November 10, 2011

Standing Up Cloud-Enabled Marketing Capabilities

Marketing’s challenge has always been to develop customer insights, targeted value propositions, and powerful communications in an iterative cycle. The Internet has given marketers a glimpse of how each element of that cycle can be dramatically transformed by new technologies that allow direct customer interactions, the ability to test and modify value propositions on the fly, and the opportunity to present the communication that best fits the customer at any point in the processwhile constantly iterating the process as the marketing cycle collapses toward real time.

Today, in the new era of the cloud—together with the expected explosion in connected devices and the dynamic applications optimised for them—information can be continuously fed to cloud-enabled ‘big data’ and analytic engines, opening up the promise that all of marketing could migrate to a true real-time Internet marketing model. The implications are profound, extending well beyond what has become the state of the art in digital marketing and campaigns. In the age of the cloud, to an ever increasing extent, every company must become an ‘app provider—using websites and cloud applications to support, enhance, and in some cases become drivers of its traditional marketing offers.

According to Booz & Company, very few chief marketing officers (CMOs) have thought through the capabilities they will need to drive these (mostly) new marketing activities. Very few are ready to lead their organisations into this new world, in which they know precisely how effective their marketing spend really is and have the opportunity to actively shape their company’s products and services using the customer insights that a connected, cloud-enabled world will deliver.


The Marketer’s Challenge

Ever since its beginnings in the early 20th century, the goal of marketing has been threefold: to gain insight into customers, both current and potential; to use that information to shape the value propositions of the company’s products and services; and then to communicate those propositions to each customer segment through carefully targeted messages and offerings. Over time, marketers were able to learn from each marketing cycle what kinds of value propositions would work with each customer segment, and what kinds wouldn’t, allowing them to deploy their marketing resources as effectively and efficiently as possible.

“The key to marketing success has always been the ability to gather the best, most complete information, and then to analyse and act upon it as accurately and as quickly as possible. However, the tools were for the most part blunt, the ability to correctly correlate activities with results was lacking, and the marketing cycle was slow. The entire cycle had to be completed before marketers could extract and synthesise findings, and then act on them in the next cycle,” said Ramez Shehadi, Partner, Booz & Company.

There were exceptions: Some cutting-edge marketers succeeded in devising ways to collect timely data about customer responses, allowing them to create ever more precise, targeted, and dynamic marketing campaigns. This was particularly true in industries like financial services, where the product—non-cash money—was information based and hence digital.

Then the Internet came on scene. Marketers, and particularly business-to-consumer (B2C) marketers, have developed a variety of dynamic, real-time marketing tools and concepts that allow them to track customer behaviour on the Internet in great detail, improving their understanding of and relationships with customers and vastly increasing the efficiency of their marketing efforts.

“We have all experienced websites that dynamically change as we visit and explore them. Few are unaware of the power (and appropriateness) of technology tools that, for example, allow cloud pioneer Google to read your Gmail messages and present you with tailored offers in real time with no human intervention at all. These Internet marketers, many of whom began their careers in the Internet era and are thus unencumbered by legacy issues, were the first pioneers and are fast becoming the experts in cloud-based, customer-centric innovation based on real-time insights, technology-enabled analytics, and dynamically integrated marketing organisations,” added Shehadi. 


A Connected, Cloud-Enabled World

Now, however, new technologies associated with the advent of cloud computing are extending the depth and reach of connected, real-time marketing well beyond simple Internet portals and siloed digital marketing efforts and campaigns. Connected mobile devices, Internet enabled technologies and appliances, and sensors embedded into almost everything from cars to shoes to pallets of produce on their way to the grocer—are all feeding information to ‘big databases’ at rates unimaginable just a few years ago.

Shehadi commented, “Floating above it all is a new locus of ‘big data’ and computing power—cloud computing—that allows companies to capture and sift through customer information, both structured and unstructured, and gather real-time and contextually grounded insights. Internet marketers are already beginning to understand and make use of these concepts—concepts that traditional marketers still only dream of.”

The impact of the cloud on how companies receive and deploy the information technology they need to run their businesses will be profound, as infrastructure and applications alike become more flexible and efficient. Also, the scale and speed of the coming changes will be unprecedented. Revenues for cloud services, including both applications and system infrastructure, will total more than US$30 billion in 2013, according to our analysis of current projections, and will keep growing in the double digits over the next several years, making cloud computing the fastest-growing sector of the information technology industry.

“Ultimately, the marketing cycle itself will shorten, becoming virtually instantaneous, as it is in Internet marketing. However, it will become much wider in scope, all the way from upstream marketing strategy and product design to downstream sales, service, and loyalty. The new cycle will affect all the connected devices that link customers to cloud-enabled databases, and all the customers who use those devices,” stated Shehadi.


The Integrated Value Chain

The shift to the cloud offers CMOs an opportunity to completely rethink how they organise and lead their marketing operations, and to put in place the tools, processes, structures, skills, and resources needed—indeed, an entirely new marketing value chain—to take advantage of connectivity and the cloud. Where the connected, cloud-enabled world will have the greatest impact on marketing will be in the opportunity to deepen relations with customers at every point across the value chain, and ultimately to integrate the value chain completely, blurring the distinctions between up-, mid-, and downstream efforts…

  • Upstream
    At the upstream end of the chain, where marketers traditionally sought to gain insight into their customers and markets, they will now be able to gather much more frequent feedback from customers and massive amounts of real-time data on how customers use their products.
  • Midstream
    Traditionally limited to the development and execution of channel, pricing, and communications strategies, midstream efforts can now be integrated with upstream efforts, enabling marketers to increase the frequency of product releases, including real-time updates for existing customers.
  • Downstream
    The availability of so many more customer touch points throughout the value chain, and real-time data that can be integrated into cloud-based offers and applications, will transform traditional downstream sales and service efforts, speeding them up and making them more iterative.


Leading the Charge

The very wealth of data produced and stored in the cloud, however, poses the risk of overwhelming CMOs and their organisations. Companies looking for a competitive advantage as business computing shifts into the cloud and devices become connected must develop new ways to capture and analyse all that data, and ultimately to integrate it throughout the marketing value chain.

Internet Marketers: If you are the CMO of an Internet only company, then the marketing capabilities you and your team have today will be almost exactly those needed to win in the new world. However, the challenge is to look ahead, reimagine yourself as an application provider, and think hard about the possibilities there will be when the physical world becomes ‘an Internet of things’ and cloud infrastructure allows you to build much larger data sets, leverage much greater computing power, and reach even larger customer populations.

Hybrid Marketers: If you are the CMO of a traditional company that nevertheless has a component of its marketing function focused on Internet marketing, or you are moving your products into the cloud—and you have access to a dedicated online division with Internet marketing expertise—then your challenge is more complex. The prize is great for CMOs who are ready to lead, but over time, more and more CMOs will be recruited—and let go—depending on how they answer significant questions.

Traditional Marketers: If you are the CMO of that rare B2C company with no Internet marketing activities or one of the many B2B companies that have managed to ignore most of the innovations the Internet marketers have been making, then you have a lot of work ahead of you. It’s time to take a crash course in digital marketing, quickly hire people with the experience and skills necessary to ramp up new campaigns, and find partners that can help get your new efforts off the ground as soon as possible.


Getting Started

“Achieving success in connected, cloud-enabled marketing will be an on-going process that requires companies to be agile and innovative in a fast-changing marketing environment. Under these conditions, CMOs will be forced to become experts in all aspects of real-time marketing and ‘big data’ analytics, and will need to transform their marketing organisations into real-time dynamic execution engines. Those who figure out how to do this first, and transform themselves into true application providers, will gain a real competitive advantage over the laggards. Every large company will expect its CMO to understand these new requirements and be able to put them into practice,” explained Shehadi.

As CMOs begin making plans to build the capabilities that will be needed, they should enlist the aid of the Internet marketers on their teams with the most relevant, developed capabilities to take the certain steps.

“Assess where your company stands now. Determine your current real time data processing and iterative sales capabilities, and the current state of all your Internet marketing efforts. Also, identify who has the requisite skills and experience. If your team does not have these, figure out where to find them. Additionally, you have to define the future state of your marketing organisation. Analyse how your marketing organisation is currently structured and its long-standing ties with other parts of your company. Then work out a transformation plan for establishing and promoting cloud marketing. Determine the new technologies and processes required, the resources needed to obtain them, and the partners that can help you get them fastest. Lastly, I would recommend starting now. There is not a moment to lose. CMOs will need to transform their marketing organisations into real time dynamic execution engines,” concluded Shehadi.