg recently noted at the Enterprise 2.0 event that business technology is not undergoing a technology revolution, the revolution is one based in communication and as a result business is being forced to adapt and innovate.

Companies of all sizes are directly connecting with individual consumers and are now able to scale these interactions. The result of this is that methods built around sampling and proxy are no longer necessary or productive. Why would you collect data that you have to interpret, extrapolate, filter, and subject to latency when employees can directly tap into customer communities for direct and immediate engagement?

To be clear, voice of the customer is not an obsolete concept… Voice of the Customer programs are obsolete and will increasingly be co-opted and replaced by customer communities.

This is one of the more interesting consequences of the mass market adoption of social networks, they serve to break down the barriers that exist between customers and employees. Whether or not the firewall exists doesn’t matter, the fact remains that employees are becoming accustomed to interacting directly with customers regardless of whether they are in the customer service org or something entirely different.

Companies are themselves recognizing that their competitive strategy requires being attuned to customer needs and engagement, a point that Josh Bernoff recently made quite well in an outstanding research piece called Competitive Strategy in the Age of the Customer.

Bernoff’s key points are that competitive advantage no longer continue to derive from backoffice technology focused on productivity and efficiency but from customer facing technology that delivers customer insights which can then be acted upon from a market and product perspective.

Companies that obsess about customers end up investing in technology differently than other companies because they build their business around the one piece of intellectual property that cannot be replicated or commoditized, customer insight. As a result, Forrester is recommending that companies budget according to the following priorities:

1) invest in real-time insight to build products that customers will embrace.

2) Spend more on customer experience and customer service to build relationships.

3) Fund sales channels that deliver intelligence about customers, not just the push.

4) Shift marketing from one-way ads into useful content and interactive marketing.

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Facebook and the Nature of Power Struggles in Social Networking

Robert may well be right in his analysis but his comment about Facebook always pissing off its users reveals another dimension to this current kerfuffle, who really owns Facebook?

Before we get deeper into this, remember that Facebook has always pissed off its users. First, you’ve gotta realize that in Facebook’s life it will go through at least seven phases. We are moving from phase four to phase five right now. In each phase change people have gotten pissed off.

[From Scobleizer: Technology, innovation, and geek enthusiasm » Blog Archive Why Facebook has never listened and why it definitely won’t start now «]

From the moment that social networks achieved critical mass there has been an uneasy conflict between users and the sponsoring company over ownership. Clearly Facebook owns the intellectual property that is Facebook but without all the user contributed content it would be quite meaningless, therefore the user community believes quite passionately that they are not subservient to the company in this regard and from time to time there erupts an insurrection.

Whether it be over data security and privacy, content controls, third party service integration, or user experience, all of those prior incidents point to a struggle between two groups that are more equal and co-dependent than either realize.

What the user community doesn’t accept is the notion that the only rights they have are those granted by the company underwriting the platform. It’s not a democracy and there is no Bill of Rights that a separate “judicial branch” will interpret and enforce. Users want a voice that has the power to override what the company believes will be strategic decision setting with profit and long term growth at its core.

For their part, the companies behind these networks seem oblivious to the fact that the very social connectedness they are enabling provides the user community with a lot more leverage than companies are used to dealing with. What starts as individual complaints can quickly snowball into large public protests that effectively suck all of oxygen out of the message cycle and take control of the message away from the company.

In the end this will all go away like previous protests because each individual user has far more invested in their Facebook experience than Facebook the company has invested in them. It goes against every grain of my belief system to suggest that the individual user doesn’t matter but it’s likely true here as it has been in the past and it will be so until Facebook crosses some undetermined and unpredictable threshold that constitutes a tipping point that drives users to a compelling competitive option.

Facebook Tries to Woo Marketers

Like a lot of people I am skeptical of advertising potential in social networks, insofar as it being massively disruptive to traditional display ads. The reason for my skepticism is simple, Facebook and Myspace both have positioned their ability to target based on profile data and activity as far superior to dumb display ads but the data doesn’t suggest their ad systems are more effective than display ads.

Facebook has a lot to prove with the new ad format, which it began quietly testing in August and started making available to all advertisers this month. The company says 70 of the U.S.’s 100 largest advertisers have advertised on its site since 2007. But its share of total number of U.S. online display ad views was just 1.1%, according to market research firm comScore Inc., in its most recent report in June.

[From Facebook Tries to Woo Marketers - WSJ.com]

It may well be that the schism here is that the user experience is so fundamentally different than a content site, therefore any form of ad detracts from the user experience in such a way that repels users rather than just making them ad blind. We have seen countless examples of social network users rebelling at efforts to monetize their activity, proving once again that Facebook doesn’t own Facebook but rather the millions of people who use it own it.

Having said that, the fact remains that Facebook in particular is generating some decent revenue and should continue to grow, even if that growth doesn’t come at a rate that Zuckerberg doesn’t find acceptable. Despite his pronouncements that revenue is not their focus, they seem to be expending a lot of energy over the last year in mechanisms that are solely focused on extracting dollars from advertisers.

The advertising market really does need something more effective than display ads and despite years of talk about behavioral targeting the fact remains that there hasn’t been a lot of that going on and contextual advertising continues to dominate the stage.

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Self-Service Display Ads

I’m not jumping on this bandwagon just yet, here’s why. MySpace hyper-targeting is super elegant and compelling on powerpoint but in practice the results are mixed. Not much has been published by MySpace but we ran a few pilot programs around Hypertargeting and the results we achieved with some targeted content that mapped well to the MySpace demographic were mixed. MySpace talks about a “50%-300% improvement” in clickthrough rates but the problem is their baseline CTR case is so low to begin with that even 300% improvement only makes it less bad.

Extending Hypertargeting with self-service display ads makes sense but just having access to a self-service system doesn’t ensure that participants will be successful with it.

This week, the News Corp. property is rolling out its MyAds self-service banner ad system. It hopes to attract tens of thousands of organizations and small businesses to create their own display ads that will be matched to user interests and placed through a Google-like auction system. The bet is such placements, using “hyper-targeting” criteria that mines personal profile data, will make the 56 billion banners displayed by MySpace each month more valuable.

[From Can Search's 'Beautiful System' Extend to Display?]

Advertising in social networks behaves differently than on websites, that much we know, and all of these sites have benefited from an environment that emphasizes that experimental value for brand advertisers. There are some compelling campaigns being run around social networks and I don’t want to pour water on them without giving credit for what is working, but successful campaigns are more the exception than the rule, were that not true we would be hearing a lot more about them. With a contraction in brand advertising in 2009 certain, social networks will come under increasing pressure to demonstrate that that advertising technologies are producing broad and identifiable success stories.

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Media Goes Social

Hutch Carpenter has a good writeup on the new site that BusinessWeek is hosting, Business Exchange. Frankly I’m surprised that it’s taken media sites this long to realize that allowing comments is not the same as community. While BusinessWeek’s efforts are still beta, I hope they succeed.

Having said that, I still don’t understand why FriendFeed and the other meta-social networking sites are not offering white label versions to media that bring a turnkey social network to the mix. The idea that a few dozen media sites will be able to build their own communities is feasible but the cost and time required to be successful will be daunting. Better yet would be for a consortium of media companies to get together and offer a shared community service.

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