Thursday, May 29, 2008

ANA Integrated Marketing Conference

I spent the today at the Association of National Advertisers Integrated Marketing Conference in New York. Presentations ranged from a nuts-and-bolts description of reaching government buyers to a frothy view of why consumer “conversations” will supplant traditional media. All quite interesting.

But the one comment that resonated most strongly for me personally came in the conference introduction by ANA President and CEO Bob Liodice. As a result of technology, Liodice said, marketing has changed more in the past five years than in the previous thirty. Marketing must reinvent itself in four primary areas: brand building, integrated marketing communications, marketing accountability, and marketing’s internal organization.

In a way, Liodice’s statement explained why a conference on integrated marketing is still needed. After all, the idea that marketing campaigns should coordinate across channels is by now a fairly old one, and it ranks with Mom and lapel flag pins as a beyond attack. So you would think we could just assume that all marketing communications would be integrated, rather than treating integration as a special case.

And perhaps we could, if we were only dealing with traditional channels like broadcast, direct mail, events, and so on. In reality, as we’ll see in a minute, even those aren’t as integrated as everyone would like. But the challenges of creating that integration are nothing new.

What is new is that various digital channels—Internet ads, social networking, mobile, etc.—have a potential so obviously huge that marketers cannot ignore them. Integrated marketing takes on a new urgency because marketers integrate the digital channels to take advantage of them. Indeed, most of the sessions at today’s conference dealt with digital issues.

One session that didn’t focus on digital showed results of an ANA-sponsored survey on integrated marketing issues. This found that the barriers to integration were largely organizational rather than technical. Specifically, the top four barriers were:

· 59% existence of “functional silos” inside the company
· 42% lack of strategic consistency across communications disciplines
· 36% insufficient marketing budget
· 36% lack of a standard measurement process

It’s only when you reach number five that the answer even might be related to technology:

· 33% lack of skill sets among marketing staff

Answers to other questions reflect a similar lack of obsession with digital channels. Indeed, the ranking of marketing communications programs by which “provides greatest value to your business” lists conventional channels first:

· 34% general advertising
· 11% in-store/point-of-sale
· 11% word-of-mouth/viral
· 8% public relations
· 8% direct response advertising
· 8% search engine marketing (at last!)
· 7% sales promotion
· 7% event marketing
· 3% internet advertising
· 3% sponsorship
· 2% social networking

One way to read these numbers is that ANA members are old-school mass advertisers who may dabble in digital channels but don’t take them seriously. But judging from the keen interest in digital at today’s conference, I don’t think that’s the case. Rather, I think these numbers mean two things:

1. most of the ANA members' business is still driven by conventional media, so by “value” they meant sales volume.

2. the obstacles to integrating digital media are the same, primarily organizational, obstacles that block integration of conventional media.

That the second of these points is true seems almost self-evident: although new technology can certainly be tricky, the real issue is figuring out what to do with it, not how to get it to work.

The first point seems more doubtful, because I think of “value” as a quality or efficiency measure (as in, “value for money”) rather than a simple volume measure (as in "value of sales").

But the ANA respondents may see things differently. When another question asked “the most important measure of effectiveness of your integrated marketing communications programs”, the ranking was:

· 35% sales growth / volume
· 11% brand tracking study
· 10% ROI analysis (e.g. econometric modeling)
· 9% brand equity measures
· 8% market share
· 8% response data (e.g. cost per lead, cost per sale, cost per click, etc.)
· 6% customer acquisition
· 4% customer relationship management data
· 3% profitability
· 3% lifetime value of a customer
· 2% advertising research
· 1% other

In other words, this group really does focus on sales volume. In fact, even the relatively high ranking of “ROI analysis” is misleading because it relates to econometric models, which primarily predict changes in sales volume. You have to get down to number nine, and a whopping 3%, before you actually reach the true value measure of “profitability”.

To be honest, these answers make me a little sad. I haven’t really given up my belief that lifetime value is really the most important marketing measure, even though I’ve pretty much abandoned hope of seeing it widely adapted. (See If Lifetime Value Falls and Nobody Measures It, Has It Really Gone Down? and a slew of earlier posts on my Customer Experience Matrix blog.) I’d be happy with profitability as a primary measure as well. But of the top measures listed in the survey answers, only ROI analysis has any real hope of tying specific results to specific marketing programs. All the others are important business value measures, but almost useless for measuring the contribution of individual marketing programs.

I’m not saying that I’m smarter than the ANA members who answered the survey. Quite the opposite: this is a very experienced group, with an average of 15.6 years in marketing. If they’ve concluded that volume and brand measures are the most important measures of effectiveness, I’m pretty sure that’s because they’ve tried them all and found volume and brand work best. And I’m guessing the reason is those are the measures that people outside of marketing—in sales, finance and the boardroom—pay attention to.

In short, what we have here is a rather tart dose of reality. Digital channels and subtle value measures may be new and cool and important. But the old media, organizational challenges and basic volume and brand measures are still what matter the most.

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