Why Brand Management Will Replace Marketing

by Mark Di Somma

P&G’s decision to formally end the era of “marketing” at the company and make the shift  to brand management may accelerate what amounts to much more than a title change for marketers generally. To me, it could point to a fundamental re-examination of the role of the people responsible for brands.

While “marketing” and “brand management” are often treated as synonyms, there is an important distinction between the two terms. Marketing focuses on the activities associated with the promotion and distribution of products and services. Brand management has, for many, been historically focused on identity management but is now much more concerned with the active management of the market value and competitive strength of a brand as an (intangible) company asset.

Marketing is about spending money. It’s how brands accumulate value. Brand management  should focus on how products continue to wrap story and distinction around what they offer to increase competitiveness and build loyalty. The two are linked – but different. Marketing is the means. Brand management should be the goal.

Perhaps we shouldn’t be surprised that the break-away from a pure marketing function should come from the company that pioneered brand management itself. According to Eric Schulz, P&G were the first to recognize, and act on, the cannibalization risk of their own portfolio approach. “By distinguishing the qualities of each brand from all other P&G brands, each would avoid competing with one another by targeting different consumer markets with a different set of benefits,” he explains. “This was especially important in product categories that the company manufactured several competing brands, like laundry detergent.”

P&G is still renowned for its deeply product-centric approach. No surprises. On any given day, around the world, three billion people will interact with a Procter & Gamble brand.


But the decision to now move on from having marketing directors (a term P&G have been using since 1993 and that itself replaced the term “advertising directors”) indicates to me that for a scaled house of brands, the competition to ‘stand for something’ might be increasingly globally rather than regionally driven and that the focus could be shifting away from  promoting products to driving up overall perceived value of the brands individually and as a portfolio.

In time that has the potential to shift the criteria for success. Marketing goals are often measured in volume and sales. When you think about brands as assets however, success becomes a broader idea and the focus is less on how they are being managed and much more on why they are being managed – for the contribution they make to the balance sheet.

To me, a future responsibility of the CMO (and a very good reason to improve relations with the finance team) lies in directing how brand managers help to appreciate these assets; how they lift not just topline value through demand generation but also underlying overall corporate value. According to CoreBrand, companies like P&G are only now starting to realize that they are leaving billions of dollars in potential corporate brand value on the table by not directly linking their corporate brand to the collective brand equity value of their portfolios. CEO James Gregory makes the point that, “When done well, corporate branding and product branding should appear seamless. I predict the next ten years will see spectacular combined campaigns from the leading consumer companies. P&G’s “Thanks Mom” campaign … was just the beginning of this trend.” His opinion reinforces my own view that in order to gain the most value from their brands, companies need to tell all their stories.

All of these motivations are conjecture in the case of P&G. I have no way of knowing if any of these agendas is behind their decision. But there are some things that seem much more certain. Total value will overtake revenue as a key driver for brand teams; advertising is still important, but not as singular to the role as it used to be; and collaboration (even some level of integration) with the data and finance teams seems highly likely. Add in mobility … and things at the bottom of the tea cup really start to cloud over. The ripple effects of those changes, and the many others we haven’t even anticipated yet, will in turn evolve how brands are strategized and what and where they communicate.

Here’s the good news. If your current role is in marketing, there’s probably no huge rush to change your business cards. Brand management may be the emerging black, but it still has some way to go in terms of widespread traction. Observes Ad Age, “P&G seems well out in front of the rest of the marketing world — or what used to be known as the marketing world — on this. A search on LinkedIn shows nearly 73,000 marketing directors and associate marketing directors … but only 1,350 brand directors or associate/assistant brand directors.”

The Hidden Truth About Today's CIOs And The Future Of Work

There have been lots of discussions lately around how CMOs are potentially swallowing up the role of the CIO. In fact within the next few years CMOs are projected to have larger operating budgets than CIOs. Everywhere you turn it seems like the topic of conversation is around the death of the CIO, how the CIO is in trouble, and how the CIO needs to change; basically doom and gloom. Several of the CIOs I’ve spoken with agree that this can get to be a bit depressing and demotivating and doesn’t really further the conversation. 

Meet Stephen Lamb, he is the CIO of the British Columbia Institute of Technology (BCIT) and he sees something that flies in the face of all the talk of the CMO out-pacing the CIO.  BCIT has 45,000 students and a faculty just shy of 2,000.  A few months ago a company wanted to do a case study on the social enterprise collaboration software roll-out at BCIT and they asked to speak to whoever was responsible for all the project marketing and communications, Stephen said, “You’re talking to him.”

According to Stephen CIOs are not standing still or running for the hills, and they are certainly not down and out for the count. In my conversation with Stephen he brought up a few things that are not being addressed and discussed when it comes to the CIO which we need to remember. 

CIOs Touch All Aspects of Organizational Life

CIOs are uniquely positioned within the organization and reach everyone and everything and they are perhaps the only ones with the ability to do so. Whether they do so or not is dependent on the culture of the organization, influence in the C-suite and the disposition of the person (there is no cookie-cutter CIO). For every CIO who is happy to stay back in the data center there is one trying to break free of the old stereotypes of solely looking after boxes and wires. For some reason we seem to be neglecting to highlight this type of CIO, why is that?

CIOs as Scapegoats
It’s convenient to paint CIOs, and for that matter, IT in general as the corporate dinosaurs who are going to become extinct.  Stephen believes that it perhaps helps “validate” the actions of those who have gone off and done their own thing (fueling the App-lification of the enterprise and consumerization of technology).

How About Some Acknowledgement?
There is little acknowledgement and mention of the new breed of CIO. The primary focus is typically on historical pain points and doesn’t take into account the new generation of CIOs that haven’t necessarily cut their teeth on coding or infrastructure management. There are plenty of CIOs who don’t come from a computing background, Stephen is one of them.  CIOs today don’t need to have a pure-bred computing background and in fact it can be more beneficial if they don’t.  Having a background in knowledge management, analytics, marketing, or other line of business can be a unique differentiating factor for today’s CIO.

CIOs can dance!
The notion that you can only be creative if you are in marketing is nonsense!  According to Stephen you have to be creative regardless of what leadership position you are in. At Stephen’s institution, he (nor marketing) is leading all of the creative efforts around marketing and employee adoption. The job is about selling ideas and getting people to change their behaviors or adopt new ways of working more effectively.

CIOs aren’t all about the numbers.
While cost savings and revenue generation seem to fall squarely in the lap of CIOs, many of them are actually deeply vested in supporting and even changing cultures within organizations. Oftentimes the CMO is typically external facing and can have very little connection or affinity with the workforce. The new breed of CIO however, is all about building that connection and adapting to the corporate culture.

Stephen makes some crucial points which I think we should all consider. Most people acknowledge that the role of the CIO is changing, but then again so is the role and responsibility of pretty much everyone else in the C-suite as new technologies and behaviors enter our organizations. I think it’s refreshing to hear from someone such as Stephen who is not focusing on the negative aspects of what is happening to CIOs. CIOs are still very much alive and uniquely positioned to drive amazing change within their companies. As Stephen aptly put, “perhaps a few CMOs might want to do a quick shoulder check.”

Jacob Morgan, 

CMOs: Build Digital Relationships or Die

by James L. McQuivey

The term "digital disruption" sounds painful. The word disruption implies that things are going to get broken up. But for companies that take advantage of what digital can do, disruption will have the opposite effect. Even if business models, traditional processes, and long-standing industry practices are about to be broken up — and they are — when the dust settles one part of your business can and should be stronger than ever: the relationship you have with your customer.

Unfortunately, most organizations don't know what it means to have a relationship with a customer, even though they have a customer list, an email database, or even a loyalty program. Sometimes these trappings of a customer relationship often mislead companies into thinking that they have the relationship thing down and that they don't have to digitally disrupt their customer relationship.

But they do. If they fail to digitally rethink their customer relationship, it will be bad, possibly irreparably bad, for the business, and it will be the CMO's fault. And it's really a shame because the CMO holds the keys to the customer relationship and should know better. 

But instead of thinking about reinventing the customer relationship, the CMO has been busy trying to make CMO a credible and necessary role in the C-suite. Many CMOs have worked hard to establish themselves as serious contributors to the business. They control costs, they oversee the social media team, they've built a fiefdom of IT systems to build the customer relationship, and, most of all, they obsess about the brand.

Marketers constantly tell me that they're the stewards of the brand and while that sounds good at marketing conferences, it won't matter at all in a world where customers can have a real relationship with a company through the expanded experience of using its actual products and services. Customers have learned in a very short period of time that thanks to digital tools and platforms they can get more from companies than they used to, easily. And if they don't they can guiltlessly switch to whatever company is willing to deliver enhanced digital benefits rather than sticking with companies that rely on their brand equity to vaguely promise that benefits will someday arrive.

This is how a no-name company like Rovio was able to enter the mobile gaming business with Angry Birds and swiftly become the dominant player, building a base of millions of users around the globe who download game updates as soon as they are offered. All while Disney and Nickelodeon struggled to earn a paltry tens of thousands of downloads with their games built on their awesome brands like Cars and Spongebob.

This is also how an Sony fell, as it stuck to its engineering-based brand and watched as LG and Samsung created products that delivered clear benefits to digital customers in the smartphone business, eventually expanding to take over rising digital categories like tablets and Smart TVs. Today, LG and Samsung are using the digital customer relationship they have through those Smart TVs to provide targeted advertising based on actual knowledge of their customers, creating better experiences while generating new revenue streams.

If brand isn't enough, what's a CMO to do? Simple: Insist on building a direct relationship with the customer. It's not enough to have a name and an email in the database. Thanks to digital tools that your customer has invested in, you have 24/7 access to that customer. But only if you can make it worth their while to engage with you digitally. An auto insurer, for example, that only touches customers at renewal time or in the event of an accident, has a terrible relationship with customers because it's never positive. But what if that insurer offered a mobile app that rides along with you as you drive, noticing that you are making complete stops and accelerating responsibly. Thanks to such an app, the insurer could offer points or partner promotions to reward drivers. This would create a positive, near-continuous relationship with the customer while potentially reducing accidents which would make everybody happier in the long run. Sure, only the best drivers would be willing to use the app, but aren't those precisely the customers that the insurer wants to build a digital bridge to connect with?

The cost to build this kind of digital bridge or relationship with customers is at an all-time low and will only keep falling. It is exactly this bridge that smart CMOs will use to capture more data about the customer while simultaneously pushing the company to deliver enhanced experiences. It will require thinking beyond the marketing box, of course, because the people responsible for product innovation and IT operations will have to add their expertise or the digital bridge will crumble under the weight of the customer's increasing expectations. But it's the CMO who should have the vision of what the customer relationship could mean for all involved.

The CMO that ignores disruption's opportunity will watch it turn into a threat. Spending more time thinking about branding or even social media — itself only a proxy for a customer relationship — rather than focusing on building a digital relationship with the customer will make the negative aspect of digital disruption a self-fulfilling prophecy. But the CMO that turns his or her energy and budget toward the customer will find that digital disruption creates more than it destroys, for the customer, for the company, and for them personally.

James L. McQuivey

James L. McQuivey is a vice president and principal analyst at Forrester Research and the author of Digital DisruptionM.

Measuring Social Media ROI: Companies Emphasize Voice Metrics

The influential economist Albert O. Hirschman argues that customers can have a disciplining effect on companies and markets through their exit and voice behaviors. Instead of simply “quitting” a product, Hirschman urged customers to voice their complaints so companies could improve and learn. Hirschman would be a happy camper these days because social media puts a megaphone on the voice of the customer. Results from The CMO Survey® show that companies, in turn, are also starting to see the value of emphasizing voice-based metrics. 

 

The CMO Survey® investigated which metrics companies are using to measure the impact of social media investments. In August 2010 and then again in February 2013, top marketers were asked to share which metrics they use to evaluate social media. Looking across the results, we can see which metrics companies most often use. The survey did not, however, ask respondents to rank or rate each metric in terms of importance.

 

Table: Use of Social Media Metrics 2010-2013


The results offer several interesting insights. The emphasis on pure financial metrics is waning. Sales levels, revenue per customer, profits per customer, and customer retention costs show the steepest drop off in usage with all decreasing by more than 45%. This shift is important because it demonstrates the realization that payoffs from social media are not likely to have a first-order impact on company sales and profits. 

Instead, the impact of social media is likely to have first-order effects in non-purchase behaviors, such as people sharing opinions about companies and brands. This sharing, in turn, creates exposure, builds knowledge, generates attitudes, and ultimately prompts purchase. Reflecting awareness of this fact, companies are increasingly using voice metrics—such as referral and buzz indicators—to measure the impact of social media. The number of companies using “net promoter score” increased 30% while the number of companies using the number of followers and friends increased 27%. Buzz indicators increased less dramatically but still grew by 3%.

These voice effects are important to companies in several ways. First, consumers get exposed to and build knowledge about brands and companies without searching on their own. This may be from others who have had company or brand experience and share in forums or blogs as well as those who are just transmitters of “hearsay” chatter, but have no direct experience. Either way, this type of voice can easily get upgraded to the level of “information” that research has shown consumers believe is valuable. Second, companies realize that not all voices are created equal.

Although opinion leaders and mavens have been measured for decades, the ability to track who is connected to whom and the movement of information between consumers makes voice metrics even more powerful. The emerging power of “Klout” is a testament to this. Third, companies are beginning to demonstrate that these voice metrics are leading indicators of company growth. This has already been demonstrated for net promoter score. Once that connection is solidified across other voice metrics, the use of these metrics will really take off.

The increased use of text analysis is consistent with the focus on online word-of-mouth that we see in the referral and buzz metrics. While only 8.5% of companies are using such metrics, there was tremendous growth with a 28.8% increase in usage over the last 2.5 years. While tools are still emerging to make the most of text, this trend indicates that companies not only want to know if customers “like” their product or service or if customers are willing to “refer” it to others, but also what customers are actually saying in their own words. This unfettered look at what customers are saying about products or brands can be exceptionally valuable for companies that want to catch early marketplace signals they want to ride, amplify, comment on, or squelch.

Of course, “voice” is always better than “exit.” 

However, whether voice equates to company learning and company growth hinges on whether companies can capture that voice, effectively filter it, create actionable insights, and drive those insights into strategies.

 

Christine Moorman, Contributor

4 Types Of Marketing Cultures: How Fast Is Yours?

by Sarah Mahoney, 

 

Marketers everywhere may be talking about creating a fast-moving culture of innovation, but most CMOs will tell you it’s an arduous, uphill climb.

 

A new report from Forrester says the trait shared by companies that are either the most successful innovators, the fastest, or both is knowing exactly what kind of marketing culture they already have, and what kind they hope to build.

Starting with the University of Michigan’s Competing Values Framework for Cultural Assessment, Forrester further sorts marketers into four distinct categories, and separate cultural norms:

• Risk-averse:   These are companies that innovate only when forced to, and generally have “command-and-control personalities,” and often operate in highly regulated industries -- especially in financial services, health care, pharmaceuticals and government services. Because they feel less threatened, they tend toward conservative marketing programs that are safe and effective.
  
• Pragmatists:   While this culture is also typically conservative, it tends to be driven by consensus. As a result, it is slower to react to changes in its markets (and so is often under siege by smaller, newer, faster competitors.) They are likely to believe they are customer-focused, and may even have funding in place for marketing innovation, but resources are only available if ROI is proven beforehand. “Innovation still focuses on the product or service, not on new ways to market,” writes Bert DuMars, Forrester analyst, in the report, called “Culture Is Key To Marketing Innovation Velocity.” Employees at such companies -- often CPG players -- “have limited flexibility and require leadership approval to adjust any program or campaign in flight.”
  
• Experimenters:  While they are speedy innovators, they typically don’t have a long-term strategy. “They create rapid marketing innovations as point solutions or tests but are not building a long-term marketing innovation foundation or culture,” he adds. “They actively set aside a larger-than-average budget for innovation programs but don’t learn from their successes or failures.” Most often, this culture exists in larger, multi-brand companies, and may be seen as rogue internal groups that cannot sustain their efforts.
  
• Customer-obsessed cultures:   Forrester says these companies, such as Nestle -- which are both the rarest and most successful -- are able to “flexibly innovate to achieve audacious goals,” and CMOs at these companies are generally immersed in the wants and needs of its customer base. “They build an accelerating innovation culture that allows them to be the disruptors in their markets. This culture knows it needs to be fast-moving … and post-digital by nature.”

Fostering faster thinking within a marketing culture requires concrete financial support, including budgets that support cultural change, such as Coca-Cola’s Liquid & Linked: 70-20-10 marketing strategy, which it says calls for spending “70% of a brand’s marketing budget on “now” or low-risk marketing-proven programs, 20% on “new” emerging trends that are beginning to gain traction, and 10% on “next” or completely untested and unproven elements.”

Also essential are building a “ground up” departmental architecture, which recognizes that the best innovations typically come from individuals and teams -- not the CMO -- as well as setting “audacious” goals, “a long-term goal that stretches the organization to think outside of its comfort zone. Finally, it stresses hiring digital practitioners who are also great communicators, partnering with a local university or student organization to make sure you’re tapping newer, freer thinking talent.

“Marketing innovation is hard and getting harder,” adds Forrester’s DuMars. “To be successful, CMOs must build a marketing innovation foundation and culture that emphasize a post-digital mindset and encourage and reward employees for bringing innovative ideas to marketing leadership.” 

The report was based on interviews with such companies as 7-Eleven, Arby’s, Chick-fil-A, Cleveland Clinic, Estée Lauder, Nestlé, and Skinnygirl Cocktails.

The Rise of the Digital CMO

by Jake Sorofman

Fact: When it comes to marketing spending, analog still outstrips digital by a factor of three to one. How could this be?, you ask. Digital marketing provides targeted reach and measurable impact. Innovative digital marketing approaches in social media, CRM, and other areas dominate the discussion. Nevertheless, analog spending still rules, as confirmed by Gartner's 2013 digital marketing spending report. Shouldn't CMOs and all marketers be shocked by this? Sure, an ample pile of dollars can be attributed to big spending on a few analog media channels, like Super Bowl ads, for example. But I would suggest that there is something more fundamental happening behind the numbers; something lurking in the very nature of digital marketing and what it asks of leadership and what it means for accountability.

The Digital Disconnect
First, there's a digital disconnect in the executive ranks, a leadership vacuum created by a mismatch between expertise and authority. Like so many other revolutions, digital marketing has taken hold from the bottom up. Here, we find digital natives steeped in digital culture and practice — twenty- and thirty-somethings who came of age on the social web. Squint your eyes and you see tomorrow's CMOs. But today's CMO is different: the corporate attire may be gone, but the assimilation to the new digital culture is incomplete. 

You can see a strong precedent for this in the open source software movement, which didn't go mainstream until its early adopters progressed through the ranks. Yesterday's Linux hackers are now the chief architects and CIOs of the largest enterprises. Unsurprisingly, open source has become a key part of most enterprise IT architectures. But open source only crossed the chasm once its champions came of age. Many CMOs see their digital future, but struggle to make the case across the executive ranks, where resistance is born of unfamiliarity, fear, or misperceptions about what digital marketing means for the brand. "But we're a traditional company" is no longer a credible line of defense, though, unbelievably, it is still a more common one than you'd think. 

Perhaps digital marketing won't go native until the natives occupy the executive suite. But I'm betting it will only accelerate because, unlike the open source movement which was initially about cost, digital marketing is plainly driven by revenue. Digital experiences and engagement draw consumers closer to a brand and more efficiently drive conversions and transactions, both online and off. 

The Consequence of Measurement
Second, digital marketing is illuminating in ways both powerful and problematic. Analog practices leave room for ambiguity. The numbers matter, but can't always be counted with precision. ROI is often ambiguous and anecdotal, which can relieve the CMO of true accountability. To be fair, many CMOs do want greater visibility. They're tired of the murkiness clouding the space between investment and impact.

Others, however, long for the bygone days when the big idea was sufficient. The CMO could tap dance through the average board meeting, as long as revenue tracked up and to the right. Like Mad Men's Don Draper, the CMO became the master of the soft-shoe performance. 

But with digital techniques, everything is measurable. Feedback loops tighten, segmentation becomes microtargeting, and optimizations can happen on the fly or even in real time. The relationship between investment and impact becomes correlated and causal — and the CMO becomes accountable down to the dime and moment by moment. Light dawns on the marketing spend! This transparency is powerful when quarters are turning into dollars for the business — but potentially perilous when the opposite is the case.

The Digital CMO
Now, a few CMOs may feel unfairly implicated here. Apologies! Of course, there are indeed strong examples of digital converts who have completed this assimilation successfully and built world-class digital marketing organizations that reimagine brand engagement, and even reinvent business models.

What do these "digital CMOs" do differently? They experiment aggressively. They hire smart digital natives — and empower them. They partner with great agencies. They have the humility to admit what they don't know, the courage to toss out the old playbook, and the confidence to allow digital metrics to illuminate the results. 

Some hire a chief technologist. Sometimes it's a peer to the CMO, perhaps a chief digital officer, which Gartner predicts will be present in 25% of enterprises by 2015. Sometimes it's a chief marketing technologist reporting to the CMO, which Gartner already finds in 70% of marketing organizations today. In both cases, this role is the designated left brain to the CMO's right. 

Digital CMOs also think beyond digital marketing. They look for opportunities to create digital experiences and revenue streams enabled by the nexus of forces, which is Gartner's description of the convergence and mutual reinforcement of social, mobile, cloud and rich information. The collision of these factors unlocks opportunities to reach and engage with consumers across the physical and virtual worlds, drawing them closer with targeted, contextually relevant experiences and offers. Further, it can allow brands to redefine how value is created and delivered — the way Apple has with music, Amazon has with IT infrastructure, and Netflix has with movies.

Last year, Gartner predicted that by 2017, the CMO's technology budget will exceed the CIO's. Why? Because more often than not, it's the CMO who is expected to drive this digital transformation, which is deeply dependent on technology. Is the average CMO ready to step up to this challenge? 

Some CMOs are preparing for the digital revolution by filling the gap between expertise and authority. In other words, they have the self-awareness and the confidence to take bold action even when the context has shifted beyond their sphere of influence and scope of expertise. That is leadership. Others are afraid of the digital disruption — or exhausted by what it will take to convert digital resistors in the executive suite. 

But as we've witnessed through the economic and technological upheavals of recent years, and the resulting creation and destruction of business models, markets and careers — disruptions can be swift and unrelenting, and it is much better to be a disruptor than one of those being disrupted.

Jake Sorofman

Jake Sorofman is a research director with Gartner for Marketing Leaders, from Gartner, Inc. Read Jake’s blog and follow him on Twitter @jakesorofman.