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Continuous Marketing Reinvention

Presented by Robert Liodice, President & CEO, Association of National Advertisers, Inc.
Marketing Summit Forum, Wake Forest University

Good Morning. Thank you very much for the generous invitation to speak with you today. It’s absolutely wonderful to be able to return to Wake Forest. This is my third Marketing Summit, and I am looking forward to enjoying it  as much as I have before.

On behalf of the 400 member companies of the Association of National Advertisers – the companies that market 9,000 brands and collectively spend over $150 billion on marketing communications annually – I congratulate you on planning and convening this outstanding event.

Furthermore, I want to commend you for tackling the prime challenge that marketers face today …namely how to engage consumers at a time of overwhelming, technology-driven transformation.

This forum – and the world class MBA program at Wake Forest that underpins it – exemplifies the vital leadership that’s necessary to drive the marketing profession forward.

And  LEADERSHIP is what our industry is all about!

All of us in marketing equally share the responsibility for:

  • Raising the bar
  • Improving the way we do business
  • Successfully building our brands
  • Making our business systems more productive and more accountable
  • Becoming professionally more capable
  • Attracting new talent to the industry while learning to become more diverse

Industry leaders have made tremendous progress as marketing communicators.  But we still have such a long way to go.

And as the leaders – and future leaders of this industry, we have the responsibility to create new pathways that will build on the substantial momentum created in the past few years.

You see, the job’s not over.  Rather, as it always seems to be in marketing – the job is just beginning.  And for that matter, the job will forever be – “just beginning”.

How come?

Well, I believe a lot of that is traced to one of the most powerful influences in the history of marketing:

– The impact of TECHNOLOGY.

It has often been quoted that there’s been more change in marketing in the last 5 years than had occurred in the previous 30. Technology has cut an important swath into the messages marketers deliver … and how they deliver them.

It has shaken – and continues to shake – the foundations of marketing in several distinct and profound ways.

First... Technology has put The Consumer in Control.

It has given the power of choice directly to the consumer. Consumers can get marketers’ messages when they want them and how they want them – and, most importantly, if they want them at all.

All you need to do is to look at the growing impact of TIVO and DVR’s, satellite radio, do not call lists, and the ad-blocking power of the Internet to know that the rules of this game have indeed changed.

And technology has also changed the media landscape.

Technology has been the foundation for the introduction of a vast array of new media alternatives.

It has increased the reach and targeting power for marketers through the evolution and development of the Internet, podcasting, blogging, I-pods, and mobile technology.

Even traditional media have been affected as video-on-demand, IPTV, addressable television, high definition radio, outdoor communications and overall interactivity have profoundly influenced the landscape.

Technology has changed how we manage Brands and how we build Brand Equity.

Brand loyalties that were once considered “givens” by product managers, are now being challenged by consumers’ access to competitive information through technology.

Brand equity must consistently be reinforced to ensure consumer relevance and value added.  Finally – technology has completely transformed the measurement platform.

That which was once considered to be beyond the scope of quantification has bowed to the reality that everything can, in fact, be measured.

These phenomena – all influenced by technology – are forcing businesses to make revolutionary choices about how to spend their marketing dollars.

To marketers, the conclusion is stark, it is clear, it is compelling:

Marketing – as a business discipline … an organizational function … and a professional career – is being reinvented.  In fact, it must be continuously reinvented!

Marketing is now based on an entirely new kind of strategic platform – one that embraces continuous marketing reinvention as its cornerstone philosophy and is built on four major pillars:

  • Brand Building
  • Integrated Marketing Communications
  • Marketing Accountability

And...

  • the Marketing Organization

1. The first pillar is the reinvention of brand building.

Reinventing brand building must reflect the technologically-driven, consumer-controlled, constantly changing marketing environment.

It is, perhaps, the most important pillar, as marketers need to consistently re-think how to keep the brand relevant, consumers loyal, competitors minimized and revenues growing.

Brand reinvention begins with innovation … innovation that continuously refreshes the brand in ways that speak to consumers one-to-one and build long-term appeal and trust.

Apple Computer is a master.  The New York Times recently said, “Apple, these days, is an innovation factory.”  First, Apple came out with the hugely successful iPod, which reinvented the entire music industry.

Then, Apple continued its assault on the consumer by making its long anticipated thrust into living-room entertainment with a device that will display movies, television shows and other videos purchased over the Internet on television sets.

And then, Apple stunned the world by reinventing the phone.   The iPhone combines three products – a revolutionary mobile phone, a widescreen iPod with touch-controls and a breakthrough Internet communications device with desktop-class email, web browsing, maps and searching.

Remarkably, they’re all packaged in one small, lightweight handheld device.  Analysts are predicting that Apple will enjoy 30-50 percent gross margins on the iPhone. Now that’s innovation that builds business!

Innovation not only drives new brand introductions, it also drives the reinvention of existing brands like:

Motorola –
which rode a remarkable business turnaround through the introduction of the RAZR and a host of other innovative product introductions.

Procter & Gamble –
which has figured out how to re-energize its mature portfolio and reinvent the way successful brands are built – including the venerable Pampers and Crest brands.

In the business to business arena, General Electric has been absolutely brilliant at reinvigorating its brands through its  “Imagination at Work” campaign.

This remarkable effort is not only a wonderful marketing platform, but it has motivated an internal cultural commitment to drive organic growth through innovation. In its first year, GE revenues grew by an astounding 18%.

2. The second reinvention pillar is integrated marketing communications.
  
Perhaps the most fundamental changes in marketing have been affected by the development of new media. Combined with the power of traditional media, this markedly new, technology-influenced landscape has created enormous opportunities.

The opportunities are embedded in the enhanced ability for marketers…and consumers… to connect directly – and, in many instances, on a one-to-one basis.

So who really “gets” what integrated marketing communications is all about?

One company that does is MasterCard.  They’ve taken their long-running, award-winning “Priceless” campaign and integrated the concept into all customer and consumer touch-points.

Today, the “Priceless” message plays throughout the world – in 105 countries and 48 languages –  across all marketing platforms, including traditional and business to business advertising, promotions, sponsorships, emerging media and public relations. 

Importantly, MasterCard has successfully engaged the consumer beyond mere brand recognition.  

When they encouraged people to produce their own “Priceless” advertisements, 100,000 individuals did just that, creating a truly personal connection with the brand.

3. The third reinvention pillar is marketing measurement and accountability.

The benefits to marketers are enormous as companies strive for process simplification, speed-to-market and overall systemic productivity – all greatly facilitated by technology.

Reinventing accountability will completely overhaul the marketing business system.

But to accomplish this, marketers need to create a culture of accountability. 

It starts with the appointment of an accountability champion, a person who drives multiple business proficiencies – analytical and financial – towards the common goal of better marketing performance. 

Here are a few distinct cultural examples:

Toyota, which has embraced Kaizen for 80 years, applied this philosophy to manage its marketing communications efforts. 

The result was a reduction of creative teams needed per brief, a decrease in agency rework and an improvement in media buying that generated a 25 percent savings in dollars – money re-invested in incremental marketing activities.

At Johnson & Johnson, marketers wove Six Sigma principles into its core processes in ways that enabled the company to increase organizational speed and to generate breakthrough sales results at lower cost.

Hewlett-Packard used technology to systematically eliminate marketing inefficiencies across multiple brands to reduce marketing expenditures, while increasing the amount of working advertising dollars.

You see, by creating a successful “culture”, these industry giants were better able to apply supply chain management to achieve business excellence, while incorporating far more sophisticated metrics into their business units.

4. That leads us to the fourth and final pillar, the reinvention of the marketing organization.

Reinventing marketing means rethinking what we require of a marketing professional. 

The ANA published a wonderful article, called “The World According to Jim.”   It’s an insightful interview with three great chief marketing officers and ANA board members –Marsh & McLennan’s Jim Speros, P&G’s Jim Stengel and Wachovia’s Jim Garrity.  

These gentlemen reflected on the characteristics they look for in the new marketing professional including:

Holistic, ‘system-thinkers’… customer-centric believers … innovators and dreamers … smart, effective communicators … results-obsessed managers… enlightened measurers … and great team leaders.

In a nutshell, the three Jims are describing the ‘renaissance marketers’ who will truly reinvent the discipline of marketing and lead it to a bright future.  They are the people who will build the pillars of a new marketing profession.

American Express has focused on reinventing its marketing organization along these lines.  It has an R&D group dedicated to develop ideas that help extract as much value as possible from the company’s entertainment and media partnerships. 

The result? 

A continuous stream of innovative marketing approaches – as exemplified by a Jerry Seinfeld webisode … an Annie Liebovitz exhibit … a Martin Scorsese short film on reopening the Statue of Liberty to the public … and the Tribeca Film Festival. 

That was an innovative idea in search of a patron that founders Jane Rosenthal and Robert De Niro brought to American Express in response to the World Trade Center attacks.

John Hayes is the chief marketing officer who engineered American Express’ remarkable shift in marketing strategy.

Jim Stengel has done the same at Procter & Gamble

…As did Russ Klein at Burger King

…As did Cammie Dunaway – who sponsored last year’s Marketing Summit – from Yahoo!

…As did Larry Flanagan from MasterCard

…And Gary Elliott from Hewlett Packard

…And Becky Saeger from Charles Schwab

…And Jim McDowell from MINI

…And Jim Garrity – who sponsored the Summit two years ago – from Wachovia

You see… all of these great marketers are growth champions. They are leaders who are driving their organizations to reinvent themselves… to reinvent the way they do business and the way they market their products and services. They are the leaders who pave the way to a new era of marketing that leverages all of their assets – especially technology – to drive their businesses forward and to build their brands and their brand equities.

Leadership...

As I’ve indicated throughout my remarks, this discussion is all about leadership – leadership that has become more capable and reliable – through the use of technology.

Those who call themselves growth champions all have a shared responsibility to drive the entire marketing industry forward.

To do so, they have to apply the same “reinvention” philosophy they are using to move their individual brands and businesses forward.

But this is not easy to do – as reinvention requires the collaboration of multiple interested parties that need to collaborate and commit to progress jointly.

Collaborative “reinvention” sometimes happens slowly – even when technology has significantly tilted the landscape.  But when reinvention happens, the impact can be profound.

Take, for example, the advertising industry’s triennial collective bargaining with the talent unions – SAG and AFTRA – that represent actors who appear in TV commercials.  Every three years, we renegotiate the talent contracts that were originally written in the 1950s, when commercial television first appeared.

As you can imagine, it has become harder and harder to agree on terms for compensating actors at a time when commercials are not just broadcast on TV, but also play on the Internet and mobile phones.

Last fall, the Joint Policy Committee representing the advertising industry reached a historic, collaborative agreement with SAG/AFTRA. 

Led by Chief Negotiator and ANA General Counsel Doug Wood, the agreement provides for a comprehensive joint study – conducted by an independent consultant – that will examine alternative methods to compensate performers across the ever-expanding array of new media platforms.

For the first time in over fifty years, SAG/AFTRA and the advertising industry have both agreed that it’s time to take a serious and long-overdue look at how we can revamp the way actors are paid for any commercial that runs in audio or video format – whether it appears on traditional television or radio, or in any of the new mobile or Internet platforms that are growing so rapidly in today’s marketplace.  Under a new model, in exchange for fair compensation, advertisers will receive a measurable return on their investment.

Our joint agreement to retain an expert and conduct an in-depth, objective study is unprecedented.

To our knowledge, never before have labor and management agreed to collaborate in restructuring the economic model under which labor is paid and management achieves a return.  This initiative will help ensure that the commercials business and the unions will remain vibrant for decades to come.

 As technology transforms the marketing world… reinvention and innovation are the keys to success.

There are numerous examples of how the reinvention model is transforming outmoded, inefficient ways of marketing into improved communications management, increased effectiveness and enhanced productivity – often through the application of technology.

Here are a few examples:

Measuring consumer engagement.

Under the aegis of the Advertising Research Foundation, a number of industry organizations are working to validate that consumer engagement models are more predictive of brand preference than current measures.

Ramping up project Apollo – which is the first single-sourced consumer measurement system championed by the joint partnership of Nielsen and Arbitron.

Jump starting a 2007 test of the online media exchange for the purposes of determining whether an auction approach to traditional media buying and selling is more productive.

This bold plan was initiated by several independent advertisers – later joined by the agency and cable communities – gaining broader acceptance for Ad ID, a universal advertising asset coding system and e-Biz for Media.

Both projects hold the opportunity for materially streamlining the marketing supply chain providing substantial time, efficiency and dollar savings for advertisers, agencies and the media.

Improving the advertising self regulatory process by strengthening NARC and CARU and changing the adversarial relationship among public policy groups, government legislators and marketers on food and prescription drug issues.

Even the ANA has spent the past few years reinventing itself with its new mission, a new brand identity, its renewed focus on leadership and our reinvented products and services – like our reinvigorated Advertiser publication – which hopefully has become part of Wake Forest’s marketing literature.

But the leadership reinvention agenda does not stop there.

Marketers must reinvent some of the negative public perceptions of the industry – perceptions that are completely misplaced and that completely overlook the enormous contributions this industry makes to society.

For example... We should all be proud of the huge contribution advertising and marketing make to the American economy. 

Last year, a coalition of trade associations came together to produce the most disciplined and focused study ever completed of advertising’s economic impact.  The results are absolutely startling.

Here are the incredible headlines:

Advertising accounts for almost 2.5% of the American economy.

The $278 billion spent annually on advertising generates an estimated revenue impact of $5.2 trillion.

Directly and indirectly, advertising influences about 21 million jobs – or about 15% of all the jobs in America.

This great industry is a major driver of our national economy and a major contributor to the wellbeing of people throughout America.

Beyond its economic impact, advertising is a strong force for creating positive social change.

It is incumbent upon the leaders of this industry, to insure that we leverage this powerful marketing engine to ensure we do our part for society. 

But the industry often fails to bring the appropriate attention to the public policy arena and those in our legislative bodies.

They should know about all of the good that is done – like the Advertising Council, the public service arm of our industry.

Thanks to the pro-bono work of agencies, clients and media partners, the Ad Council places more than $1.7 billion in donated media to educate the public and influence positive social change on more than 50 issues, including drunk driving, seat belt usage and, of course, the well-being of children.

One of the Ad Council’s newest campaigns addresses the troubling problem of childhood obesity. 
 
Teaching kids the importance of eating well and being physically active at a young age is crucial to reversing the trend of childhood obesity in this country.   

The Ad Council campaign launched a year ago encourages youngsters to look at food differently by asking, "Can Your Food Do That?”

The PSAs seek to provide children with a meaningful reason to make better food choices, namely, that healthy foods can help them do the things they love to do, only better. 

Another great example of using advertising to promote positive social change is the terrific work of the Partnership for A Drug-Free America.

As we all know, the lure of drugs continues to be a powerful force that seriously affects the lives and wellbeing of the general public – and in particular, kids.

The Partnership leverages the incredible power of advertising to deter usage and to put useful information in the hands of parents, teens, teachers and friends.

Overall drug use is down by more than 30% since the Partnership started – equaling some nine million fewer Americans using drugs.

That says something about the power of advertising at work. 

As I look at the responsible way the advertising profession leads, an important insight emerges.  Marketers by their very nature are obsessed with reinventing themselves to meet the changing needs and desires of consumers. They listen. They respond. They innovate. They adapt. 

All with the goal of achieving consumer satisfaction.  Marketers are inherently willing – indeed driven – to continuously reinvent themselves – their products, services and methods – in service of the consumer.

Continuous marketing reinvention.

It’s the term I’ve used throughout my remarks, and it’s the imperative – driven by technology – that will relentlessly transform every aspect of our profession in the future.

The future, of course, is what all marketers must predict.  And that’s what I was asked to do at the end of last year by Advertising Age, which invited me to identify the top ten ways that technology and other driving forces in our industry are likely to reshape the marketing landscape in 2007. 

In concluding my remarks today, I’d like to share with you my expectations for the coming year.  And if I’m fortunate enough to be invited back to Wake Forest a year from now, you can applaud my clairvoyance – or jeer my lack thereof!

Let’s kick them off:

  • Consumer in Control: Marketers will abandon their historic ‘command and control’ model of brand building in favor of a truly interactive dialogue with consumers.  Recognizing that consumers now have the power to control how, when and where they interact with advertisers, brand marketers will reinvent their approaches, putting the consumer in the driver’s seat and unleashing a tsunami of interactive campaigns across all media forms.
  • New Agenda for Agencies: Agencies will be turned on their heads, with their efforts increasingly tied to client brand performance.  Marketers will expect them to integrate strategic brand management, creativity and innovative media management – and to deliver big, game-changing ideas.  Failure to do so will result in eventual disintermediation of the marketers’ strongest partner – the agency.
  • Hail to the Chief: The chief marketing officer will rise in stature as a C-suite player, not only serving as chief brand architect and marketing discipline integrator, but also as the enterprise’s business system innovator, organizational teacher/ motivator and, most importantly, chief revenue builder. More CMO’s will embrace their roles as “growth champions” and work to reinvent their respective organizations to improve marketing processes and deliver better, more durable results.
  • Unconventional Outreach: Marketing will increasingly become unconventional – tapping into social networking, word-of-mouth, local events and more – to break through media clutter, consumer multi-tasking and the growing cacophony of marketplace noise.  With the use of the internet, mobile and other new media forms, combined with the innovative use of traditional media, marketers will find ways to reach and engage reluctant consumers and customers.
  • Media Buying Metamorphosis: Media buying and selling will be transformed. The old, antiquated ways of doing business will give way to technology which will usher in new, automated, highly transparent and efficient processes, as demonstrated by the growth of online media buying exchanges.
  • Let the Fighting End: Government policymakers, consumer advocacy groups and brand marketers will begin to find common ground, aligning business goals with public policy needs. Marketers will increasingly embrace their role in helping to advance national priorities in such areas as diversity, education and health – proactively addressing such societal ills as illegal drug usage, obesity, underage smoking, alcohol abuse and others.
  • Organizational Overhaul: The marketing organization will undergo a top-to-bottom reinvention, providing better professional education and skill-building, with a focus on enhancing creativity, strategic alignment and, ultimately, brand stewardship. The students here at Wake Forest and all of your colleagues at campuses across the country hold the key to transforming the marketing organization of the future.
  • Research Renewal: Research will become the next frontier in the accountability equation. Marketers will insist that macro measurements that come from Nielsen, Arbitron and the Audit Bureau of Circulation … and insights that come from marketing mix models and brand performance research … be integrated with critical brand accountability goals. Marketers will be especially vocal in their desire for granular, brand-specific commercial ratings.
  • Blow up the Back Room: Archaic business systems and back office operations that plague the marketing supply chain must be overhauled. With technology as its backbone, marketers, agencies and the media need to lower costs, increase efficiencies and redeploy non-working dollars to harder-working, productive investments.

And finally … my never-ending mantra …

  • Continuous Marketing Reinvention: In the face of relentless technological change, continuous marketing reinvention will become the mantra of marketing executives and the cornerstone philosophy for successful brand building, integrated marketing communications, marketing accountability and the marketing organization.

We can never lose sight that technology is the new underpinning of marketing. It has changed everything – and it will change it so much more.  While technology will always bring change, in the future it will be faster and more tumultuous than ever before. And, as Martha Stewart often says: “That’s a good thing”.

But who better to lead Marketing’s technology revolution than you – the next generation of advertisers and marketers. You are the innovators, the creators, the users. You see the power and the potential. You see its limitless boundaries. You understand its ability to influence and improve. It’s up to you to usher in the next wave of marketing. And I, for one, can’t wait until that happens!

It’s been my great pleasure to address you today as you convene this magnificent summit.  Learn all that you can from this weekend’s program – and from your MBA studies.  We look forward to welcoming you – as future innovators and leaders – to the marketing profession.

 

 

 

Robert Liodice, ANA

Copyright © 2007. All rights reserved.

 

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