While most of the world’s top marketing executives acknowledge a critical shift in the way they engage with their customers, many question their organisations’ ability to manage the change, a study by IBM has found.
The IBM Global CMO Study is the technology giant’s first study of CMOs, and the 15th in the ongoing series of C-suite studies developed by the IBM Institute for Business Value. The study conducted face-to-face interviews with over 1,700 CMOs between February and June 2011.
Respondents spanned 19 industries and 64 countries and included marketers from 48 of the top 100 brands listed in Interbrand’s 2010 rankings.
The study showed that while CMOs are aware of changing trends in the digital landscape they, or their organisations, remain slow to act. For example, while 82 per cent of CMOs plan to increase their use of social media over the next three to five years, only 26 per cent are currently tracking blogs. 42 percent are tracking third party reviews and 48 percent are tracking consumer reviews to help shape their marketing strategies.
That the majority of CMOs are not currently doing so is surprising. Carolyn Heller Baird, CRM research lead for the IBM Institute for Business Value and the global director of the study pointed out that social media has permanently changed the nature of customer relationships with brands.
“Approximately 90 per cent of all the real-time information being created today is unstructured data. CMOs who successfully harness this new source of insight will be in a strong position to increase revenues, reinvent their customer relationships and build new brand value,” said Baird.
As customers increasingly share their experiences widely online, they gain more control and influence over brands, the report pointed out. This shift in the balance of power from organisations to their customers new marketing approaches, tools and skills in order to stay competitive. Yet, over half of the CMOs surveyed think they’re underprepared to manage key market forces – from social media to greater customer collaboration and influence.
Ann Glover, CMO for ING Insurance US said in the study that marketers needed to ensure that their relationship with customers was “give and take”.
“(It needs to be) a two-sided conversation, with both parties having responsibilities in the interaction,” she said.
In fact, most CMOs admit that they remain mired in 20th century approaches. Over eight in 10 have not moved beyond sources of information like market research and competitive benchmarking and 68 per cent still rely on sales campaign analysis to make strategic decisions – despite recognising the impact of real-time data.
Baird likened marketers who underestimate the impact of social media to those who were slow to view the internet as a new and powerful platform for commerce. These marketers are missing out on an opportunity to drive increased revenue, brand value and to reinvent the nature of the relationship between customer and brand.
CMOs are having a tough time not only being held accountable for their actions by consumers on social media but also having to be more financially accountable to their organisations. Nearly two-thirds of CMOs believe that ROI will be the primary measure of marketing’s effectiveness by 2015. But, even among the most successful enterprises, less than half of all CMOs feel insufficiently prepared to provide hard numbers.
“The success of my role is far more about analytics and technology than it is about hanging out with my ad agency, coming up with great creative campaigns. We must increase campaign ROI,” noted Rob Colwell, executive manager – commercial and marketing, Qantas Frequent Flyer, in the study.
On the bright side, this emphasis on accountability is a reflection of the function’s growing prominence found the study. Today’s CMOs are in much the same position as chief financial officers (CFOs) were a decade ago, when the CFO’s role was evolving from guardian of the purse strings to strategic business adviser.
This development however may not be moving swiftly enough for CMOs to be in a position to stay ahead of change, the study found. Most of those surveyed acknowledged their lack of significant influence in key areas such as product development, pricing, and selection of sales channels.
To meet these new challenges, CMOs must boost their own digital, technological and financial proficiency. However, the study reported that many interviewed were “surprisingly reticent” in this respect. Only 28 per cent said they would need to be personally successful in terms of technological competence with 25 per cent acknowledging a need to develop a strong understanding of social media.
Ricoh Netherlands CMO, Jeroen de Pundre, commented in the study that marketers would require unique skills to survive. “They’ll need to be capable of integrating marketing and IT – like footballers who can kick with both feet.”
Collectively, the study points to four key challenges that CMOs everywhere are confronting but are unprepared to manage, namely:
Data Explosion: The past two years have accounted for 90 per cent of the world’s data. The increasing volume, variety and velocity of data available tops the list of CMO challenges. Marketers are still struggling to analyse these vast quantities of data, extract meaningful insights, and use them effectively.
Social platforms: If Facebook were a country, it would be the world’s third largest. With 800 million users it’s only smaller than China and India. And users aren’t sitting idley – the average one posts 90 items a month. Twitter users send about 140 million tweets a day. And YouTube’s 490 million users upload more video content in a 60-day period than the three major U.S. television networks created in 60 years. Marketers struggle with capturing consumer insight from these data streams.
Channel and device choices: The growing number of new marketing channels and devices, from smart phones to tablets, is quickly becoming a priority for CMOs. Mobile commerce is expected to reach US$31 billion by 2016. Meanwhile, the tablet market is expected to reach nearly 70 million units worldwide by the end of this year, growing to 294 million units by 2015.
Shifting demographics: New global markets and the influx of younger generations with different patterns of information access and consumption are changing the face of the marketplace. In India, as one example, the middle class is expected to soar from roughly 5 per cent of the population to more than 40 per cent in the next two decades. Marketers who have historically focused on affluent Indian consumers must adapt their strategies to market to this emerging middle class.
This article first appeared on Campaign Asia-Pacific