The dawn of marketing’s new golden age
Marketers are boosting their precision, broadening their scope, moving more quickly, and
telling better stories.
February 2015 | byJonathan Gordon and Jesko Perrey.
Science has permeated marketing for decades. Fans of the television drama Mad
Men saw a fictionalized encounter when an IBM System/360 mainframe computer
physically displaced the creative department of a late-1960s advertising agency. In
reality, though, the 1960s through the early 1990s witnessed a happy marriage of
advertising and technology as marketers mastered both the medium of television and
the science of Nielsen ratings. These years gave birth to iconic advertising messages in
categories ranging from sparkling beverages (“I’d like to buy the world a Coke”) to credit
cards (“American Express. Don’t leave home without it”) to air travel (“British Airways:
the world’s favourite airline”).
Until recently, marketers could be forgiven for looking back wistfully at this golden age
as new forces reshaped their world into something completely different. These new
trends include a massive proliferation of television and online channels, the
transformation of the home PC into a retail channel, the unrelenting rise of mobile social
media and gaming, and—with all these trends—a constant battle for the consumer’s
attention.
The resulting expansion of platforms has propelled consistent growth in marketing
expenditures, which now total as much as $1 trillion globally. The efficacy of this
spending is under deep scrutiny. For example, in a survey of CEOs, close to three out
of four agreed with the following statement: marketers “are always asking for more
money, but can rarely explain how much incremental business this money will
generate.”1 Chief marketing officers (CMOs), it appears, don’t disagree: in another
recent survey, just over one-third said they had quantitatively proved the impact of their
marketing outlays. 2 Paradoxically, though, CEOs are looking to their CMOs more than
ever, because they need top-line growth and view marketing as a critical lever to help
them achieve it. Can marketers deliver amid ongoing performance pressures?
In this article, we’ll explain why we think the answer is yes—and why we are, in fact, on
the cusp of a new golden age for marketing. At the core of the new era are five
elements that are simultaneously familiar and fast changing. The first two are
the science and substance of marketing. Leading marketers are using research and
analytics to shed light on who buys what, and why; who influences buyers; and when, in
the consumer decision journey, marketing efforts are likely to yield the greatest return.
That understanding, in turn, is making it possible for marketers to identify more
effectively the functional benefits that customers need, the experiences they want, and
the innovations they will value.
But this isn’t just another missive on the power of big data. Organizational simplicity is
fueling speed, and story is pulling things together while inspiring both the customer and
the organization. Happily, the story just seems to get better as creative minds express
themselves through digital means, and it then echoes and expands through social
media and user-generated content. As you’ll see, the emerging new rules for marketing
extend well beyond data and analysis, crucial though those are, and even transcend the
marketing organization itself.
Science
Advances in data, modeling, and automated analysis are creating ever more refined
ways of targeting and measuring the returns on marketing investments, while
generating powerful new clues about why consumers behave as they do. Long gone is
spending guided mostly by intuition and focus groups. Instead, organizations are
seeking greater precision by measuring and managing the consumer decision points
where well-timed outlays can make the biggest difference.
Big data is a term that’s often used to describe this transition. But it’s not just big data;
it’s also big research. A major consumer company investigating the decision journey for
its products recently undertook a consumer study, collected through online surveys, on
a massive scale and at a speed that would have been unimaginable in the days of mallintercept
interviews. The project, which involved more than 10,000 surveys over the
course of a month, uncovered material differences between how the company and
consumers were thinking about the category, while also explaining what drives choice
at each stage of the journey. These insights are now being used to change brand
strategy, product-portfolio design, and marketing campaigns. The potential impact runs
into billions of dollars in additional revenue.
While much recent marketing science has played out in the measurement and targeting
of advertising and promotion expenditures, many consumer companies are increasing
their focus on in-store behavior: how promotions, traffic flows, and physical engagement
with products affect sales. Capturing and analyzing data on such issues has become
more feasible in recent years thanks to low-cost sensors that can be embedded in
products, as well as the ability to capture and analyze huge amounts of unstructured
data from store videos—and even to track shoppers’ eye movements.
The impact goes beyond marketing and product teams. Marketing science is boosting
the precision of real-time operating decisions. At a major hospitality company,
marketing analysts are able to get a read on the performance of a particular property or
category over a weekend and then drill down on individual customer segments to
assess how to make improvements. If the data show that a profitable segment of
weekend travelers are shortening their stays, the company can create special offers
(such as late checkouts or room upgrades) to encourage repeat business.3 Or consider
how one industrial-products company revamped its highly fragmented portfolio of more
than 500 SKUs sold to customers in a diverse set of industries. Prices varied widely
even for the same products, without any clear reasons as to why, hindering efforts to
manage margins. An analytical tool that could scan 1.3 million transactions helped the
company redraw customer segments, identify products with opportunities for pricing
flexibility, and recommend new prices. Ultimately, it reset about 100,000 price points.
More scientific marketing means that CMOs and other senior leaders need enhanced
analytical skills to exploit data possibilities more fully and stay ahead of the whirl of
developments. One CEO we know believes it’s time to create a position—marketing
technology officer (MTO)—that’s rooted both in technology and domain knowledge.
Knowing what can be automated, when judgment is required, and where to seek and
place new technical talent are becoming increasingly central to effective marketing
leadership. That is intensifying the war for specialized talent as traditional marketing
powerhouses bid against high-tech companies for needed skills.
Substance
As more advanced marketing science and analytics take hold, they are making it
increasingly natural for marketing to go beyond messaging and to shape the substance
of the business, particularly the experiences of customers, the delivery of functional
benefits, and the drive to develop new products and services. Armed with information
about customers and a company’s relationships with them, the CMO is well-positioned
to help differentiate its products, services, and experiences.
That’s good, because digital innovation, transparency, and customer-centricity have
raised expectations across the board. In automobiles, as sensor technologies
proliferate and onboard computing power increases, consumers are now starting to
expect that collision-avoidance and digitally-enabled safety systems will become part of
manufacturers’ offerings. (Luxury carmakers already are making sophisticated safety
options part of their marketing story.) In retail, brands like H&M, Topshop, Uniqlo, and
Zara have harnessed the consumer’s desire to have it all by bringing mass-market
prices to the colors, fabrics, and designs of high fashion. Simultaneously, Amazon and
other digital players are pressuring brick-and-mortar retailers, which are responding
both by retooling their supply chains to enable faster restocking and one-day delivery
and by creating new advertising messages around the in-store pickup of online orders.
Marketers are well placed to help their organizations meet the rising bar by, for
example, making the case for customer-care initiatives and for consistency in the
customer experience. A better one became the heart of a marketing campaign at
European energy supplier Essent, a subsidiary of RWE. To ensure that the company
delivered on the promise, the CEO named the chief of marketing to lead the initiative.
Among the successes: making customer onboarding less cumbersome by cutting
process steps from seven to two. Marketing also took the lead in efforts to create new
products that customers wanted. The CMO led a cross-functional team of sales, IT, and
product development to produce Essent’s smart, Internet-connected E-thermostat, for
instance. Some of its functionality was cocreated with customers.
Similarly, marketing has taken a leadership role in designing and setting standards for
Daimler’s highly digital customer-experience brand, “Mercedes me.” The digital platform
provides customers with automated appointment booking, personalized financing, a
chance to cocreate ideas, access to maintenance data from sensor-enabled automobile
diagnostics, and even quick access to Daimler’s car-sharing and taxi services—for use
on business trips, for example. (See “Marketing the Mercedes way,” forthcoming on
mckinsey.com, for more on the role of marketing at the company.)
These efforts and many more like them are extending marketing into the guts of the
business, and most would not have been possible just a few years ago. The power of
today’s digital tools and the scientific approaches they make possible are not only
enabling a more substantial role for marketing but also giving it opportunities for realtime
impact.
Story
Even as marketing reaches new heights with technology-enabled measurement, the
importance of the story hasn’t diminished. But ways to tell it are morphing continually as
the stuff of storytelling encompasses richer digital interactions, and mobile devices
become more powerful communications tools. In this world, creativity is in greater
demand than ever.
Google’s “Dear Sophie” advertisement is an example of the modern art form. It tells the
story of a father writing to his daughter as she grows up, with the narrative
demonstrating how Google search, Gmail, and YouTube can be new channels of
human connectivity.4 (For more on how Google seeks to connect, see “How Google
breaks through,” forthcoming on mckinsey.com.) P&G’s “Pick Them Back Up” spot for
the Sochi Olympics (part of the ongoing “Thank You, Mom” campaign) is another
moving story. It dramatizes the moms who were there for their kids throughout the
years of hard training, who picked them up when they fell, and who deserve celebration
as the unsung heroines. It’s hard to watch these commercials and not tear up, at least a
little.
Chanel’s recent launch of the new No. 5 perfume offers a good window on how stories
are evolving beyond traditional video. Over a decade after their first collaboration,
creative chief Karl Lagerfeld has again partnered with film director Baz Luhrmann to
produce a short film on a woman whose lifestyle embodies the brand. Their latest
effort—“The one that I want”—stars model Gisele Bündchen and features the perfume,
along with clothing and other Chanel products. Beyond the film itself, a series of
YouTube videos extend the campaign with shorts on the making of the film, interviews
with Luhrmann on both projects, behind-the-scenes footage from Chanel’s studio, and
more.5 All of this is designed to amplify the lifestyle message of the fragrance’s launch
in a way that traditional TV or print couldn’t accomplish.
New media also dictate that marketers relinquish control of the story as digital
interactions with customers become more frequent. Customers want to interact with
stories and modify them on social media. Following the kinds of story rules that once
made board members and CEOs comfortable is no longer feasible. Social-media
programs are consuming a larger share of many marketing budgets. A number of major
consumer companies are using interaction centers to monitor and participate in socialmedia
conversations as they develop, sometimes including the promotion of
discussions on corporate social-media channels.
Agency-management issues also are an important piece of the puzzle. Talent scarcity,
evolving digital storytelling, and perceived institutional rigidities have opened new
debates about the best ways to access creativity. Some companies, like Chanel, are
enhancing their control over the story with supplemental digital content. Other global
marketing leaders are bringing in-house more of their story muscle, particularly when it
involves lighter message content for social media. Agencies are responding. Many are
acquiring more digital talent and working to break down silos to overcome perceptions
that they are actually geared to bigger productions and may lack the digital and story
skills to handle new content in an agile, integrated way. All this is very much in flux,
suggesting that leaders who aren’t asking fundamental questions about the roles of
(and fit between) agencies and internal marketing teams stand the risk of being left
behind.
Speed
In a digital economy, marketing is no longer a “batch” process but a continuous one.
Consumer preferences change with stunning velocity, as do the dynamics of markets
and product life cycles. This culture of urgency means that marketers need a new
agility, plus the management skills and organizational clout to bring other functions
together at a higher clock speed.
How speed is achieved, of course, will vary by company and industry. A number of
CMOs we know are setting the terms of how functional units should collaborate and
spelling out what the entire organization needs to know to get new products to market at
a stepped-up pace. In these cases, marketing becomes the glue across the
organization, providing oversight and coordination.
To speed up its digital tempo, Nestlé’s marketing organization launched digitalacceleration
teams. These specialists train business units and functions in the skills
needed to be effective in digital marketing and social communications. Nestlé’s country
units have adopted the approach, as well, allowing them to adapt the digital training to
local market conditions, while adhering to core, company-wide standards.6
At Google, lead times for new products are continually shrinking. Internal teams are
attuned to putting products in front of consumers and then, in real time, to bringing back
insights in a cycle of testing, learning, and iterating. Marketers are central to this
process: they work to develop close relationships with product-development teams in
order to inject their knowledge of user needs into how products are developed. That
helps create a vision of the product from the user’s eyes, and one that engineering
teams are eager to create. Achieving that shared vision between product developers
and marketers is a key element of speed in formulating new products and features. The
time-to-market benefits of better information and more fluid collaboration extend to a
wide range of companies, sectors, and business functions. Consider, for example, how
data and collaboration are increasing the speed and agility of B2B sales teams. (For
more, see “Do you really understand how your business customers buy?,” forthcoming
on mckinsey.com.)
Simplicity
Complexity is the enemy of speed, which is a big reason why a number of leading
marketers are reforming their organizations. Too often, expanding geographic
footprints, product proliferation, and new arrays of channels and digital specialties have
led to complex hierarchies, silos, communication gaps, and redundancies. But these
can be tamed.
For example, one telecommunications company realized that a cumbersome
organizational structure was getting in the way of delivering the top-notch customer
service that the CEO had designated as a strategic priority. He created a unit combining
existing call centers and a newly formed social-media customer-care group. The leader
of the unit reports directly to him. Proximity to the top of the company allows the new
team to collaborate more smoothly across the organization, while signaling the
importance of the customer experience.
Many consumer marketers are using technology to reduce complexity. They are
embracing internal social-media platforms to encourage the generation and sharing of
ideas, which helps speed up problem solving across the organization. Daimler,
meanwhile, reorganized its marketing and sales departments around the idea of the
“best customer experience.” It created a new customer-experience function bundling
several headquarters functions into one that maps the entire customer journey, with the
goal of locking in a consistent brand experience throughout the world.
Simplifying working relationships with advertising and other media agencies is another
goal for many marketing organizations. Trade-offs abound: specialist agencies have
expertise in new digital-content formats and delivery channels, but they aren’t always
full-service shops. Larger agencies offer more services, but the strengths of many still
lie in traditional media. Marketers building teams of employees with strong skills in
digital content and delivery are bringing more activities in-house, but bulking up can
create complexity and slow things down. And of course, simplicity can’t come at the
expense of great creative output.
In our work with global marketers, including many leading-edge practitioners, we are
seeing significant progress in each of these five dimensions. As you think about the
implications of science, substance, story, speed, and simplicity for your organization,
we suggest that you ask yourself five questions:
• Are we taking advantage of the science of data and research to uncover new
insights, or are we working off yesterday’s facts, assertions, and heuristics?
• Do we fully exploit the power of marketing to enhance the substance—that is, the
products, services, and experiences—we offer our customers, or are we just selling
hard with a “me-too” mind-set?
• Do we have a clear brand story that echoes through cyberspace, or do we feel that
we aren’t quite capturing hearts and minds?
• Have we created simplifiers within our organization, or have complex matrices
become a logjam?
• Are we faster or slower to market than our competition?
Although this may seem like a lot to handle, the rapid changes and fast-breaking
opportunities facing marketers in the 21st century suggest to us that the best ones will
have good answers to all of these questions. In our opinion, those that do will not only
enjoy above-market growth, they will define the next golden age of marketing.
About the authors
Jonathan Gordon is a principal in McKinsey’s New York office, and Jesko Perrey is a director in the Düsseldorf
office.
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