How to seize opportunity in a disrupted marketplace

We’ve all seen disruption happen, the establishment giants too big to notice the upstarts at their feet quietly pulling the rug out. That’s what it looked like to watch Netflix execute two industry-changing offerings, first unseating Blockbuster in at-home video rentals and then disrupting itself in the move to on-demand subscription streaming. And disruption is equally visible now, as Uber and Lyft challenge taxi services, on-demand delivery, and even the traditional model of auto ownership. What we’re witnessing is the result of fundamental systemic changes in consumer behavior, technology, and marketing processes that have paved the way for drastic change at both the industry and product level. In a world of ubiquitous access and distribution – where scale is defined as billions of users — the marginal cost of being in second place has never been higher.

Technology has changed the way companies communicate with consumers. Programmatic media buying, leveling the hierarchies of legacy pricing advantage, has forced marketers to use tools and processes that use data to reach specific audiences. Social media, content, and experiential marketing, with their promise of reaching disengaged consumers, are also of growing relevance. All of this brings complexity to marketing’s technology choices, talent requirements, organizational issues, and budget priorities.

The sum of these changes for many companies is a sense of chaos. Marketers must keep pace with constant and swift changes in consumer behavior and ever evolving technology. When the practices of yesterday suddenly no longer work today, how do marketers determine priorities for staying ahead tomorrow?

MediaLink surveyed a number of marketers to identify their biggest challenges and their strategies for facing them. Understandably, worries centered on how to best harness digital opportunities in a complex media ecosystem where new platforms are continually emerging and consumer interactions are personalized and trackable. Just as concerning is how to bridge internal silos in a more networked world where digital is now traditional.

Some of the ways marketers meet these challenges include consumer-centric, always-on models; media-agnostic planning; leveraging first-party and partner data for audience targeting; and implementing content hubs that integrate with web, social, and email marketing. E-commerce and digital shopper marketing — rather than being considered niche disciplines — are becoming core to marketing efforts, and marketers are making smart investments in digital marketing innovation and emerging platforms.

MediaLink contends that companies that harness chaos are in a better position to stem outside disruption than companies that attempt to avoid it. And while there is much talk in the industry about being an innovative company or being resilient to disruption, not much is said of the practical strategies for actually embracing change and becoming that kind of company.

Here are three methods that businesses successfully employ to foster innovation and become more responsive to change.

1. Innovation Strategy
An innovation strategy is an open-minded but disciplined approach a company takes to help navigate emerging technologies and foster experimentation while avoiding the allure of the next big thing.

Innovation strategies should create the space to identify areas of focus and risk, a decision process to vet and map a path forward, a framework for experimentation, the tools needed to implement and execute new processes, and the KPIs to identify the right measurements for success. It requires permission — even incentives —from the company’s senior ranks to take and reward calculated risks.

To execute an innovation strategy it’s essential to first evaluate the technology landscape through the lens of the business. This means having a point of view about where the industry as a whole is headed; it’s a critical first step and key to understanding the emerging themes resonating with customers. The evaluation also needs to question the advances that will create the most value for the business, the market forces driving the industry forward, and their likelihood of systematically changing the organization.

Marketers will need to ask themselves how technology will change consumer behavior and potentially affect product and positioning, and discuss whether their innovation strategy should apply to local markets or be implemented globally.

Establishing an innovation strategy can take a number of forms. One tactic used to instigate the process involves relevant emerging companies presenting to brand and marketing teams who then brainstorm on how to best use the technology to improve their specific businesses; grants are given for the best ideas, which are then piloted and eventually shared back along with success metrics to other teams and implemented if applicable. Another tactic is to incorporate structured play — 30 minutes of the day set aside for passion projects or exploring an idea — allowing big ideas to bubble up once the mind is freed from normal workday focus. Digital journeys are another productive angle to foster innovation mindsets. These are often facilitated at tentpole events, like CES or SXSW, and include curated tours, workshops, and sessions with innovators and creative thought leaders, all selected according to the specific requirements of the company’s leadership. Journeys create an opportunity to learn from those on the cutting edge and allow dedicated time to collaboratively ponder the application of innovation to specific areas of business.

Regardless of how marketers initiate an innovation strategy, brands will need to identify exploration areas that will move the needle for their organization and be clear on the boundaries of those areas. Determining what the company will not do is just as important as defining what it will.

A good innovation strategy helps companies create internal cultures of innovation while setting parameters for a test-learn-adapt-adopt approach.

Calculated risk-taking, creativity, and experimentation should be encouraged at individual, team, and organizational levels, and ultimately the goal is for the company to develop a competitive advantage through its own resident innovation expertise.

2. Center of Excellence
Many organizations are moving to formalize the importance of innovation in business. One manifestation of that is the establishment of centers of excellence (COEs). Just as often centered within marketing departments as within an entire global enterprise or one of its regions, these are internal units designed to accelerate digital capabilities and share digital expertise without complicating the ongoing demands of business.

COEs should help drive consistent policy and approaches, help innovate and test, standardize measurement, educate, increase efficiency, and share best practices. “We created a center of excellence to accelerate digital fluency and the adoption of digital marketing techniques,” says Jon Potter, chief marketing officer and executive vice president of brands at Möet Hennessy USA. “The COE was designed to respect and preserve the DNA of each brand that sits within the Möet Hennessy USA portfolio. Each brand is able to collaborate, share best practices, and benefit from experts that are resident in the organization.”

While COEs are dynamic and multifunctional, most encompass a similar range of responsibilities, including establishing standards for digital planning and management; managing centralized digital resources, data, and platforms; encouraging digital literacy at all levels of the organization; championing digital adoption and best practice; advising on decision-making and adoption; and identifying areas for innovation and experimentation with digital tools. Because of their expertise, COE leaders are often called upon to act as spokespersons for digital efforts.

While all this might sound like a cost center, COEs can have a positive effect on the bottom line. With a centralized digital unit, COEs can participate in negotiations with the biggest digital media and technology platform providers, realizing lower rates and additional services —even if media budgets remain housed with brand teams. Internal experts may identify existing or potential technology pitfalls, avoiding expensive corrective action, while instituting internal measurement systems that can lead to marketing efficiencies. It’s also worth noting that data sharing across the brand portfolio can identify new customer segments that will help lower the cost of customer acquisition.

What this looks like in practice depends on the needs of the company, its vision for change, and its transformation timetable. Often, outside experts can help companies establish their centralized digital COEs, set the vision, and design organization structure, pulling together a cross-functional team with a mandate to provide digital leadership, training, and best-in-class advice.

3. Agency Realignment
In a recent MediaLink survey, a number of agencies were asked to identify the biggest changes in the industry and the effect on their businesses. Results reveal many agencies feel flat client budgets and the demand for ROI leave them having to achieve more with less, and brands taking control of first-party data threatens in-house programmic buying.

Other changes include the centering of social and mobile in marketing plans, the displacement of creative by media agencies, and resource-intensive content and analytic disciplines. This can understandably be a difficult environment in which to operate.

Marketers’ tendency to tap multiple niche agencies specializing in specific areas of media, tech, digital, etc., to address emerging disciplines that bigger, more traditional agencies have been slow to adopt, has further complicated the marketer-agency relationship. It often leads to the question of which agency should own the strategy. Historically, the advertising process
started with the creative agency leading with insight and ideas to create the strategy. Today many agencies are involved
in creative, and brands are taking control of first-party data and flirting with in-house media This can lead to overlaps in
competencies, confusion in processes, and operational inefficiencies. In truth, there is rationale for strategy to be led by almost any agency, but especially by agencies for which a consumer-centric, always-on mindset is innate and data and social media are second nature.

It’s tempting to consider blowing up the agency model, but despite the difficulty of the landscape, agencies have enormous
potential to be important agents of change for marketers. Many have taken the idea of customer centricity to heart, have creative approaches to media, and are experts on change in organization culture, data, and technology — and yet their abilities are often underutilized by marketers. Thankfully, marketers have begun to realize this and are realigning their relationships with agencies to be more collaborative and to seek their help in navigating the chaotic media landscape. Many marketers are realizing the move toward automation is a shift away from their own expertise and are now counting on agency partners for education on trends and emerging platforms, to break them of bad habits, and to bring digital capabilities to the whole organization and set it on the road to the future.

In a 2015 Ad Age article on media agency reviews, Doug Ray, the U.S. chief executive officer and global president at Carat, said the following: “Clients and agencies are now facing challenges they have never faced before: viewability, ad fraud, programmatic trading, transparency, and social media. An agency now must be expert in technology, data, and content planning.” And that’s entirely true. Organizations are working with agencies in a number of new ways to fully utilize their capabilities. Some are aligning roles across their agency roster or not assigning a lead at all. Others require collaboration among agencies, whether in client presentations or by ensuring data and metrics are shared to improve creative output.

Some clients are even aligning agency incentives to promote collaboration between agencies working on the same business. It’s this level of realignment that must happen in order for brands to expect agencies to work as partners and be true agents of change, not just outsourced service providers.

“This journey is one percent finished.” That’s the internal motto of Facebook employees. It reminds them that no matter how much code they’ve shipped, users they’ve reached, or ads they’ve served, they need to keep working and innovating or they risk losing the forward momentum that’s propelled them into the lives of more than one billion people across the world. And that’s the takeaway for seizing opportunity in a disrupted marketplace: innovation isn’t a one-time cure-all. The methods above are not prescriptions for success — they’re starting points for what should be an ongoing journey of lifelong innovation and change. Marketers have no guarantees their businesses and industries won’t be affected by disruption, but that doesn’t mean they should be ill prepared to face it.

 

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