Marketing News: February 2018 by Molly Soat

AMERICAN MARKETING ASSOCIATION

T h e

AMA.ORG

I N S I G H t s

FEBRUARY 2018

I S s U E

FEBRUARY 2018 NO.

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table of contents AMERICAN MARKETING ASSOCIATION

4-6

SEEN ON AMA.ORG

8-11

2018-19 ELECTION SLATE

12-15

ANSWERS IN ACTION • Snapshot • Core Concepts

16-20

AMA INTELLIGENCE • The Middle Market • Scholarly Insights

22-27

EXECUTIVE INSIGHTS • Lawrence Crosby • Michael Krauss • Kevin Joyce

59-62

CAREER ADVANCEMENT • Recruiting • On the Record

#OFFICEGOALS

 Genetically Modified Marketing

Consumer genetics is poised to become the next big driver of consumer preference if it can successfully address concerns about privacy and legitimacy.

42  Flying Blind: How Airlines Get Customer Experience So Wrong With So Much Data

Using data to segment products and customers may not breed passenger satisfaction.

 Message Over Medium

Why advertisers must tune up on principles in the digital age.

FIND OUT MORE AT

AMA .org

OR FIND US ON

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FEBRUARY 2018

VOL. 52 | NO. 2

LETTER FROM THE CEO

Becoming Insight-prone

hat does the term “insight” mean to you? It’s a suitcase word with so many different meanings that it’s become little more than white noise in daily discourse. “Strategy” is another such term. I exhort to my teams that strategy is about developing, designing, abstracting and arranging elements in an ecosystem to yield competitive advantage. If the actions don’t yield competitive advantage, there is nothing strategic about them. A clear and common understanding of such frequently used and consequential terms is as important as speaking and comprehending a common language in an enterprise. I define insight as the unpacking, discovery and abstraction of the most relevant, most leverageable nexus of two or more elements. As a result, insights are about powerful connections. Insights are critical knowledge that unlock untapped opportunity and ultimately lead to competitive advantage. Enterprise-level insightfulness can often generate higher returns in pricing. In my days as president of global marketing, strategy and innovation at Burger King, my team had a great insight into our menu architecture and pricing. They developed the hypothesis (an insight to be tested) that if we introduced a Triple Whopper to our Whopper line, we might not sell very many of them, but when offered single, double and triple options, customers would more regularly choose the Double Whopper, according to the Centrist Pricing Theory. Sure enough, Double Whopper sales jumped almost overnight! A single high-yield insight connected the dots of our menu architecture to consumer behavior related to pricing.

AMERICAN MARKETING ASSOCIATION

Becoming insight-prone is not just for ad agencies and marketing teams. Every aspect of your business has opportunity trapped or unseen that a perspicacious and insightful mindset can unlock or identify. Place a premium on curiosity. Organizations and individuals with a rage to know and learn are those that regularly produce great insights spanning their entire business. Build a cultural message that rewards managerial courage to question why anything and everything is or must be the way it is. Teach people to become insight-prone by orienting them in systems thinking. Becoming insight-prone is everyone’s responsibility. A recent study featured in Jeff Howe and Joi Ito’s Whiplash showed that adding so-called “smarter” people to a team has diminishing returns on their problem-solving skills; whereas adding more diverse thinkers (with potentially lower IQs) has an almost unlimited effect on improving a given team’s problem-solving skills. Got insight?

Mary Garrett Chairperson of the AMA Board 2017-2018 Russ Klein, AMA Chief Executive Officer rklein@ama.org Andy Friedman, AMA Chief Content Officer afriedman@ama.org EDITORIAL STAFF

Phone (800) AMA-1150 • Fax (312) 542-9001 E-mail editor@ama.org Molly Soat, Editor in Chief msoat@ama.org Michelle Markelz, Managing Editor mmarkelz@ama.org Zach Brooke, Staff Writer zbrooke@ama.org Hal Conick, Staff Writer hconick@ama.org Sarah Steimer, Staff Writer ssteimer@ama.org Bill Murphy, Designer wmurphy@ama.org ADVERTISING STAFF

Fax (312) 922-3763 • E-mail ads@ama.org Sally Schmitz, Production Manager sschmitz@ama.org (312) 542-9038 Michael Gay, Account Executive mgay@yourmembership.com (727) 329-4421 Nicola Tate, Account Executive ntate@yourmembership.com (727) 329-4437 Jordan Berthiaume, Media Sales Representative jberthiaume@YourMembership.com (727) 497-6565 x3409 Marketing News (ISSN 0025-3790) is published monthly except June/ July and November/December (pending) by the American Marketing Association, 130 E. Randolph St., 22nd Floor, Chicago, IL 60601. Circulation: (800) AMA-1150, (312) 542-9000 Tel: (800) AMA-1150, (312) 542-9000 POSTMASTER: Send address changes to: Marketing News, 130 E. Randolph St., 22nd Floor, Chicago, 60601-6320, USA. Periodical Postage paid at Chicago, Ill., and additional mailing offices. Canada Post Agreement Number 40030960. Opinions expressed are not necessarily endorsed by the AMA, its officers or staff. Marketing News welcomes expressions of all professional viewpoints on marketing and its related areas. These may be as letters to the editor, columns or articles. Letters should be brief and may be condensed by the editors. Please request a copy of the “Writers’ Guidelines” before submitting an article. Upon submission to the AMA, photographs and manuscripts will not be returned unless accompanied by a self-addressed, adequately stamped envelope. Annual subscription rates: Marketing News is a benefit of membership for professional members of the American Marketing Association. Annual professional membership dues in the AMA are $220. Annual subscription rates: $35 members, $145 nonmembers and $190 libraries, corporations and institutions. International rates vary by country. Nonmembers: Order online at amaorders.com, call 1-800-633-4931 or e-mail amasubs@ebsco.com.

RUSS KLEIN CEO

Single copies $10 individual, $10 institutions; foreign add $5 per copy for air, printed matter. Payment must be in U.S. funds or the equivalent. Canadian residents add 13% GST (GST Registration #127478527). Advertisers and advertising agencies assume liability for all content (including text, representations and illustrations) of advertisements published, and also assume responsibility for any claims arising therefrom made against the publisher. The right is reserved to reject any advertisement. Copyright © 2018 by the American Marketing Association. All rights reserved. Without written permission from the AMA, any copying or reprinting (except by authors reprinting their own works) is prohibited. Requests for permission to reprint—such as copying for general distribution, advertising or promotional purposes, creating new collective works or resale—should be submitted in writing by mail or sent via e-mail to permissions@ama.org. Printed in the U.S.A.

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LETTER FROM THE EDITOR

The Evolution of Insights

n an age of ubiquitous data, it’s no surprise that biodata is the latest and greatest trend in insights. The rate at which consumer DNA tests—which cover everything from ancestry to health data— have caught on is staggering. Staff writer Zach Brooke delves into the rapidly crowding market and what its growth means for marketers. According to Brooke, 23andMe’s personal genetic test was one of Amazon’s top-purchased items on Black Friday last year. As genetic information makes its way into marketers’ hands, consumer watchdogs are taking notice. What could go wrong in this uber-personalized product market? Plenty. Do consumers really care? Not yet. As marketers are flooded with data, some have found that it does them little good. Staff writer Sarah Steimer explores how commercial Airlines have garnered ever-worsening customer experiences despite mounds of data. Airlines seem to be one industry that must move away from personalization, rather than toward it. “If airlines tuned out the siren song of customer data and segmentation, they would

see that flying isn’t an individual experience, it’s communal,” Steimer writes. “It stands to reason that members of a flight can only be as happy as its least happy customer. While it’s important to make the most valuable passengers’ experiences the best possible, airlines need to use data to lift morale for all customers, rather than a select few.” How are your insights evolving? MOLLY SOAT Editor in Chief @MollySoat

CONTRIBUTORS

CAMILLE FETTER

AARON GARVEY

Fetter is president and managing partner of TalentFoot, an executive search firm. She has been featured in AOL, MSN Careers, Crain’s New York Business, CareerBuilder, TheLadders and Today’s Chicago Woman.

Garvey is an assistant professor of marketing at the Gatton College of Business and Economics, where he researches branded product consumption and consumer decision making, affect and motivation.

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as outdoor advertising) will benefit from these displaced ad dollars.

Direct-to-consumer Marketing

4 Advertising Predictions for the Next 4 Years $150 billion in ad dollars could be up for grabs in the next four years. The channel likely to boom may surprise you.

echnology, consumption patterns and media distribution are evolving rapidly, and the monoliths of advertising do their best to keep pace. But try as they might, they’re inevitably late to the party and miss out on arbitrage opportunities in their marketing allocations. Below are some forecasts for the 2018 media and advertising landscape and how it is changing—faster and more dramatically than most prognosticators suggest.

Channel Mix Over the past few years, TV and digital advertising have been the Goliaths of the ad world. Digital

advertising’s self-service execution and granular ROI data have propelled it from less than 5% of U.S. ad spend 15 years ago to surpassing TV in 2016 for the largest share of ad spend. This gap should only increase in the coming years as ad-supported, linear TV crumbles. In the last five years, TV consumption by 18- to 24-year-olds has decreased by half, yet TV ad spend has increased in the same time period.

Prediction: TV ad spend will flatten and begin to decline in the next four years as ad-supported programming is lapped by subscription services such as Netflix, Amazon Prime Video, Hulu and YouTube Red. Digital and other channels with large reach (such

Direct-to-consumer distribution has changed the dynamic between major urban and secondary markets in marketing and advertising. For companies with a direct-to-consumer product such as Casper, Netflix, Amazon and Dollar Shave Club, a customer in Toledo, Ohio, has just as high a lifetime value as one in New York. The cost to acquire that customer, however, can be dramatically lower in second- and third-tier markets. This presents a unique marketing arbitrage opportunity for marketers willing to step outside the demand-heavy major markets and explore more costeffective campaigns in second- and third-tier markets. For marketers, aggregating the long tail of outdoor media owners’ impressions makes it just as easy to execute massive campaigns in second- and third-tier markets as it would be in major markets.

Prediction: There will be a flattening in the U.S. market for direct-toconsumer marketing with advertising dollars doing a “reverse commute” and shifting toward cost-effective awareness and acquisition in smaller markets. New business models deserve new approaches to marketing. Technology As media and technology adoption change faster than they ever have, so must the modern marketer. Another technology disrupting the apple cart of advertising is ad blockers. Ad-blocker adoption is rampant in Asia, and not for the eponymous reasons. Ad blockers decrease data usage, which is a luxury in many of these countries. But no matter the reason for adoption, this technology

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has the potential to change the advertising landscape. A few stats jump out from a recent Pagefair report: • Mobile ad-blocking software has more than doubled globally in just two years. • Ad-blocking penetration is 58% in Indonesia; contrast that with less than 20% in the U.S. • Mobile-first countries are higher on the ad-blocker adoption curve. As time spent on mobile increases, patience for invasive mobile ads will decrease. Original equipment manufacturers may pre-install mobile ad blockers, which would drive an explosion in ad-blocker adoption. Google, Apple and numerous third parties have pioneered technologies that could theoretically displace the entire online ad industry with a few lines of code. What happens if the two giants (TV and online) of advertising get disrupted?

Prediction: As more purchasing, consumption and time is spent on mobile devices, mobile ad blockers will drive the supply of impressions down and make mobile advertising cost-prohibitive.

with multiplatinum rappers, any brand can now reap the benefits of outdoor advertising.

Prediction: Out-of-home revenue has the most potential to double within the next five to 10 years. This will be driven by a combination of: • Shrinkage in TV and digital advertising. • An increase in digital locations that can serve eight ads versus the traditional single advertiser. • Municipalities using outdoor advertising as a new revenue stream as self-driving cars diminish speeding- and parkingticket revenue by $30 billion. • Increasing ability to use out of home advertising as a direct response medium leveraging technologies such as voice operating systems (Alexa, for example) and always-on phone cameras recognizing QR codes. Data is being created with smartphone movement, app downloads, mobile purchasing and social sharing. Capturing that

information and quantifying the impacts will be critical for marketers to know how well their campaigns are performing. As marketers wise up to the evolution of their audience’s consumption patterns, buying and measuring outdoor advertising will be an important part of their advertising mix. TV has enjoyed a relatively uninterrupted half-century of dominance of media consumption. Over the past 15 years, digital advertising has come out of nowhere, riding the massive wave of internet adoption; however, adoption cycles have never been faster, and both channels—which together account for close to 80% of U.S. ad spend—have major downside risk. What happens when ad-free streaming is the status quo and ad-blocker adoption is ubiquitous? We think outdoor advertising stands to benefit more than any other channel to absorb the $150 billion in ad dollars that could be up for grabs. —MATTHEW O’CONNOR

Outdoor Advertising We’re taking a bullish position on outdoor advertising. It’s anti-fragile: As technological progress creates and destroys other channels, outdoor advertising looks to be a stalwart way for brands to reach mass audiences. The analytics driven by outdoor advertising provide better visibility into ROI than ever before. Because every consumer has a point of sale in their pocket, anyone who sees an outdoor advertisement can act on the message in the moment. From small campaigns with local owners of Orange Theory Fitness to campaigns

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5 Reasons to Ditch Programmatic for Private Marketplaces

s a long-time CEO in digital advertising, what I’m about to say may seem sacrilegious to my contemporaries: Advertisers need to spend less budget on programmatic. Programmatic advertising changed the game by allowing marketers to reach consumers on thousands of sites without human interaction, offering millions of impressions. However, programmatic has recently shown chinks in its armor. It has become synonymous with remnant inventory and fraudulent ad traffic, which WPP projects will cost brands $16.4 billion in 2017. It’s also led to a YouTube ad boycott and a GuardianRubicon Project lawsuit. To avoid the pitfalls of programmatic, more companies are turning to private marketplaces (PMP). PMP can be self-service like open exchanges, but it’s an invitation-only marketplace with a limited number of sites offering premium inventory from world-class publishers. Here are the top five reasons to pivot to PMP:

1 Avoid Remnant Inventory

Open exchanges work with thousands of publishers and promise millions of impressions, but brands will not know the exact sites on which their ads will run. PMP uses the same automated buying technology, but has a controlled number of highquality publishers. This means the advertiser will know exactly where their ads will appear. JPMorgan Chase recently decided it wanted more human oversight and went from having ads on 400,000 websites to 5,000 websites. Even after reducing ad placement by 395,000 websites, ROI improved. Why? Higher-quality ad inventory on reputable digital properties.

Exclusive Inventory with World-class Publishers

PMP media companies often have exclusive deals with reputable publishers. Not all PMP companies are alike, and advertisers should find out which direct-to-publisher relationships the company has before agreeing to partner with them. After finding the right partner for your

target audience, you will receive a Deal ID, which is akin to a VIP pass to some of the best websites and placements. While you watch your high-performing ad campaign in real time, your competitor will likely stand outside the virtual velvet-rope. This is one of the major benefits of working with PMPs.

3 Brand Safety

AT&T is the latest company to halt advertising with Google after its ads ran with a YouTube video promoting terrorism. While YouTube, Google and Facebook get most of the blame, these sites are just the tip of the iceberg. When advertisers work with PMP companies, they know exactly where their ads will appear and can prevent them from running next to abhorrent content.

4 Less Bots and Fraud Traffic

In 2016, 30% of the $27 billion spent on open exchanges was on invalid traffic (IVT), compared with nearly 10% in PMP. For multinational organizations, that percentage difference can mean wasting billions of dollars. While the industry is currently unable to eradicate IVT, advertisers should only work with PMP companies that include terms in their contracts that state that clients will not be charged for any impressions classified as IVT by companies such as Moat or Integral Ad Science.

5 The Highest ROI

PMP allows advertisers to see which sites are performing well and make real-time adjustments to capitalize on the best sites. Incorporating channels such as connected TV and digital out of home, advertisers are seeing higher ROI. KitchenAid, which recently ran a PMP campaign across eight channels for its Mini Mixer, saw a 468% brand lift in purchase intent measured by Nielsen. The industry average measured by Nielsen is an 8.4% lift. Programmatic has changed the game. As with all progress, unforeseen issues and unintended consequences tend to follow. More companies are finding that the premium inventory available in PMPs is safer, and they are maximizing ad ROI. —TOM ALEXANDER

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ama elections

2018-2019 SLATE

American Marketing Association 2018-2019 Election AMA

members vote annually on a slate of candidates to hold office on the AMA Board of Directors and AMA councils. A ballot, candidate information and link to the voting site for the upcoming election will be sent to members electronically on March 1, 2018. The voting site will remain open through 11:59 p.m. CST on April 30, 2018. If you have difficulty voting, questions about voting online or wish to request a paper ballot, please contact Election Services Corp. by e-mail at AMAhelp@ElectionServicesCorp.com or call 866-720-HELP (4357), 8 a.m. to 5 p.m. CST. Each candidate for the AMA board seats and council president positions is running unopposed, in accordance with the AMA bylaws. It is intentional that there is only one candidate for each position. The nominating committee of the AMA Board of Directors works each year to identify candidates who have exemplary credentials, a track record of AMA involvement and a commitment to invest their time and talent in the AMA’s future. This slate of candidates is reviewed and approved by the current board of directors. After board approval, the candidate slate is publicly posted on ama.org and in Marketing News prior to the start of the election process. Due to the rigor of evaluation prior to getting on the ballot, each position runs unopposed to avoid unproductive competition. Thus, the election process should not be seen by AMA members as a competitive election, but an opportunity to be informed regarding future leadership and to voice support for the incoming candidates. The election process is important, and we encourage all members to exercise their right to vote for the 2018-2019 slate of candidates. In accordance with AMA bylaws, the nominating committee for the AMA has placed the following names in contention for the indicated offices for 2018-2019 terms, beginning July 1, 2018:

Executive Board Positions Chairperson Bill Cron, Texas Christian University Bill Cron is the J. Vaughn and Evelynne H. Wilson Professor in Business and the senior associate dean for graduate programs and research at the M. J. Neeley School of Business at Texas Christian University. Cron’s research has been published in top academic journals, such as the Journal of Marketing, Journal of Marketing Research and the Academy of Management Journal. Cron has served on the board of directors for the Health Industry Trade Association, Park Plaza Medical, Advanced Medical Supply, Southwest Medical Supply, the Midmark Corp and 24VirtuaIMD. He has served on four editorial review boards, including the Journal of Marketing and the Journal of the Academy of Marketing Science. He has published more than 80 marketing and sales management articles and manuscripts and has been recognized as one of the top 10 sales and sales management researchers in the U.S. He has also co-authored seven editions of one of the leading sales management texts in the U.S. and Canada, Sales Management: Concepts and Cases. He received the 2012 Lifetime Achievement Award from the Sales and Sales Management Special Interest Group of the AMA. Cron has been a member of the AMA since 1977. Prior to serving on the AMA Board of Directors, he served as president of the AMA Academic Council and co-chair of the

AMA Winter Educator’s Conference in 2004. He currently is on the Berry AMA Book Award Committee and the Parlin Award Committee. Cron earned his doctorate of business administration and master’s degrees from Indiana University and his bachelor’s degree from Xavier University.

Chairperson-elect Stacy Armijo, Pierpont Communications Stacy Armijo is executive vice president for Pierpont Communications, a Texasbased public relations and marketing firm with offices in Austin, Houston, Dallas and San Antonio. Armijo has been named a woman of influence by the Austin Business Journal and winner of the Austin Under 40 Award for Marketing, PR and Advertising. At Pierpont, Armijo manages marketing services across the firm, spearheads leadership and development for employees and provides direct client services in additional arenas such as public relations and crisis communications. Armijo serves as secretary of the AMA Board of Directors. In her 15 years with the AMA, she has previously served on the organization’s Audit & Finance Committee, as president of the Professional Chapters Council and as president of the Austin chapter, among other roles. Armijo is also active in the Austin community as a member of the Board of Directors of Communities in Schools of Central Texas and the Member Relations Committee of the Austin Chamber of Commerce. In addition, she is a trusted advisor of Vistage International and a graduate of the Emerge and Essential programs of

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2018-2019 SLATE

Leadership Austin. Armijo also served nine years on the Board of Directors of the American Red Cross serving Central Texas, including two years as chairwoman, and recently completed fellowships with the Austin Area Research Organization and Next Generation Project Texas by the Robert S. Strauss Center at the University of Texas at Austin. Armijo earned a bachelor’s degree in public relations from the University of Texas at Austin. She is a lecturer at the university’s Stan Richards School of Advertising & Public Relations at the Moody College of Communications, where she teaches strategies in public relations. Most proudly, Armijo is wife to her husband, Ronnie, and mom to two boys, ages seven and three.

Secretary Katherine Lemon, Boston College Katherine (Kay) Lemon is the Accenture Professor of Marketing at Boston College’s Carroll School of Management. She is a globally recognized expert in customer management, customer equity, customer experience and the dynamics of customer-firm relationships. Her research appears in leading marketing journals including the Journal of Marketing, Journal of Marketing Research, Marketing Science, Management Science and Journal of Service Research. She has received several awards for her research, including the Sheth Foundation/ Journal of Marketing Award, Lehmann Award, Davidson Award and Berry AMA Book Award. She is the past editor of the Journal of Service Research. She serves on the editorial boards of several journals including the Journal of Marketing Research, Journal of the Academy of Marketing Science and Journal of Service Research. She is an AMA Lifetime Fellow. She received the Christopher Lovelock Career Contributions to the Services Discipline Award, the Early Career Contributions to Marketing Strategy Research Award and the Elsevier Research Scholar of the Year Award. She is a member of the PhD Project’s Circle of Champions. Most recently, Lemon served as the executive director of the Marketing Science Institute; she now serves on the Executive Committee of MSI. She also serves on the Marketing Advisory Board for Harte Hanks, on the International Academic Advisory Panel for the Institute of Service Excellence at Singapore Management University and as an Academic Fellow for the Center for Services Leadership. Previously, she served as an at-large member of the AMA Board of Directors; an academic trustee for MSI; and on a variety of corporate advisory boards including IBM/Lenovo, AirTran, CRMC, WOMMA and Copernicus Marketing (now part of Isobar). Lemon has taught and consulted with leading global companies in many industries (including consumer packaged goods, retailing, digital, health care, financial services, tech and telecom). At Boston College, she serves on the Council for Women Colloquium Advisory Board and the Carroll School Promotion and Tenure Committee.

ama elections

Immediate Past Chairperson Mary Garrett Mary Garrett led global marketing for IBM from 2009 until her retirement in 2015. She joined IBM in 1981 as an electrical engineer and served in key positions, including vice president of marketing global technology services, profit and loss owner for the $6 billion small and medium business for global technology services and vice president of e-business hosting. She led teams across the software and services portfolios in 170 markets around the world. Garrett serves on the board and the audit committee of Ethan Allen Interiors, Inc., a manufacturer and retailer of home furnishings. She also serves on the board of HillRom, a global medical technology company. She is an active mentor in W.O.M.E.N. in America, a professional development group aimed at advancing promising professional women and is also on the board of the AMA, serving as chairperson. Garrett has extensive experience in the technology industry, including digital transformation, Big Data and cognitive analytics, cybersecurity and cloud computing. She holds a patent for her work in speech recognition. She has a broad international background including Europe and emerging markets in Asia and Africa, marketing expertise and business leadership experience.

At-large Members of the Board Bernie Jaworski, Claremont Graduate University Bernie Jaworski is the Peter F. Drucker Chair of Management and Liberal Arts at the Peter F. Drucker and Masatoshi Ito School of Management at Claremont Graduate University. Prior to this appointment, he was the executive vice president of the International Institute for Management Development (IMD) for North America. He previously was a full professor of marketing at the University of Southern California. He is recipient of the three Journal of Marketing awards: the Alpha Kappa Psi Award for best managerial article (received twice), the Harold Maynard Award for best theoretical contribution and the Jagdish Sheth Award for long-term contributions to the discipline. He is also the recipient of the Vijay Mahajan AMA Lifetime Achievement Award for his research on marketing strategy. His research is largely centered on building market-driven companies. For 10 years Jaworski was senior partner at Monitor Group, where he advised clients on their human resource development, leadership approaches and go-to-market strategies. In this capacity he played a senior partner role in guiding several Fortune 500 firms through organizationwide marketing transformation. He also advises leading firms (e.g., GE’s Crotonville) on their overall approach to human capital and leadership development. FEBRUARY 2018 | MARKETING NEWS

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2018-2019 SLATE

Diana O’Brien, Deloitte As the chief marketing officer for Deloitte’s U.S. and global organization, Diana O’Brien leads the network’s marketing leaders in helping to drive growth, build worldclass creative and analytics capabilities and champion the voice of the customer. Appointed in 2015 as Deloitte’s first chief marketing officer for the U.S., she reimagined marketing by combining independent functions (including client programs, regions, industries, research, eminence, social corporate responsibility, sales, pursuits, public policy and client experiences) with PR, communications, digital and marketing to create a cohesive, agile client-centric organization. With responsibility to amplify the firm, she focuses on enabling leaders and aligning execution to global strategy and brand purpose. Over the course of her 32 years as a life sciences and health care consulting professional, she has held numerous leadership roles, including global client portfolio leader, global lead client service partner and global consulting leader for two global life sciences clients as well as U.S. managing principal for Deloitte University (DU), the 700,000 square-foot, $300 million leadership center. As the managing principal for DU and talent development, she was responsible for industry and professional learning, leadership development, leader succession, community and inclusion engagement. She continues to lead the C-suite CMO Program and serves as an advisory partner to several life sciences and public sector clients. She serves on the U.S. executive committee; global, clients and industries council; societal impact council; and brand council. She leads the global marketing council. Previously, she served on the global executive committee, consulting board of directors and diversity council. O’Brien has been included in Business Insider’s Top 50 Most Innovative CMOs in the World, Forbes’ World’s Most Influential CMOs, Leading Women Inc., Leaders Magazine and Cincinnati’s 40 Under 40. Her passion extends to charities related to autism and diversity. She is the chairman and founder of IMPACT Autism, a forward-thinking organization that creates and delivers life management solutions to combat the educational, emotional and social challenges of living with autism. She has received several community awards from Autism Society, Applied Behavioral Services, Every Child Succeeds, FRED and Cincinnati Center for Autism. O’Brien holds an MBA in finance and a bachelor’s degree in behavioral management from Xavier University.

Lisa Bowman, United Way Worldwide Lisa Bowman is responsible for leading United Way Worldwide’s (UWW) marketing and communications team. The UWW marketing and communications team is responsible for the creation, development and implementation of United Way’s global marketing strategies. Bowman

oversees brand, marketing and strategic communications, including brand innovation, creative development, media relations, affinity groups and strategic alliances, such as the famed NFL and United Way partnership. With more than 20 years of experience in developing and implementing strategic marketing and communications initiatives in the transportation, retail, dot-com and apparel sectors, Bowman joined United Way Worldwide from the UPS Foundation, where she oversaw the strategy and execution of the United Way campaign. Bowman began her career with UPS in 2000 as vice president of market development for UPS eVentures, the company’s dot-com incubator. She led a number of groundbreaking marketing initiatives for the company, including rebranding of The UPS Store network and development of UPS Direct-to-Door, a UPS-delivered co-op media product. In 2010, Bowman moved from UPS’s marketing organization to The UPS Foundation. Prior to joining UPS, Bowman held a variety of seniorlevel marketing roles for USWeb/CKS, where she secured as clients UPS; Fabric.com, recently acquired by Amazon; and Ambitions, a private-label manufacturer of women’s ready-to-wear clothing. Bowman was the 2017 American Marketing Association’s Nonprofit Marketer of the Year, has received the Harvey Communications Measurement Award and was named Frontstream’s 2014 Campaign Administrator of the Year. She holds a bachelor’s degree in marketing from Columbia College and a certification in applied project management from Boston University in addition to executive education at Emory University’s Goizueta School of Business. Bowman serves on the board of the American Jewish Committee Southeast Region and has served as both the chairperson and a board member of United Way’s Global Corporate Leaders Advisory Council. Bowman resides in Atlanta with her husband, Bill, and their Alaskan Klee Kai, Mojo, who has appeared in several episodes of Animal Planet’s “Teacher’s Pet.”

Roger Adams, USAA (retired) Roger Adams recently retired from USAA after serving as chief marketing officer for more than seven years. Adams has more than 35 years of marketing experience, spanning consumer packaged goods, durables and retail industries. He previously served as chief marketing officer at Lord & Taylor and Home Depot and as executive director of U.S. advertising and marketing at General Motors. He began his career in product management at PepsiCo. Adams holds a bachelor’s degree in communication studies from Northwestern University and an MBA in marketing from New York University. He has been a longtime member of the board of the Association of National Advertisers and currently serves as chairman of its Brand Management Committee. Adams previously served as a board member of the New York chapter of the AMA.

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2018-2019 SLATE

ama elections

Divisional Presidents-elect President-elect, Academic Council Anders Gustafsson, Karlstad Business School Anders Gustafsson is a professor of business administration in the Service Research Center at Karlstad Business School in Sweden. Gustafsson is conducting research on customer satisfaction and loyalty, service innovation and management of customer relationships. Most of his research is carried out in close collaboration with companies, including grocery stores, sports stores and electronics stores, as well international companies such as Ikea, Ericsson and Volvo. He is the current editor-in-chief for the Journal of Business Research, and he is an area editor of the Journal of Service Research. Gustafsson has published more than 150 academic articles, book chapters and industry reports. He has published articles in journals such as the Journal of Marketing, Journal of Marketing Research, Journal of Service Research, Journal of Business Research and Industrial Marketing Management. Gustafsson is also an author of 12 books, some translated into multiple languages.

President-elect, Collegiate Chapters Council Craig Atwater, Temple University Craig Atwater is an assistant professor in the department of marketing and supply chain management at Temple University’s Fox School of Business. He has served for the past seven years as the senior advisor to TU-AMA, Temple’s AMA chapter. TU-AMA was named one of 2017’s top five collegiate chapters and has consistently been among the finalists in AMA’s annual Collegiate Case Competition. Atwater earned bachelor’s degrees from SUNY College of Environmental Science & Forestry. After receiving his MBA from the Wharton School at the University of Pennsylvania, he began a career in business that spanned more than 25 years, working in senior marketing roles for several information technology and financial services companies. In 2002, however, Atwater followed his passion and returned to academia to earn his Ph.D. in business administration and teach college. He completed his doctorate at Temple University’s Fox School of Business in 2010. Atwater’s research has been published in the Journal of Business Logistics and Transportation Research, as well as the Journal of Education for Business. His research interests include marketing strategy, services marketing, sustainable marketing and most recently marketing education. Atwater is a long-time member of AMA and the Institute for Supply Management. He is also a member of AMA’s Collegiate Chapters Council and co-chair of its annual International Case Competition.

President-elect, Professional Chapters Council Mihali Stavlas, Mellōnaid Mihali Stavlas is the founder and CEO of Mellōnaid, an analytical and creativedriven agency in Raleigh, North Carolina. For the past 12 years at Mellōnaid, Stavlas has helped clients capture and recreate their brand’s story and build brand experience and online platforms by encompassing the full spectrum of their touch points: identity, collateral materials, advertising, marketing, user experience and interactive media. Stavlas overseas all strategy and brand experience efforts that help clients convert prospects into advocates. In addition to overseeing Mellōnaid, Stavlas currently serves on AMA’s Professional Chapters Council. He has previously served as president of the AMA Triangle, an advisor to North Carolina Center for Nonprofits and an advisor to AIGA Raleigh (American Institute of Graphic Arts). In addition, Stavlas hosted a radio talk show out of California called “This Week in Marketing” and is a national speaker on marketing, design and leadership. Stavlas graduated from Virginia Commonwealth University with a bachelor of communication arts degree. Stavlas has been recognized by the marketing community as the 2015-2016 Triangle AMA Volunteer of the Year and a recent recipient of Triangle Business Journal’s 40 Under 40 Award in 2017.

President-elect, Practitioner Council Alyson Heffernan, Ipsos Marketing With more than a decade of experience, Alyson Heffernan is a seasoned insights professional in both qualitative and quantitative research techniques. She has helped organizations intimately connect with their consumer, anticipate trends and maintain cultural relevance. Currently, Heffernan is a vice president of Ipsos Marketing Quantitative Research Division in the U.S. She leads a team that supports clients at every stage of the marketing value chain, from identifying brand and market opportunities to developing and launching new products and optimizing path-to-purchase and shopper strategies. Prior to Ipsos, she led the global consumer marketing insights team for the Writing Instrument and Creative Expression portfolio for Newell Brands. Heffernan focused on embedding consumer insights into business strategy, which increased the innovation funnel value and identified retail growth opportunities for existing products. She was also instrumental in driving the launch of several brands, such as Sharpie, into Asian markets. Prior to Newell Brands, Heffernan held a variety of insight roles at Unilever. She earned an MBA and a bachelor’s degree in marketing management from Quinnipiac University. FEBRUARY 2018 | MARKETING NEWS

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SNAPSHOT

OK, Google, How Did Burger King Create the Longest 15-Second Ad in History? Burger King’s “Google Home of the Whopper” campaign was tricky, cunning and undeniably the most successful in company history. Here’s how the restaurant chain subverted a tech giant for marketing success. BY HAL CONICK | STAFF WRITER

 hconick@ama.org Goal An excited voice called Fernando Machado with a proposition to bend time: “Imagine if we created the longest 15-second TV commercial in history.” Machado, Burger King’s head of global brand management, was skeptical. How can a 15-second spot be longer than 15 seconds? His skepticism gave way to curiosity, as David—the creative agency calling Machado—had won his trust. If anyone could manipulate time itself, it was David. David has an “open brief ” to break unwritten rules and generate what Machado calls “talkability” for Burger King. The burger chain’s regular ad campaigns keep the registers beeping, but campaigns with talkability are lottery tickets that pay off in virality. Machado went straight to David’s Miami office to hear its plan. The presentation was simple: A TV commercial that starts with a crew member from Burger King talking about the Whopper and ends with him saying, “OK, Google. What’s the Whopper sandwich?,” triggering virtual assistants within earshot. Machado was shocked. “I was like, really? Do you think this would work?” A David employee pulled out a Google Home. On a video screen, a low-budget

version of the ad played: “OK, Google,” an on-screen actor said, uttering the device’s wake words. The Google Home lit up, recognizing the voice as if the actor had been in the room. With the device listening, the actor asked what the Whopper burger is. The device responded by reading the Whopper’s Wikipedia entry: “The Whopper is a hamburger, consisting of a flame-grilled 4 ounce beef patty, sesame seed bun, mayonnaise, lettuce, tomato, pickles, ketchup and sliced onion.” “I was completely blown away,” Machado says. He quickly realized the idea’s potential to produce talkability, but just as quickly realized that David couldn’t be the only creative agency attempting to subvert this nascent technology. During the 2017 Super Bowl, just weeks before

Machado’s meeting at David’s office, a Google ad accidentally awakened consumers’ Google Homes. Others had to have seen that error as an opportunity, Machado thought. “We know that this is the type of idea that pops up in different places at the same time, so we rushed to film the ad in the proper quality, prepared a press release and just went for it,” Machado says. Action Just before noon on April 12, 2017, Burger King employees gathered in the company’s Miami headquarters, their eyes nervously jutting down toward the screens of their devices. Some were more nervous than others; Machado felt the anxiety in the pit of his stomach and smiled. “When you feel that way, it means you probably hit something,” Machado says. The ad was set to air just twice during prime time that evening, but the first salvo of reaction was expected much sooner. The media received a press release about the ad with a noon embargo, and just after noon, Burger King posted the ad to its YouTube channel. The response was swift: Google Home owners were creating their own videos, filming the ad waking up their devices and hurriedly posting the videos across the internet. The campaign generated more than 2 billion impressions in a couple hours. Then, Machado says, the media “went crazy.” Headlines flooded the web: “This Burger King Ad Is Trying To Control Your Google Home Device,” the Huffington Post said. “Burger King’s Sneaky New TV Ad Tricks Your Google Home Into Talking About the Whopper,” AdWeek reported. Within two hours, Google quietly released a patch to block the commercial actor’s voice from waking the Google Home. Machado huddled with the David team. Having reached all the objectives for the campaign, the question was whether to stop, or continue playing and having fun. “Fortunately, we decided

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to continue playing and having fun,” Machado says. As the New York Times reported on the beef between Google and Burger King— “Burger King ‘O.K. Google’ Ad Doesn’t Seem O.K. With Google,” per the story’s headline—Machado and the David team went back to the studio to counterattack Google’s patch. They dubbed different voices over the ad—a female voice, a robot voice, a high-pitched voice—and, with hours to spare, sent the updated ads to TV stations. Burger King’s rejoinder worked. During prime time, Google Homes across America blurted out information about the Whopper. “Burger King beats Google in showdown over sneaky ad,” the New York Post’s headline said. But, as usual, the prankster was pranked back: Between April 12 and April 14, there were 104 edits of the Whopper’s Wikipedia entry. Pranksters modified the entry to say the Whopper was a “cancer-causing” burger, that it was a “100% rat meat and toenail clipping hamburger product” and even that the Whopper included “medium-sized child” as an ingredient, causing Google Homes to recite bizarre, disgusting sandwich descriptions to their owners. “Burger King ad lists Whopper ingredients as cyanide, rat meat, toenail clippings,” a headline by AV Club said. “It’s just funny,” Machado says, his voice breaking into a high-pitched laugh when reading back the prank edits. “‘The Whopper contains rat meat;’ everyone knows that’s not true. People are a little bit smarter than that.” Machado, of course, doesn’t want his nationwide burger chain associated with toenails, rat meat or cannibalism, but people were having fun. Brands have trouble getting consumers to pay attention to ads, let alone interact with them; to have consumers react on this level was incredible. This was talkability, exactly what Machado and the David team had set out to achieve. Plus, the Wikipedia entry was quickly protected from vandalism, and the Whopper’s definition was restored. “It’s all good,”

COMPANY

Burger King HEADQUARTERS

Miami CAMPAIGN TIMELINE

April 2017 RESULTS

10.5 billion impressions, $135 million in earned media, 15 million YouTube views, Cannes Grand Prix Award

Machado says. “I find it hard to believe that people think that we didn’t predict it would go back.” Results Two months after the ad shook the news cycle, Business Insider raised Burger King’s arm in victory: “Burger King’s Google Home Whopper stunt wins advertising award.” The campaign won the 2017 Cannes Grand Prix in the Direct Category. Burger King’s goofy identity allowed it to become the prankster, the jokester and likely the lone food chain in America that can survive being labeled as rat meat. The rewards didn’t stop at awards: Burger King’s day of roistering through the internet netted 10.5 billion impressions and $135 million in earned media. It was the most successful campaign in company history, Machado says, surpassing the McWhopper campaign’s 9.3 billion impressions— Burger King’s second-biggest campaign— and fetching more impressions than any of its infamous “King” ads.

answers in action

While Machado won’t reveal sales numbers tied to the Google Home campaign, he says its ROI was “infinite,” as shooting was tacked onto a traditional commercial and cost little to film. Add to the infinite ROI the ad’s more than 15 million views on YouTube and the ineffable number of impressions from GIFs, memes, images, spoofs and Twitter posts. But the explosive success of this ad was a one-shot deal, says Karsten Weide, vice president of media and entertainment at market intelligence firm IDC. Burger King’s campaign was funny and tonguein-cheek, Weide says, but it was also the first to enter homes by force via voiceenabled speakers, and not without controversy. “I don’t think it has a future, just because it’s too intrusive,” Weide says. The ad’s intrusiveness was mostly forgiven due to Burger King’s cheeky humor, but brands that attempt an encore may not be so easily absolved. Customers would likely develop hatred for brands that barge into their homes through their devices, Weide says, which would be especially insidious for advertisers when more people own voice-enabled speakers. While only 3 million voice-enabled speakers shipped in 2017, Strategy Analytics projects sales of 15 million units by 2020. Aside from innovative forays into controversial terrain, ads are still nonexistent in the voice-enabled speaker market, Weide says—and that’s by design. Rather than ads, Weide suggests that companies create apps for virtual assistants—like Amazon’s Alexa— as consumers would find an app less intrusive than a device that spouts off at every commercial break. Machado likely won’t try to expand time via voice-enabled speakers again, but he says he’ll never hesitate to jump into an innovative idea if it has potential for talkability. Machado’s cavalier attitude makes for anxious days at Burger King HQ, he says, but the anxiety would be there if they simply relied on hamburgerand-fry ad campaigns. “So we better just do it,” Machado says. m

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CORE CONCEPTS

How to Hack SEO in 2018 Google power plays and the decline of keyed search input could be among the year’s biggest SEO X-factors BY ZACH BROOKE | STAFF WRITER

 zbrooke@ama.org

s marketers proceed with their digital strategies in 2018, it’s easy to be overconfident in their brand’s online searchability. Search engines have existed for nearly 30 years. Four out of five Americans report buying items online. And eMarketer estimates total 2017 online retail sales reached $452 billion in the U.S. Marketers should have a pretty good feel for what works by now, right? Not so fast. SERPin’ USA Search engine optimization in 2018 is more challenging than it’s ever been. The main reason is the ever-increasing battle for space on Google Search Engine Results Pages (SERP). SERP real estate is

finite, but the space occupied by special SERP features continues to grow. SERP features are any items on a SERP that are not traditional, organic indexed and ranked listings. Paid search results, such as Google Adwords and Google Shopping, are SERP features that can push down organic results by taking up space on the results page. Another common SERP feature is the rich snippet, which adds extra information to existing results, such as star reviews for business ratings. Image results, category results or breaking news updates appearing at the top of the search page are other SERP newcomers, all of which expand the size of a traditional organic result, occupying valuable space.

“Every year more keywords and phrases return search results that have ads, maps, images, answer boxes, local listings and products,” says Andy Crestodina, co-founder and strategic director of Orbit Media Studios. “Back in the day, search pages almost always displayed 10 blue links.” Now, Crestodina says, when someone submits a query with key phrases indicating commercial intent, organic results that are considered highranking are relegated far down on the page, beneath paid SERP features. Crestodina attributes the burgeoning features to aggressive competition among marketers for the Google search audience. “Last year, the percentage of visitors who clicked on a Google ad or Google Shopping product was something like 49%,” he says. “The click-through rates from search engines to websites is declining because there are so many featured snippets on every search results page now. The size of the prize is smaller, and I predict less website traffic from search for most websites.” Because SERP features now occupy more space than ever before, it’s harder

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to ensure a site is noticed, no matter how well marketers own their key phrases. There’s less screen space on which to be seen. Crestodina believes the proper solution is to view SEO as a single prong in a larger search strategy. “Anybody who has 75% of their traffic coming from organic search did not diversify their traffic sources, and they’re at greater risk,” Crestodina says. “You can adapt by doing pay-per-click [advertising] or image SEO or optimizing your YouTube videos. Google is a monopoly, and they’re deciding that they want to keep more [website] visitors in Google Shopping and Google ads. The best approach isn’t to do better SEO, it’s to diversify your traffic sources. Don’t rely too much on organic traffic.” In lieu of dependence on SEO, Crestodina says every marketer should be building e-mail lists, leveraging social media and investing in search engine marketing, aka SEM. Hearing Voices Mobile searches surpassed desktop searches in 2015, according to Google. And one in five mobile searches were voice-based in 2016, as cited in esteemed chronicler of internet evolution Mary Meeker’s “Internet Trends 2017” report. Paired with the explosion of smart speakers, these advances suggest optimization for voice search will be an imperative for marketers in the near

future. “The keywords you optimize for need to be based on user behaviors for mobile devices,” says Rocco Baldassarre, CEO of digital marketing agency Zebra Advertisement and a recently named Forbes 30 Under 30 marketing and advertising expert. Those behaviors include localizing searches with words such as “near me.” Other distinct keywords and phrases in the lexicon of voice search will become clearer as the format grows. Baldassarre predicts voice searches may be prone to long-tail keywords because users will not be hampered by typing, however business category will have an impact on length as well. A locksmith will likely always traffic in shorter terms, he says, but industries with a lot of local variety, such as restaurants, may strive to optimize for searches like, “best Italian restaurant in the area.” Google RankBrain Another curveball from the gatekeepers in Mountain View, California, is Google’s RankBrain, an artificial intelligencepowered tool that helps the company evaluate the relevance of search results. According to Baldassarre, RankBrain is closer to a detective than a traffic guard. “The overall trend over the past few years has been truthfulness,” Baldassarre says. “Google is trying to get rid of all reviews and tools that can be used to fake your results.”

Anybody who has 75% of their traffic coming from organic search did not diversify their traffic sources, and they’re at greater risk. You can adapt by doing pay-per-click [advertising], image SEO or optimizing your YouTube videos.

answers in action

Google first confirmed the existence of RankBrain in 2015, but it wasn’t until last year that the company said it was among the three most influential factors in its ranking algorithm. Put simply, RankBrain is an attempt by Google software to guess at the intent or the interpretation of search terms. Kristine Schachinger of Search Engine Journal writes that the functionality is most in play when a search is unique and causes the search engine to spit out a best guess. She cites as an example a search she made for water rights near Mesquite, Nevada, which Google interpreted as a request for links on mesquite wood, trees and barbecue chips. In this case, Schachinger thinks a lack of results about Mesquite, Nevada, water rights spurred RankBrain to provide results to more popular searches using the word “mesquite”. Knowing this, how can marketers account for RankBrain and meet its requirements? Unfortunately, there’s no template for pleasing RankBrain because Google keeps its exact inputs a closely guarded secret. But a good start is to ensure authenticity and quality of a site’s content.“RankBrain is impacting the way you need to optimize your website to be able to rank,” Baldassarre says. “It’s not one-size-fits-all anymore.” In the words of Google webmaster trends analyst Gary Illyes, try writing in a natural voice instead of structuring text in the form of SEO bait. “Optimizing for RankBrain is actually super easy, and [writing in natural language] is something we’ve probably been saying for 15 years now,” Illyes told SEM Post. “Try to write content that sounds human. If you try to write like a machine, then RankBrain will just get confused and probably just push you back. But if you have a content site, try to read out what you wrote, and ask people whether it sounds natural. If it sounds conversational, if it sounds like natural language that we would use in your day-to-day life, then sure, you are optimized for RankBrain. If it doesn’t, then you are ‘un-optimized.’” m

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ama intelligence

THE MIDDLE MARKET

Marketers at Midsize Companies Can Lead CX Digitization The back end led the way in middle market digitization. Now marketers can help their teams improve customer-facing digital offerings. BY SARAH STEIMER | STAFF WRITER

 ssteimer@ama.org

urchase decisions large and small are happening digitally. Potential homeowners often start their searches on websites like Redfin. Those in the market for a teapot may comparison shop on Amazon. With so much of the customer journey happening on the web, it stands to reason that digitizing a company’s customer-facing services is the marketing team’s responsibility. Not always so, according to a report from the National Center for the Middle Market, “Digitizing the Customer Experience: Are We There Yet?,” which explores how digitization has affected the customer experience. “When we asked which executives have the most responsibility for the digitization of the customer experience, we found that twice as many people said the CIO is in charge than said the CMO is in charge,” reports Thomas Stewart, executive director for the National Center for the Middle Market. “When you ask them who’s in charge of customer experience, they might say CMO or head of sales, but if you ask them about the digitization of the customer experience, that’s still more likely to be in the IT department than the marketing department.” NCMM previously studied the state of digitization in midsize companies in 2015, finding firms had made more progress digitizing back-office functions than customer-facing activities. The new report found that 34% of middle market companies say customer experience is

a critical part of corporate strategy, and these organizations are the most likely to invest heavily in related digitization tools. Digitally strategic firms—defined in the study as those with a clear digital strategy that directs their investment in the digital consumer experience—also report 10% year-over-year revenue growth and 4.6% year-over-year employment growth, compared with 4.7% revenue growth and 2.7% employment growth at nondigital firms. One of the greatest challenges to digitizing is managing an omnichannel customer experience. Retail, for instance, may involve a number of digital and analog activities: A customer purchases a shirt online, but then returns it in-store and perhaps has questions for customer service via chatbot and over the phone. “Marketing teams, classically, work at the top of the funnel and at some point hand their leads off to sales,” Stewart says. “In a customer experience world, that’s no longer true. The implication of that old funnel model is that marketing’s job is to brand, and the customer experience has nothing to do with the brand. But in fact, the brand is engaged all the way down to the time when you call the complaint line. The marketing people have to stretch into areas where they’re not as fluent.” Teams at midsize companies are learning to speak the language of these new areas. Sean Campbell, CEO at Cascade Insights, a market research firm working with B-to-B technology

companies, says marketers are leading the charge in digitization, especially as they become increasingly focused on uncovering the buyer’s journey through analytics. “Marketing owns more of the customer touch points these days and more of the funnel, so it’s the logical place to start,” Campbell says. More companies are investing in digital customer experience, but the most popular tools may not be the most effective. For example, the NCMM report shows 74% of middle market companies are investing in a social media presence, but only 54% of those who invested rank this as extremely or very effective. “Customer/partner collaboration tools, Internet of Things (IoT) and smart devices and system automation

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with partners appear to offer the most promising returns,” the report authors say. Stewart offers six actions marketers working in the middle market should employ in response to the findings.

Bring the Marketing Team From the Top of the Funnel Deep in the Organization “Even places like Disney recognized that every front-line employee carries the brand,” Stewart says. “Marketing needs to be everywhere the brand is named.” The brand is engaged all the way through the customer journey. The marketing team needs to engage with the information technology team to inform the implementation of customer-facing platforms.

Make Marketers the Guardians of the Company Archetype Every organization has a brand cop: the person who keeps the company in line with its stated mission, look and function. As middle market companies pursue more customer-facing digitization, this role becomes even more important. It’s up to the marketing team to patrol the boundaries and brand guidelines.

Provide Tangible Evidence of the Service Experience The digitization of customer experience is a service. A customer cannot kick the tires of a new app, so marketers must consider how to provide tangible evidence that the digital offering is worth using. The marketing team needs to clearly

ama intelligence

articulate why their app, website or other digital product is worth the space on customers’ devices.

Marketers Must Understand Customer Interactions and How to Intervene Stewart calls these the make-or-break moments. It’s crucial for a marketing team to understand these moments from the customer experience point of view. There’s a big difference between casually calling an auto insurance company to add a new car to a policy and calling from the side of the road after an accident. The marketing team can map the ways customers access digital products and improve the accessibility of those offerings with optimized site structure and design. Customers will not appreciate searching and clicking through multiple links to get the answers they urgently need.

Coordinate Touch Points “Across the customer journey, how do these handoffs work?” Stewart asks. “Do you still feel like you’re in the same business or talking to the same company? Is there a consistent look and feel as the customer moves along?” Continuity is key. A company’s app should look and feel consistent with its website. Similarly, customers should receive continuity in customer service in person, over the phone and online. Digitization allows companies to track interaction between the brand and individual customers across platforms.

Increase the Value of Customers Think of customers as capital. Stewart says understanding customers as assets, not just net promoter scores or average lifetime value, can play a critical role in understanding customer experience. Customers have preferences, wants and needs that can be viewed as assets, especially those who are loyal and have downloaded an app or signed in to a website. These preferences can be mobilized to improve offerings. m

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ama intelligence

SCHOLARLY INSIGHTS

The ‘Jilting’ Effect: How Dashing Consumers’ Hopes Isn’t Always a Bad Thing The common experience can be an opportunity to steal market share from competitors BY AARON GARVEY

 aarongarvey@uky.edu

magine you are a cigar-smoker who regularly enjoys a specific Nicaraguan brand of cigars. You learn that the Cuban embargo will soon be lifted and

excitedly pre-order a box of previously unavailable Cuban cigars. As you eagerly anticipate the delivery, you make do with your old Nicaraguan brand. You

then learn that the embargo will remain in place—to your dismay, there will be no Cuban cigars. Has this experience of a “jilt” changed how you will purchase cigars in the future? Particularly, will you continue to prefer your incumbent Nicaraguan cigars, or have you become more likely to switch to an altogether different brand? A study published in the Journal of Marketing Research explores the question of how the experience of a jilt— that is, the anticipation of receiving a highly desirable option only to have it become inaccessible—changes preference for an incumbent. “The Jilting Effect: Antecedent, Mechanisms, and Consequences for Preference,” authored by my colleagues Margaret G. Meloy and Baba Shiv and me, reports that preference for incumbent, status quo options, such as the Nicaraguan cigars, may shift

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SCHOLARLY INSIGHTS

dramatically due to jilting. As such, jilting can provide an opportunity to pull consumers away from their entrenched product preferences. Jilting occurs in marketing contexts when a consumer anticipates receiving a desirable product or service but then loses access to that option before receiving it. Consider how marketing messages excite consumers with promises of new, better products only to have those products become inaccessible through limited stock, launch delays, cancellations and other breakdowns in product availability. The authors conducted a series of studies to determine whether the incumbent product loses some of its luster due to a jilt. Field and laboratory experiments show that the experience of a jilt decreases preference for the incumbent product, thereby freeing consumers to explore alternatives. In an initial field study, the researchers recruited staff at Pennsylvania State University during morning hours to evaluate real bottles of $15 California chardonnay. To establish an incumbent product, all participants held and evaluated their wine with the promise of receiving that bottle at the end of the day. At lunchtime roughly half of the participants were told that a limited number of bottles of a fine French chardonnay, valued at $50, would be a replacement option while supplies lasted. Upon pickup, these participants were told that the fine French chardonnay had already been given away—they were jilted. All participants ultimately chose

between their $15 California incumbent and a different bottle of wine valued at $15. Those consumers who were not jilted chose the incumbent wine option 88% of the time; jilted participants chose the incumbent wine 57% of the time. Jilting significantly reduced consumer preference for the incumbent wine and increased preference for the alternative. A different study, “Lusting While Loathing: Parallel Counterdriving of Wanting and Liking,” published in Psychological Science, used a similar scenario to reveal that as soon as participants anticipate new, desirable options (e.g., the fine French wine), they have more negative thoughts about their incumbent option. Even after the jilt occurs, these denigrating thoughts make the incumbent less desirable. The negative emotions caused by the jilt also shift consumers away from the incumbent. The loss of access to the new option induces sadness, which shifts consumers toward unexplored options. What Does Jilting Mean for Marketers? The frequency of jilt-related marketing phenomena such as stock depletion, lack of distribution or channel access and launch delays make jilting an important concept to grasp. Preference for incumbent options is particularly relevant to marketing managers because attempts to shift consumer preferences away from an incumbent through competitive offerings are often met with resistance. Consumers

A current customer who intended to upgrade within a brand but was jilted will be less satisfied with both the incumbent option and the denied upgrade. This presents a situation ripe for customer defection to competitors.

typically prefer the incumbent over comparable alternatives due to status quo bias. This represents a unique challenge for marketers of products that are not superior to entrenched incumbents. By better understanding consumers’ responses to jilting, firms can identify jilt-related circumstances that are likely to shift people away from an incumbent option. These findings are particularly relevant for brand managers, product marketing managers and retailers involved in product launches and product availability in competitive market environments. Even though it is often initiated unintentionally by circumstances beyond a firm’s control, jilting may undermine adherence to the incumbent brand. For a competitor, jilting may represent an opportunity to steal share away from the incumbent brand. Marketers regularly promote highly desirable, aspirational products to increase purchase intention, but consumers anticipating such products may become jilted for any number of reasons. A current customer who intended to upgrade within a brand but was jilted, the results suggest, will be less satisfied with both the incumbent option and the denied upgrade. This presents a situation ripe for customer defection to competitors. This research suggests that firms should invest in identifying such opportunities, then strike with promotions directed toward consumers who have been jilted. Implications for in-brand repeat purchases warrant particular consideration. The findings suggest that brand managers should work closely with retailers to ensure that shelf availability and promotional activities (e.g., limitedquantity sale pricing or intense demandgeneration advertising campaigns) are sufficient to meet demand, particularly during new product launches. m AARON M. GARVEY researches consumer behavior as an assistant professor of marketing in the Gatton College of Business and Economics at the University of Kentucky.

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executive insights

MANAGEMENT

The Best-managed Firms Excel in Customer Satisfaction Using the Drucker Institute’s five-dimensional model of corporate effectiveness, firms can expect to see financial gains if they improve customer satisfaction

BY LAWRENCE A. CROSBY

 lawrence.a.crosby@gmail.com

he Wall Street Journal’s recently released ranking of the Management Top 250 offers a holistic appraisal of the corporate effectiveness of America’s largest public companies. The rankings are based on the Drucker model and measurement system developed by our team at the Drucker Institute. Behind the top 250 is a longer list of 693 large-cap, U.S. and Canadian firms that were ranked by the institute. These rankings and the underlying dimensional ratings shed light on the role of intangibles, such as customer satisfaction, in driving business success. The conceptual foundation for our work is drawn from the writings of the late Peter Drucker, generally regarded as the “father of modern management,” who also commented on marketing and customer satisfaction saying, “To satisfy the customer is the mission and purpose of every business.” A firm’s Drucker Score is derived from a validated model that treats corporate effectiveness as a higher-order construct (aka “latent variable”) that’s composed of five performance dimensions: customer satisfaction, employee engagement and development, innovation, social responsibility (including environmental, social and governance factors) and financial strength. The model is

operationalized using 37 specific indicators from a wide variety of thirdparty sources; eight indicators focus on customer satisfaction. The nonfinancial metrics were all current as of the first quarter of 2017, but depending on the timing of data capture by the sources, some largely reflect 2016 performance. The financials were current as of June 30, 2017. Drucker measurements are at the firm level, not the brand level, and the firm is the unit of analysis. Brand-specific scores were averaged for firms with multiple brands. The eight indicators of customer satisfaction in the Drucker Model include the American Customer Satisfaction Index (both absolute and industryrelative), an index of five Temkin measurements (both absolute and industry-relative), Satmetrix net promoter scores (both absolute and relative), the CSRHub Product Rating (absolute only) and the wRatings Corporation Quality Gap Score (absolute only). The first six are applicable to B-to-C businesses while the latter two cover both B-to-C and B-to-B firms. CSRHub excepted, all indicators involve the collection of primary data from samples of customers. CSRHub is an aggregator of massive amounts of secondary data. While all eight indicators

were found to converge on the same customer satisfaction dimension, they are not interchangeable. Some are probably better-suited to certain purposes than others, (e.g., predicting the economy versus assessing touch points or getting a quick read on loyalty). The Wall Street Journal highlighted the top-scoring companies overall and by dimension. Among the 15 highest scorers in customer satisfaction were B-to-B tech providers Hewlett Packard Enterprise Co., Teradata and Cisco Systems; B-to-C seller Molson Coors Brewing; and JetBlue Airways, which has both commercial and consumer clients. Though the performance of individual firms makes for interesting case studies, insights may also be gained by looking at the data through an industry lens. The Global Industry Classification System (GICS) group with the highest average customer satisfaction scores was automobiles and their components. Among U.S. vehicle manufacturers, Ford did particularly well. It’s also noteworthy that three auto component suppliers were among the Wall Street Journal’s top companies for customer satisfaction (Autoliv, Tenneco and Johnson Controls). These findings suggest that customer satisfaction is best assured when each firm in the entire supply chain is striving for it. Some of the factors contributing to an aligned supply chain may include channel leadership, the adoption of industry quality standards and competitive pressure. Though the auto industry has recently dealt with quality issues (e.g., Takata airbags) and reputational scandal (e.g., Volkswagen emissions), these appear exceptions rather than the rule. Takata and Volkswagen are not U.S. companies, so they are unranked. Three related industries with notably high average scores were food and staples retailing (e.g., United Natural Foods and Costco); household and personal products (e.g., Kimberley-Clark and COTY); and food, beverage and tobacco (e.g., Dean Foods and PepsiCo). Those clusters basically represent the enormous supply chain that puts food on your table

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MANAGEMENT

and cleaning products under your sink. Another cluster of industries with high customer satisfaction scores might simply be labelled “technology” and includes software and services (e.g., First Data Corp, Salesforce.com, Oracle and IBM); semiconductors (e.g., Nvidia and Analog Devices); and technology hardware and equipment (e.g., TE Connectivity, Juniper Networks and Apple). Perhaps the most fundamental insight gleaned from the Drucker modeling is the considerable overlap that exists among all five dimensions of performance. That overlap is what we interpret as corporate effectiveness. While the Drucker Institute’s efforts to date have been focused on creating a single, summative measure of effectiveness, we recognize that there are cause-effect linkages among the five dimensions and that they are probably mutually reinforcing. The institute is just now turning its attention to unraveling those influences. For example, we observe that customer satisfaction is correlated with the other four dimensions, but we were surprised to find that the weakest correlation is with employee engagement and development. Considering all that has been written about the employee-customer-profit chain (and before that the serviceprofit chain), we expected a stronger correlation. Adopting an industry lens may help explain the contrary finding. Specifically, we observe that most of the higher correlations between

customer satisfaction and employee engagement involve service industries. The industries with the strongest linkage were telecommunications, consumer services (e.g., restaurants and lodging) and transportation (e.g., airlines, railroad and rental cars). Utilities and insurance were not far behind. These industries all involve high customer contact or have a major customer service component. Based on these results, we are led to the proposition that the relationship between employee engagement and customer satisfaction is not always strong or direct and may be mediated by other factors such as innovation. Further research is underway to examine that theory. A businessperson might wonder what our data reveal about the link between customer satisfaction and financial performance (measured in terms of market share, shareholder returns, return on invested capital, return on assets, return on equity, earnings and economic profit). As others before us have found, we detect a solid correlation. Yet it is important to remember that correlation does not prove causality. Is it possible that the flow of influence is from financial performance to customer satisfaction or that reciprocal causation exists? Perhaps companies that do well financially are more likely to invest in customer satisfaction because they have the resources to do so. Though our work does not directly address that issue, we have a smoking

executive insights

gun based on a multiyear analysis that examined the cross-lag effects of the performance of intangibles (combining customer satisfaction, employee engagement, innovation and social responsibility) on financial performance and vice versa. We found that the main flow of influence is from the intangibles to financial performance. Specifically, it appears that a 1.0 standard unit improvement in the performance of intangibles drives a 0.26 standard unit improvement in financial performance over two years. To put that in context, a firm that moves from the 50th to the 70th percentile on the intangibles composite in the first year of study could expect to see its return on invested capital rise by 1.5% by the third year (a change from 10% to 11.5% on average). One way to boost the performance of intangibles is by increasing customer satisfaction. Lam Research is a firm that has realized these gains. Lam is a leading supplier of chip-making equipment to the semiconductor industry. From 2012 to 2016 Lam’s intangibles T-score rose from 46 to 58 due, in part, to a nine-point improvement in customer satisfaction (T-scores have a mean of 50, a standard deviation of 10 and generally range from 0 to 100). During that same period, Lam saw operating return on invested capital rise from 4.83% to 11.76% while its stock price climbed from $36 per share to $106. In 2016, Lam received top supplier awards from both Intel and Infineon, who cited Lam’s continuous pursuit of excellence, its quality, value and service commitment. We feel that the database being built around the Drucker Model (including five years of past data and plans to repeat the rankings on an annual basis) will prove to be a treasure trove of insights for marketers. m LAWRENCE A. CROSBY, Ph.D., is the retired dean of the Drucker School of Management and currently the chief data scientist at the KH Moon Center for a Functioning Society, a part of the Drucker Institute at Claremont Graduate University.

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executive insights

AT C-LEVEL

Unleashing the Innovators Offers a Template for Partnerships Between Startups and Established Firms Readers won’t find a self-help manual for invigorating inveterate companies, but rather a way to turn competitors into collaborators

BY MICHAEL KRAUSS

 michael.krauss@mkt-strat.com

im Stengel’s new book, Unleashing the Innovators: How Mature Companies Find New Life with Startups, offers an explanation for the trend of digital startups toppling established players and what the latter should do about it. Stengel, a former global marketing officer for Procter & Gamble, says, “Upstarts such as Google in its early days reminded me of what life must have been like in the earliest days at the biggest and oldest corporations.” He continues, “P&G, IBM, Levi Strauss, Target, Toyota, Wells Fargo and Motorola Solutions started with a dynamic founder, a brilliant idea and a determination to deliver something extraordinary and transformative.” Despite these exciting beginnings, as companies grow, Stengel writes, they lose their original excitement, purpose and drive. Why do these leading global enterprises lose their mojo? According to Stengel, “They become more concerned about how to maintain market share or survive in their space

than about how to transform the world. In a word, they go from bold to old.” Stengel describes how he led a personnel and culture exchange between P&G and Google in 2008, literally swapping staff with Google to see if he could rekindle the fire of nimbleness at P&G while coaching Googlers on P&G’s processes. Members of his P&G marketing team were embedded at Google while Googlers came to Cincinnati to live and work at P&G. The impact of that partnership and personnel exchange loom large in Stengel’s mind and in his book. Though he retired from P&G shortly after the experiment, he saw the personnel exchange as a microcosm of how established firms and digital transformers can partner and mutually benefit each other. P&G could teach Google about brand management and Google helped the P&G team loosen up and experiment. Stengel, now a management consultant and author, sets out in Unleashing the Innovators to explore

lessons learned from the mutual engagement of startups and established players. Over the course of two years Stengel interviewed leaders at multiple enterprises to form the basis for his insights in the book. It is a must-read for any marketer or business executive who wants to catalyze change in an established organization and initiate partnerships with startups. What I like about Stengel’s book are the anecdotes of the executives he cites. His stories about GE and the failure of its partnership with Quirky and its founder, Ben Kaufman, are instructive. It is helpful to know that Beth Comstock, then the vice chairwoman of GE and president of GE Business Innovations, went into the deal with her eyes open. “Ben is just fearless,” Comstock told Stengel. “He trained some of our guys to just think faster and figure it out as you are going forward.” Comstock had her doubts. “It may end up being a black eye for GE that we backed something that is not going to work,” Comstock is quoted. Six months into the partnership Quirky was bankrupt, Stengel writes. Customers were furious at the lack of support for the products the two companies had introduced. In court papers, GE charged that Quirky’s demise “caused substantial damage to the reputation of GE and to its trademark.” “Not just a black eye,” Stengel writes, “a complete orbital blowout.” Stengel reminds us of the need for CEO leadership in his discussion of Motorola Solutions, where he was once a corporate director. Unlike many CEOs who strive to deflect hostile investors who have innovative ideas for transforming an established company, Motorola Solutions CEO Greg Brown is known for embracing them and embracing innovation. “None of these [innovative] ideas can take root, much less flourish, without

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AT C-LEVEL

executive insights

Unleashing the Innovators offers an explanation for the trend of digital startups toppling established players and what the latter should do about it.

unqualified support from the CEO,” Stengel writes of the communications firm. Stengel’s description of how Brown embraced corporate raider Carl Icahn and investors such as ValueAct Capital Management and Silver Lake Partners is instructive, yet too short. That’s the problem with Unleashing the Innovators—it is wide but not sufficiently deep. If you need a roster of the leading actors in the corporate drama of

established firms in the face of digital disruption, you’ll find it in Stengel’s book. You won’t find a deeper understanding of why these established enterprises are stuck and what it takes to free them. Stengel’s book is a terrific addition to the literature on unleashing innovation. It is an important read for marketers who want to partner with an entrepreneurial entity to create constructive change.

However, if you are a marketer striving to become a CEO, pick up Microsoft CEO Satya Nadella’s Hit Refresh after reading Stengel’s book. Nadella’s book details the necessary cultural and management changes required to unleash innovation in a gridlocked enterprise. m MICHAEL KRAUSS is president of Market Strategy Group based in Chicago.

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executive insights

TRACKING + MEASUREMENT

Stop Drowning in Marketing Data and Start Measuring Influence on Revenue Follow these five steps to track meaningful metrics and understand the monetary value of your content

BY KEVIN JOYCE

he 2017 Content Marketing Institute Survey, executed in conjunction with MarketingProfs, reported that content development consumes nearly one-third of nonlabor spending on B-to-B marketing in North America. Marketers might imagine that investment is backed by airtight

analytics on its return, right? The same report shared that the No. 1 metric for content marketing results is website visits. Not so airtight. Marketers want to better understand how well their dollars are spent. They want a sense of which content is working, where it is successful, why it works and

when, so they can focus their budgets on high-performing tactics. To do that, they need data. Many of them already have a lot of data. They have reports in Google Analytics. Google AdWords data. Blog results in Kapost. Viewer stats in Wistia and YouTube. Podcast download reports in Libsyn. Funnel reports in their customer relationship management (CRM) dashboard. E-mail engagement reports in Marketo. Social engagement results in Grapevine6, Facebook, LinkedIn and Twitter. The point is, we are drowning in marketing data. But are we getting good, timely and consolidated information to make better decisions relative to our content? And if so, how do we use that data to answer basic questions such as: • Which content in what format, through which channels, generated the most or the least engagement this month, and why? • What marketing content was most instrumental in helping close new business from existing customers and

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TRACKING + MEASUREMENT

from net new customers last month? • What topics are attracting people to our digital properties, social sites and syndicated content? • What is the pattern of content that the best qualified leads look at before they become a known lead to us, and through which channels did that occur? • What is the channel mix or the linear attribution that distributed the content and attracted the final conversion point? Analytics vendors believe that they have the panacea to these data ailments. But these simple questions are difficult to answer because they involve multiple channels and technologies. So, what are some simple steps we can take to consolidate the data and make it easier to answer these questions on a regular basis? How can you configure your marketing automation platform (MAP), Google Analytics, content management system and CRM to get insights? You need a data buoy.

Decide What You Want to Track Say you host a webinar in the first quarter on “hot content.” As a result, you have a webcast, perhaps a transcript, a blog post of some key points, a SlideShare, a blog post about the polls you conducted during the webinar and an infographic related to the information you shared. That makes six related assets. Do you track them all as unique items or tag them all as “Q1_Hot_Content” and track them as one? If you decided to use a single common label, you are agreeing that, for now, you are more interested in the topic result than the precise format in which the topic was delivered. Based on that decision, the blog post is an asset—but it’s just a page on the website, not a file or downloadable object. It’s starting to get messy now. My advice: Blog posts are ungated assets and can be packaged in bundles of posts related to a topic. To track them with related content assets, insert the appropriate stem into the

URL of the blog post. In this case, insert “Q1_Hot_Content” into the page URL, so you can easily add results from visits to this page to the other “Hot Content” visits.

Create Unique Landing Pages for Downloadable Assets Each asset should be shared through the many channels you control: website, social and e-mail. The problem is, if you share a direct link to an asset (.pdf, .png, .ppt, .mov, .mp4) it can’t easily execute any JavaScript, and anyone viewing the link simply accesses the asset without being tracked. Most folks solve this by sending the visitor to a landing page, which tags them and registers the visit to the asset. It is cumbersome for the visitor, but does help track content results. In the “Q1_Hot_Content” promotion, I would likely end up with at least six landing pages. If I decided to track these as one item, I would create a common part in the URL stems of all six landing pages. For example “q1_hot_content” can be common to all six assets. An alternative that offers a better user experience, if you do not require a form to access the asset, is to create a virtual landing page. Give out the direct link to the asset with Urchin tracking modules (UTMs) embedded, and the link will go to a page where the UTMs are grabbed and immediately redirected to the actual asset. The visitor is unlikely to notice the redirect at all. This requires a little bit of JavaScript but is entirely doable.

Utilize UTMs Set up your content promotions to direct visitors to the same landing page for the same asset, albeit with different UTM values embedded. Regardless of whether you are doing a blog post, LinkedIn promotion, Facebook promotion or tweet, all should route to the same landing page. Some channels, such as LinkedIn, might strip out your UTMs. To avoid this, shorten the link with the UTMs prior to using it in the social channels. Don’t minimize the URL in blog posts or e-mails. Do not use UTMs when linking within your own

executive insights

digital properties and content. Use them only for links that will come from external sources back to your content.

Set up Campaigns in Your MAP Ensure you capture the UTM values from the landing pages for each of the unique assets you want to track, identifying the origin of the click to the asset (source, medium, campaign, keyword, ad). Testing is critical here to ensure you are getting what you expect.

Set up Campaigns in Your CRM That Align to Your MAP Campaigns Draw on the information in the MAP to show the same results in the CRM. Sync over from the MAP all the relevant fields. Build your content reports in the CRM based on the asset campaigns you synced from your MAP. If you have properly used UTMs and landing pages and created tracking campaigns in your MAP, you should be able to create reports for your assets in the CRM. The difference between doing them in the CRM versus your web analytics is that you can connect content usage to individuals and where they are in the funnel. Perhaps you will determine which content is used most often in which part of the funnel and by which role in the purchase. If you have applied your UTMs diligently, you should be able to see which channels are driving the most traffic to which assets. Having a view of your content results in the context of their influence on the funnel is vital to making wise content editorial calendar decisions. Don’t drown in the sea of content reporting data. Focus on measuring your results in the most important context: influence on revenue. m KEVIN JOYCE is CMO and vice president of strategy services at The Pedowitz Group. He holds a combination of marketing skills and sales experience to bridge the gap between sales and marketing.

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PA R T N E R C O N T E N T

What’s Wrong with Segmentation? BY JORIS ZWEGERS AND DMITRI SEREDENKO

“The differentiator seeks to secure a layer of the market cake, whereas one who employs market segmentation strives to secure one or more wedge-shaped pieces.” Wendell R. Smith

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PA R T N E R C O N T E N T

everaging findings from a survey of AMA marketers about segmentation and their respective organizations, the authors argue that segmentation can be used to much greater effect in many organizations as a platform for customer-centric growth by bridging commercial and customer value, reaching the organization and linking to marketing tools. Market segmentation is the process of dividing potential customers into discrete groups with similar characteristics to guide the development of strategy. Since its inception in the mid-1950s, segmentation has been proliferated among academic and business circles as the foundation for effective marketing. Segmentation has become a polarizing topic for marketers. For some, the rise of Big Data and the quest for personalized, one-to-one marketing has rendered classical segmentation irrelevant. For others, the rapid pace of disruption and the need for real-time customer insight has made any point-in-time, survey-based segmentation seem like an artifact of the predigital world. When Wendell R. Smith introduced the notion of segmentation in 1956, he envisioned segmentation as the foundation for a new type of marketing strategy. Whereas most marketers of the time focused on capturing a horizontal layer of the “cake” (the market) by differentiating their product or service from that of competitors, Wendell argued that marketers could instead choose to cut themselves a full slice of cake by developing a deeper market position with specific customer segments. Since Smith’s seminal paper, segmentation has evolved from an alternative approach to strategy to the core tool for marketing strategy and, more recently, to a commonly used tool for any type of

strategy. Organizations commonly apply some form of segmentation to support decision-making in areas as diverse as corporate strategy and innovation, brand positioning and media planning. Segmentation has morphed into a more complex topic than its core definition would suggest. On a philosophical level, segmentation has shifted away from a simple focus on understanding customers’ needs to an intricate exploration of customer lifestyles, values, jobs to be done, need states and occasions. On a practical level, the influx of real-time, digital data about customers has unlocked entirely new ways of understanding them. Taken together, the complexity of modern-day customer segmentation has made it a sensitive topic, particularly for marketers. Where markets can be finely sliced in real-time and customers can be targeted live, classic segmentation can seem obsolete and irrelevant. Much of the debate about segmentation is misguided. Fundamentally, market segmentation must be considered a platform for driving cross-functional strategy, not just another tool in an increasingly cluttered marketing toolbox. When done correctly, market segmentation provides a complete and intimate view of customers, which serves as a North Star that aligns an organization around the premier stakeholder: the customer. This outcome requires a delicate balance of understanding what customers want and aligning business functions around customer segments it can and should focus on. Research has shown that the organizations that are the best at putting customer needs at the heart of everything they do, (i.e., they are customer-centric) are able to more effectively identify and execute strategies that drive growth. Therefore, we find a close relationship between the quality of a segmentation program and an organization’s level of customer centricity (Exhibit 1).

Exhibit 1: Customer Centricity of Organizations With Varying Levels of Segmentation Performance

No segmentation

Weak

Average

Above Average

PERFORMANCE Customer centricity was rated on a scale of 0 to 100. Performance is defined by the number of aspects an organization’s segmentation program currently delivers on. (Aspects defined in Figure 4.) Weak: agreement on one or two aspects. Average: agreement on three to five apsects. Above average: agreement on six to eight aspects.

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When employed effectively, modern-day segmentations drive both short- and long-term strategy. In the short term, actionable segments can guide customer acquisition teams and aid in targeted marketing efforts to ensure that brands reach the right customers with the right messages. Furthermore, when integrated with customer behavioral data, segmentation can help customer relationship management teams fortify existing relationships with meaningful rewards and loyalty programs. In the long term, clearly differentiated and economically substantial segments can guide decision-making on expanding the business into adjacent categories or segments. Segmentation can inform the organization’s blueprint for long-term growth, guiding decisions on which products to launch, which go-to-market strategy to employ and which brands to reposition or acquire. Despite its importance, segmentation is significantly underutilized by marketers. Nearly 40% of marketers surveyed indicate that they do not have or don’t know if their organization has segmentation in place. Another 32% of marketers surveyed indicate that their segmentation is at least three years old (Exhibit 2). Less than half of marketers surveyed indicate that they are very satisfied with the segmentation in place at their organization (Exhibit 3).

WHAT’S NEEDED FOR WORLD-CLASS SEGMENTATION There is extensive literature on the requirements of effective market segmentation. However, most efforts tend to focus on either the technical aspects or philosophical underpinnings. Based on our own experience and the data analyzed here, we assert that the type of segmentation is not a critical factor so long as it is aligned with the key business objectives. However, to truly serve as the platform for developing a unified, customer-centric business strategy, segmentation needs to do much more. Segmentation should bridge customer and commercial value, providing organizations with a clear understanding of how they Exhibit 2: Use and age of segmentation programs

Exhibit 3: Satisfaction with segmentation program I am very satisfied with our segmentation: 100%

Don’t know

10%

28%

Yes: 6 years or older

20%

Yes: 3-5 years old

12%

Yes: up to 2 years old

80%

60%

31%

Strongly disagree

21%

Disagree

29%

Neither agree nor disagree

39%

Agree

40%

10%

can simultaneously create value for their customers and their business. It should connect and rally historically siloed functions around the most important voice in the business: the customer. And segmentation should orchestrate the delivery of strategy by linking together key marketing tools. Marketers surveyed were asked how strongly they agree that their organization’s segmentation delivers on key aspects of these three overarching objectives (Exhibit 4).

BRIDGING CUSTOMER AND COMMERCIAL VALUE World-class segmentations delicately balance in-depth customer understanding, commercial relevance and future orientation. Despite the importance of this balance, just one-fifth of marketers (20%) agree that their segmentation delivers on all three key aspects. In practice, segmentations are often limited by a narrow focus on either the needs of the business or the needs of the customer. On one end of the spectrum, segmentations that focus on driving short-term strategy can miss the rich customer understanding required to build truly forward-facing strategy. On the other end, segmentations that focus on painting a vivid picture of customers without reflecting business realities and elucidating concrete commercial opportunities fail to gain traction in organizations. Achieving this balance of rich customer insight and robust commercial opportunity requires shifting the role of segmentation from research exercise to strategic endeavor. Designing, executing and implementing world-class segmentation requires bringing together perspectives from across the organization to ensure that outcomes link closely to desired objectives. Ultimately, segmentation can serve as a powerful first step toward customer centricity but only if it establishes a common understanding of the customer and a clear path forward for commercializing opportunities.

CONNECTING THE ORGANIZATION Segmentations have the greatest impact when they are understood and used by all relevant functions in the organization. In practice, segmentations are often owned by the insights department, rather than led by it. As a result, they fail to reach all relevant functions of the business and are not incorporated into annual strategic planning cycles or day-to-day decision-making. If not actively engaged before and throughout a segmentation initiative, critical business functions can easily dismiss the outcomes of segmentation as irrelevant. Achieving maximum impact requires the endorsement of senior stakeholders and input from key functions at the start of a segmentation program. Early and ongoing engagement ensures stakeholder alignment and builds the shared sense of ownership essential to shaping customer-centric strategies. Upon completion of a segmentation program, it is critical that all end users are provided the appropriate level of training and equipped with tools to apply customer insights to day-to-day decisions. Ultimately, a vivid and intimate understanding of customer segments can serve as a galvanizing North Star across functions, but only if appropriately embedded into the organization and in an inspirational way.

LINKING TO MARKETING TOOLS

Strongly agree

Segmentation can only serve as a platform for growth when it is connected to key marketing tools and integrated into marketing processes. Segmentations are often developed

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PA R T N E R C O N T E N T

Exhibit 4: Percent of Marketers Who Agree on Segmentation’s Ability to Deliver on Key Aspects and Segmentation’s Relationship With Customer Centricity* Agree

Strongly agree

10%

20%

30%

Neither agree nor disagree

40%

50%

60%

Disagree

70%

80%

Strongly disagree

90%

100%

Bridge customer and commercial value Helps us truly understand our (potential) customers

11%

49%

24%

Is linked to business strategy/financial outcomes

14% 11%

49% 54%

24%15%

Is future proof/growth oriented

9% 14%

35%

Reach the organization

Is completely understood by all (relevant) funcations in the organization

3%7%

Is really used by all (relevant) functions in the organization

24% 24%

31%

54%

31%

26%

31%

26%

31%

Link to marketing tools

10%

50%

Is actionable and pragmatic

10% 20%

50%

Plays a leading role in our marketing activities Is linked to customer and/or other databases

15%

13%

13% 13%

4% 3%

22%13% 22%

37%

4% 4% 9%

24%

37% 30%

7% 9%

24%

30%

25%

12%

46%

25%21%

10% 12%

12% 20%

52% 46%

17% 21%

17%10%

3% 3%

12%

52%

17%

* All aspects correlate with customer centricity. Correlations range from 0.10 to 0.28.

without consideration of how they will be linked to commonly used marketing tools and processes. Instead of serving as the foundation for a customer-centric marketing ecosystem, segmentation can ultimately become a stand-alone research report. In this case, customer insights that drive marketing strategy begin to emerge from various, disconnected research projects, which usually results in multiple incompatible, and sometimes conflicting, views of the customer. To link segmentation to marketing tools and processes requires careful consideration of tools, data sources and processes at the outset. Effective connections between segmentation and databases add to the understanding of current and potential customers and can greatly expand the actionability of the program, making it easier to execute on strategy. For example, connecting with the organization’s CRM database—and any existing micro segmentations—allows for immediate translation of marketing strategy to execution, measurement and optimization. Syncing to the proprietary audience information database allows teams to quickly focus on core segments with more targeted media buys. And connecting to proprietary data management platforms provides the opportunity for accurate digital/programmatic media buying.

HOW TO GET STARTED For segmentation to fully effect change, organizations should first create cross-functional alignment by setting the vision for success and developing a blueprint for how segmentation results will be implemented across the organization. Assigning responsibilities to key stakeholders before beginning a segmentation program ensures that all relevant functions are involved and committed to using segmentation as a platform for growth, rather than a research tool. Maintain consistent internal communication and stakeholder management across all levels of the organization so that all teams are aligned with key decisions and engaged on the implications of

those decisions on segmentation outcomes. Support from senior stakeholders is a critical enabler for setting the foundation for effective segmentation, and ongoing support from cross-functional segmentation champions can help ensure that key outcomes are applied at all levels of the organization. Finally, design an embedding and socialization program that equips employees at all levels of the organization. End users of the segmentation need to be provided with tools to guide them through interpretation of results and help them translate insights into action. It is imperative that socialization is not a one-anddone process, but an ongoing initiative to infuse customer-centric capabilities and a customer-centric mindset into the organization. Peter Drucker once famously noted, “Culture eats strategy for breakfast.” Although segmentation provides the groundwork for sound strategy, to truly unlock customer-centric growth, segmentation must galvanize organizations around their priority customers and serve as a spark plug for igniting a customercentric culture.

Joris Zwegers is vice president of global research at Kantar Consulting. Dmitri Seredenko is a senior director at Kantar Consulting. Kantar Consulting is a specialist growth consultancy. With more than 1,000 analysts, thought leaders, software developers and expert consultants, Kantar Consulting helps clients develop and execute brand, marketing, retail, sales and shopper strategies to deliver growth. Kantar Consulting owns market-leading assets including PoweRanking, GrowthFinder, Global Monitor, RetaiI IQ, RichMix, XTEL and Marketing, Insights and Purpose 2020. It tracks 1,200 retailers globally; has purchase data on more than 200 million shoppers; and forecasts social, cultural and consumer trends across the world. Kantar Consulting is part of Kantar, the data investment management division of WPP. FEBRUARY 2018 | MARKETING NEWS

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M o d i f i e d Consumer genetics is poised to become the next big driver of consumer preference if it can successfully address concerns about privacy and legitimacy

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M A r k e t i n g BY Zach BROOKE FEBRUARY 2018 | MARKETING NEWS

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he second act of Bennett Greenspan’s professional life was inspired by a long-held interest in genealogy and spurred by a not-so-friendly nudge from an annoyed spouse. It was the late 1990’s, and Greenspan’s 16-yearold company, Industrial Photographic Supply, had just been sold. He was mired in an idle period between gigs when, one afternoon, his wife came home with a car full of groceries. “I opened up the cupboard, and it was a mess,” he says. “The whole-peeled tomatoes were on the top shelf. Spaghetti sauce was on the next shelf. You couldn’t even find the tomato paste, and tomato sauce was on a different shelf yet. I asked my wife, ‘Would you mind if I reorganized your cupboard?’” Big mistake.

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“She told me I should pick up golf or go back to my genealogy, but I needed to get the ‘expletive’ out of her kitchen.” Greenspan opted for the latter. Long an enthusiastic chronicler of his family’s history (he first sketched a family tree as a teenager in 1965), Greenspan devoted the next month to exploring the lineage of his lone unmapped grandparent, only to bump into an online researcher from Buenos Aires tracing the same person. It wasn’t long before the pair channeled their efforts to uncover a probable familial relationship between them, and though they succeeded in linking their respective ancestors to the same village and set of surnames, they fell short of producing a single connecting historical record—then considered the gold standard of genealogy. The search normally would have stopped there, if not for a burst of inspiration on Greenspan’s part. “It dawned on me that I could use molecular biology,” Greenspan says, as if it’s something he’s done his whole life. Except Greenspan is not a molecular biologist. He doesn’t even have a

general science background. His bachelor’s degree is in political science, and at the time he’d spent the bulk of his life selling photographic film. But he was determined. And he’s a voracious reader. Greenspan remembered a pair of studies he’d seen that used DNA to confirm suspected lineages. In 1997 researchers analyzed the Y chromosomes of Jewish men and found that members of the Cohanim, or Jewish priests who claim to be descendants of Moses’ older brother Aaron, possess distinct genetic traits that suggest they share a common male ancestor who lived approximately 3,000 years ago. A separate study published a year later linked the modern-day descendants of Sally Hemmings to Thomas Jefferson, seemingly confirming historical suspicion that Jefferson had fathered some of Hemmings’ children. Perhaps, Greenspan thought, he could use the same methods to search for a genetic link between himself and his Argentine counterpart. He also wondered if this quest could form the foundation of a business model. He reached out to Dr. Michael Hammer, author

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(Above) The author’s AncestryDNA results.

of the Cohanim study, with a plan to commercialize DNA ancestry tests. Greenspan would sell the tests, and Hammer and the University of Arizona would perform the analysis. The partnership proved so successful that Greenspan

eventually opened his own lab company in Houston to increase processing volume. Nearly two decades later his company, Gene by Gene, offers three types of genetic ancestry tests through a subsidiary, Family Tree DNA, and performs

genetic analysis for a host of competitors. Greenspan’s idea captivated genealogy enthusiasts and has been copied by reams of competitors, some of which have scaled enormously. One industry snapshot, published by Credence Research last May, found that the market for direct-to-consumer genetic testing topped $70 million in 2015 and is expected to grow nearly fivefold to $240 million by 2022. AncestryDNA, arguably the most visible player in the consumer ancestry space, sold an estimated 1.5 million units of its at-home testing kit over the 2017 Black Friday weekend. Part of the industry’s growth is attributable to technological breakthroughs. Greenspan’s company began by offering Y-chromosome testing, which traces only direct male lineages. The subsequent development of a test for autosomal (nonsex chromosomes) DNA allows geneticists to make links between distant relations. This broader test is largely what backs today’s ancestry offerings. Greenspan’s idea has also evolved to encompass products he never dreamed of offering. The same genetic material consumers submit to determine their ancestry can yield troves of information about a person’s physical traits. 23andMe, a chief rival to AncestryDNA, whose Health + Ancestry Personal Genetic Service was one of Amazon’s top

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five 2017 Black Friday items, offers kits that can reveal predisposition to genetic diseases such as Alzheimer’s and Parkinson’s. Other competitors are pitching DNA testing as a means to customize and enhance lifestyle aspects. Everything from optimal sleep schedules to wine preferences, some say, are written in a person’s DNA and can be sussed out with a simple test. If consumers could harness and apply insights about their biology captured in their own DNA, this line of thinking goes, their potential for self-improvement would skyrocket. With promises like these, many believe DNA insights are poised to become a great driver of consumer behavior. “I knew that DNA testing was going to be a big deal. ... But I didn’t realize it was going to become ubiquitous such that every single person would eventually end up with a DNA test, just as they will end up with a cellphone,” Greenspan says. That’s still a big if, though. Even as the field of consumer genetics approaches widespread cultural resonance, experts are questioning the science behind some of the products. And as DNA-collecting companies start to treat genetic information as they would any other piece of consumer data, government watchdogs are taking a closer look at the practice. These pitfalls, if not properly navigated, carry the potential to squash the market for

consumer genetics just as it’s on the precipice of a breakthrough. Thus far, the threats aren’t scaring away any opportunists. onsumer DNA testing for the world’s largest for-profit genealogy company, Ancestry (parent company of AncestryDNA), works like this: Consumers order collection kits online, deposit a teaspoon of saliva into a plastic tube, mix it with a bonding agent and mail it to a laboratory for analysis. As they await their results, which are typically delivered in four to six weeks, they can search for the origin of their last name or begin mapping family trees using traditional genealogy methods on the company’s website. Unlike Greenspan’s initial products, AncestryDNA doesn’t purport to link individuals with specific ancestors. Rather, it provides estimates of a person’s ethnicity, showing the regions of the world where their ancestors once lived. The service also checks a person’s sample against the 6 million users stored in its DNA database to determine whether there are any familial links between customers. That ability to offer consumers a profound sense of self creates a unique marketing proposition that has allowed the service to thrive, says Ancestry’s vice president of U.S. marketing, Caroline Sheu. “DNA testing is no longer a niche interest, it’s a mass consumer market

Everything from optimal sleep schedules to wine preferences, some say, are written in a person’s DNA and can be sussed out with a simple test. With promises like these, many believe DNA insights are poised to become a great driver of consumer behavior.

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with millions of people wanting to experience the emotionally powerful, lifeaffirming discoveries that can come from simply spitting in a tube,” Sheu said via e-mail. “Our product is in a cultural and human space that very few brands are in. We’re pairing science and technology with creative, emotional marketing strategies to spark a new dialogue focused on the interplay of genetics and culture.” Of course, it doesn’t hurt that Ancestry enjoys a $175 million marketing budget to push that message. A year ago, most of its marketing dollars were spent on television advertising, but with the arrival of former Johnson & Johnson exec Vineet Mehra as CMO in early 2017, the company deployed a new strategy that saw heavier investments in programmatic, social, influencer and mobile categories. Mehra’s onboarding was quickly followed by the appointment of Droga5 New York as Ancestry’s lead creative agency. Ancestry’s heavy marketing investments underscore the high-stakes jockeying taking place in the ancestry market. DNA databases are at a premium, not because of what they can tell researchers about anthropological patterns, but because of what they say about consumers’ lifestyle traits. Consider the following set of questions Ancestry asks as part of a beta project to learn

about shared genetic traits: • Are you more of an extrovert or an introvert? • Are you a vegetarian? • Do you like to go to sporting events? • Do you play a musical instrument? • Do you burn when you don’t wear sunscreen? Marketers will at once grasp the relevance of these surveys. The data gathered can be used to build personas and inform campaigns. But what happens when these personality traits are linked to DNA profiles? The answer is found in the field of genomics, which considers how relationships throughout the entire human genome influence personal development, rather than searching for a specific gene that determines a certain trait. “Genomics is the next major consumer market, and it will change all of our lives,” Sheu wrote. “We are leading this revolution and provide opportunities for anyone who wants to play a key role in building this new frontier.” Genomic testing was the bread and butter of 23andMe when it launched in 2008, offering clients a battery of screenings to determine their propensity to develop more than 90 genetic-related conditions, such as migraines and baldness. And while that remains true today, a 2013 ruling by the Food and Drug Administration curtailed several of the company’s

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offerings, limiting its scope and confining it more narrowly to the ancestry space. That changed last April when the FDA revisited its 23andMe decision and allowed the company to market 10 tests for inheritable genetic conditions. Following that high note, 2017 closed with the news that 23andMe is embarking on one of its most ambitious projects yet: offering 1.3 million current customers the ability to participate in a weightloss study searching for a link between genomes and diet success. After initially agreeing to answer questions for this story, 23andMe communication manager Christine Pai stopped responding to repeated requests for comment. The sum of these moves suggests the market for consumer DNA tests is moving beyond ancestry into the realm of health careadjacent products. 23andMe might be first, but it won’t be alone for long. Ancestry’s Sheu wrote there is “nothing to report today” in regard to potential steps her company might take into lifestyle and wellness genomics, but she also admits the company is looking at ways to integrate health information over the long-term, a sentiment that is echoed by Ancestry’s chief privacy officer, Eric Heath. “We have expressed interest in the health space,” Heath says, “but we are not doing that now.” As genetic testing companies fight for market share, a promising model

is emerging for startups to enter the DNA insights space. Helix is billed as the world’s first DNA app store. For $80, users can sequence their DNA and store it in the Helix market. Once their genetic code is uploaded, users can pay individual apps to scan bits of their DNA to produce specialized insights. Helix now offers ancestry mapping de rigueur, but the full range of apps display variety normally found in shopping malls and range from serious to silly. One fitness tracker creates workouts customized to users’ DNA readings. A family-focused app lets mothers test the amount of a certain omega-3 fatty acid present in their breast milk. The most fanciful offering eschews the personal improvement pitch altogether. It’s a fashion app that knits scarfs reflecting the unique sequential pattern formed by the four base enzymes found in users’ DNA. “The Helix.com store was created to give each individual a choice in how they engage with their DNA,” says Elissa Levin, director of policy and genomic services for Helix. “For some, they only want to know the health-related insights. For others, they just want to start with something fun, like ancestry or a personalized scarf, and then at another point in their lives, they may have a need or newfound interest in accessing insights that tell them more about their health or nutrition.” Helix formed three years

Exploragen’s SlumberType app (shown above and at left) analyzes DNA to align users with one of four sleep patterns, which determine the time of day they are most productive.

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ago using a $100 million grant from Illumina, a global leader in DNA sequencing. Many business metrics are still being kept secret. Levin won’t say how many users have purchased apps on the market, nor how large Helix’s database of sequenced DNA samples is. What she will say is the Helix store currently lists more than 30 products for 15 different partner companies. One such partner is Exploragen. Its debut app, SlumberType, uses Helix’s sequenced DNA to determine what it claims is a person’s optimal sleep schedule. Society has long promoted the concepts of morning people and night owls, believing certain people are more suited for activity at different times of the day. Exploragen’s value proposition lies in addressing the uncertainty over these distinctions on an individual basis. “There are many DNA variations that are thought to be important in influencing how well or how long a person sleeps,” says Exploragen CEO Ronnie Andrews. “About 30% to 40% of the variance in people’s sleep patterns is determined by DNA while the rest is influenced by other factors such as age, environment and lifestyle.” SlumberType needs access to DNA to read gene variants associated with certain sleep traits, such as sleep onset latency, or how long it takes someone to fall asleep after shutting their eyes. From there, it classifies people

into one of four categories— roosters, bees, fireflies or owls—and provides insights into how best to plan a day (and night) around this category. Like Levin, Andrews won’t say how SlumberType is performing, other than to say he’s excited by the response. Exploragen plans to release a second app in 2018, which will allow people to track how their bodies respond to caffeine. After that, Andrews says Exploragen is still working on its roadmap for the ensuing years. “Our goal is to develop apps that are not only educational but engaging as well with actionable tools and insightful features that keep customers continuously exploring their biology and habits,” he says. “Consumer genomics is at a tipping point, where it becomes a normal, everyday thing to query your DNA for answers that can positively impact your life. Today, the question might be: Where did my ancestors come from? Tomorrow, it might be: What should I have for lunch, or how much coffee is too much coffee?” There’s a flip side to the proliferation of these genomics tools, however, that marketers will need to address. As genomics applications trickle ever closer to informing consumer decisions, their scientific legitimacy is attracting skepticism. Put bluntly, there’s a whiff of pseudoscience emanating from some of the more

outrageous offerings that threatens to torpedo consumer genomics’ budding trajectory. Helix was a target of derisive skepticism in October when Eric Topol, a prominent cardiologist, took to Twitter to add up the cost of Helix store apps he believes lack sound science or convincing data. “Total cost = $1,900; Value = 0,” he tweeted. Three days later, during an episode of “The Late Show,” comedian Stephen Colbert mocked Wine Explorer, an app sold on Helix that recommends wine based on genetic analysis. “I’m getting notes of almond, black currant and total bullshit,” he intoned while sniffing a glass of red wine. Levin is aware of the image problem, which she says stems from people confusing serious apps with ones meant for entertainment. She also vouches for the science behind Wine Explorer. “[The app maker] performed a research study to explore variations in taste and smell genes along with selfreported food preferences,” she says. “The outcome was an algorithm that can take these factors and tell you the characteristics of wines that suit your genetic palate. Wine Explorer not only highlights these preferences but then connects you with unique wines that meet those preferences. It’s a little bit genetic, and a lot of fun— not to mention a great way for people who are not yet motivated to learn health

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insights to access the power of their DNA.” But soundness of principle is only the secondbiggest obstacle impeding widespread adoption of consumer genomics. By far, the most significant concern is privacy. Questions about user privacy have existed for as long as DNA testing has been commercially available. When Greenspan brought the first genetic ancestry test to market, consumers peppered him with dozens of concerns about the fate of their DNA sample. Indeed, it’s hard to imagine a more sensitive type of data than DNA. Just using consumer DNA for its marketed purposes could expose deeply sensitive, legally protected information such as race and health status. And though providing salvia samples for diagnostic purposes would trigger Health Insurance Portability and Accountability Act protection, submitting spit tests to obtain ancestry or other genetic information is not subject to the same legislation. This allows consumer genetics companies to treat DNA like typical consumer data, which they can sell to third parties in anonymized, aggregate form. 23andMe has two such research partnerships with drug companies Pfizer and Genentech, and Ancestry has a similar agreement with Calico, a longevity-focused subsidiary of Google parent company Alphabet. Ancestry’s Heath notes that individuals can opt to not include their DNA in the

aggregate samples and still use the service. He also says that aggregate DNA-sharing agreements are not the company’s top priority. “Generally, [third parties] come to us,” Heath says. “Unlike other DNA testing providers, [selling aggregate data] is not a main source of revenue for us. This is opportunistic engagement with companies or institutions that are researching important aspects of genetic science that, if they fit within the protocol, we will entertain.” Heath is also adamant that there are some parties that Ancestry refuses to sell to: insurers, employers or thirdparty marketers, for example. His assurances, as well as those given by competitors, have yet to be enough for Sen. Chuck Schumer, D-N.Y., however. In November 2017, the Senate minority leader held a press conference where he pressed the Federal Trade Commission to investigate the privacy policies of consumer DNA kits and ensure policies are fair and transparent. Heath believes Schumer’s actions were unnecessary. “I think Sen. Schumer’s comments may not have been fully researched because we’re already doing a lot of what he was hoping to get the FTC involved in doing,” he says. “Our brand has a pretty high degree of trust, and we are giving users control of their data. … We’re meeting our customers’ expectations, we’re meeting the legal requirements, and

we’re meeting the market’s expectations as well.” Nevertheless, Ancestry updated its privacy statement two weeks after Schumer’s press conference. FTC spokeswoman Juliana Gruenwald declined to confirm whether the agency would act on Schumer’s request, citing organizational policy not to comment on the existence of investigations. But she referred to a blog post that highlighted a 2014 settlement with the producer of genetically customized nutritional supplements who failed to protect personal genetic information, among other transgressions. Amid the delicate landscape of consumer data, there’s at least one company that has struck out the other way: Greenspan’s Family Tree DNA. The same day Schumer called for tougher FTC standards, Family Tree DNA unveiled a media campaign vowing to never sell consumers’ genetic data to other entities. Greenspan isn’t optimistic about the message’s ability to drive business, though. “I don’t think it matters, unfortunately, either way,” he says. Then why do it? “I think it’s an important message that needs to be sent,” he reasons. He also believes the campaign will position him to be left alone should the FTC or Congress come prowling around the industry. Perhaps he has shrewdness encoded in his genes. m

Consumer genetics companies can] treat DNA like typical consumer data, which they can sell to third parties in anonymized, aggregate form. 23andMe has two such research partnerships with drug companies Pfizer and Genentech, and Ancestry has a similar agreement with Calico, a longevity-focused subsidiary of Google parent company Alphabet.

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FLYING

BLIND: HOW AIRLINES GET CUSTOMER EXPERIENCE SO WRONG WITH SO MUCH DATA By Sarah Steimer

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PETER FADER FLIES A LOT. The Wharton School marketing professor has the highest frequent-flyer status on a certain airline, often earning him firstclass seating, but he flew coach a few summers ago with his family. This discrepancy in his typical seating data must have triggered an alert to the flight crew. Once all passengers were seated, one of the pilots came back and greeted Fader, remarking on what a valuable customer he was.

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“We know that you usually fly first class with us, and deservedly so,” Fader recalls the pilot saying. “But we appreciate having your whole family with you and want to make your flight as special as possible, despite being in coach.” His children seemed impressed with their father’s status on the airline, but Fader’s mind quickly turned to the passengers around him. “This is just weird,” he thought. “Don’t embarrass me.” A gesture intended to preen one customer’s feathers may have instead ruffled those of others. Fader’s brief and otherwise innocent encounter with the pilot illustrates a marketing paradox: reams of customer data may not yield high customer service scores. Airlines collect an incredible amount of passenger data, but it hasn’t helped the industry’s notoriously mediocre customer service scores. This conflicts with the marketing concept that more customer data creates more personalized experiences and greater satisfaction. Headlines decrying violently deplaned passengers suggest 2017 was a particularly chafing year for airline passengers, with customers forced to meet puritanical dress codes before boarding, removed from overbooked flights and squashed into ever-shrinking seats. If airlines tuned out the siren song of customer data and segmentation, they would see that flying isn’t an individual experience, it’s communal. It stands to reason that members of a flight can only be as happy as the least happy customer. While it’s important to make the most valuable passengers’ experiences the best possible, airlines need to use data to lift

morale for all customers, rather than a select few.

WHEN BAD ANALYTICS HAPPEN TO GOOD PASSENGERS Fader’s personal experience shares a thread with that of United Airlines passenger David Dao, who was physically removed from an overbooked flight last year. Both interactions were based on customer data. Which passenger gets bumped from an overbooked flight is an automated decision, according to United’s report on Dao’s viral incident, and loyalty and money factor into the decision. Passengers who pay the least for their ticket are first in line to be bumped involuntarily, and those in United’s MileagePlus frequent-flyer program aren’t bumped unless everyone on the plane has status, in which case those with the lowest status get bumped first. The airline industry may be the only place where segmentation determines whether customers receive the service they paid for. Imagine purchasing a meal at a restaurant but being denied that food because there isn’t enough for everyone. The more loyal customers receive the meal; you have to come back and eat at a less-convenient hour. It’s not difficult to understand why airlines focus on their most valuable customers’ data and experience. According to Investopedia, business travelers make up 12% of passengers, but they are typically twice as profitable for airlines. Business passengers sometimes represent 75% of an airline’s profits. First-class and business tickets can cost as much as 10 times the

price of coach tickets. Luring and keeping business customers makes more economic sense than focusing equally on all passengers—or so it would seem. Dao’s forced removal, justified by the company’s algorithm that identified him as one of the least valuable people on the flight, highlighted the negative cost of such competitive customer segmentation. United Airlines’ social sentiment fell almost 160% within 48 hours of the incident, according to Brandwatch, and United Continental Holdings’ stock was off about 4% in the immediate aftermath, knocking close to $1 billion off the company’s market value. Yet airlines continue to focus on how they can slash conveniences for those unwilling to pay a premium. Data support this strategy. A Reuters/Ipsos opinion poll released in mid-2017 found 83% of Americans put ticket prices among their top considerations when booking personal travel,

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outweighing travel perks or airline reputation. Sixty percent said they would not pay extra to avoid being assigned a middle seat, and 52% said they would not pay more to fly on their preferred airline. Armed with this knowledge, airlines have unbundled the services that were previously included when purchasing a single ticket. Booking a flight now means choosing from an a la carte group of products. Carrying on luggage, extra leg room and in-flight entertainment are now considered extras on some flights. “Airlines have gotten pretty refined in their analysis of how much they can charge for add-ons, whether it’s checked baggage, overhead bins, advanced boarding, preferred seat selection and so on,” says John Strong, an aviation expert at the College of William and Mary’s business school. This phenomenon has been referred to as “calculated misery,” a term coined by Tim Wu, an author and professor at Columbia Law School. In 2014, Wu wrote in The New Yorker about the decline in quality of commercial airline service, explaining: “For fees to work, there needs be something worth paying to avoid. That necessitates, at some level, a strategy that can be described as ‘calculated misery.’ Basic service, without fees, must be sufficiently degraded in order to make people want to pay to escape it. And that’s where the suffering begins.” Strong says customer data show that airlines can take their cheapest ticket and add or subtract some nuances because people are willing to pay or save a bit, whether on leg room, reserved seating or baggage. “What data has let [airlines] do is divide economy seating into three classes now: premium economy, economy and economy-minus,” he says. The concept of calculated misery

is exemplified by leg room. The shrinking airline seat is welldocumented. The New York Times reported that seat width at the time of airline deregulation in the 1970s was 18 inches, compared with about 16.5 inches today. Seat pitch, or the distance between a point on one seat and the same point on the seat in front of it, fell from 35 inches to 31 inches. Meanwhile, the average American has grown in size. At a time when many marketers are aiming to delight their customers, airlines appear to be doing the opposite. These companies are instead marketing their products as a reduction to discomfort, instead of incremental improvements to baseline quality.

WHAT (AND FROM WHOM) THEY’RE GATHERING The unbundling of flight products and online booking presents airlines with an abundance of customer data. For the occasional traveler, the airline may be able to track credit cards used, flight frequency, typical destinations and spending behaviors. More valuable customers— frequent flyers and high-status loyalty members—are tracked with a close eye. They may receive a personal apology from a gate attendee if he notices the passenger’s previous flight was delayed. A flight attendant may offer the flyer his or her favorite beverage once the flight is in progress. These gestures, typically reserved for high-value customers, are becoming more common as airlines upgrade their technology and combine data touch points. For example, Delta Air Lines introduced software last spring called SkyPro, which may be accessed on its flight attendants’ Nokia Lumia mobile devices to track basic customer

information. American Airlines is expected to launch iSolve this year, an app on its flight attendants’ Samsung Galaxy Note devices that will allow them to offer frequentflyer miles or a travel voucher as immediate compensation for customer service issues onboard. Rohit Deshpande, a professor of marketing at Harvard Business School, has authored two case studies on Singapore Airlines in the past 10 years. The company is considered the gold standard in customer experience, not just in its own industry, but in the greater hospitality sector, Deshpande says. Singapore Airlines worked with Accenture to develop an app that can track customer data from check-in at the airport through the flight and on to baggage retrieval. “Let’s say you go from Sydney to Singapore to change flights from Singapore to London,” Deshpande says. “You decide when you’re going to Singapore that instead of drinking your normal gin and tonic, you’re going to ask for a vodka and tonic. They will record that, and when you reboard in Singapore to go on to London, the flight attendant will ask if you will continue with vodka and tonic or go back to gin and tonic. This might seem intrusive, but their feeling is that people want to know that they’re cared for. They want to be recognized with not just customer service but personalized customer service.” This isn’t the only high-tech way airlines are collecting customer data. Delta has used heart rate monitors on volunteer customers to track their heartbeats at 11 stressful moments during the travel experience, such as finding a parking spot at the airport, moving through security and boarding the plane. “We do focus groups with biometrics and biodata on where customers are looking at things on

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screens, where their eyes are on the airplanes to make things more intuitive,” says Andrew Wingrove, Delta’s managing director of product and customer experience. “The heart monitor was one of the tests we used for focus groups to better understand where their anxiety is.” The monitoring extends to the web via social media, which offers a real-time opportunity for airlines to react to customers, regardless of their status. “We’ve created a robust social listening platform to react in the moment when things are going right or going wrong,” Wingrove says. “[Customers] use it to reach out directly or to mention us. Our goal is to be where customers are, and while that may have been solely over the phone in the past, we’re thinking about it as more engagement with multiple channels.” JetBlue Airways is one of the top brands for customer service on social media. Danny Cox, director of customer support and insights at JetBlue, acknowledges that much of the social media interaction the brand has with its audience is fun banter that doesn’t necessarily turn into data, but it’s still an important way to gather information. “[Social media is] sometimes the first platform where people speak up,” Cox says. “I like to be at the crossroads of the very micro customer feedback, which is the single tweet, the single e-mail and then the single phone call, but also at the macro [level] where we roll out these million-plus surveys a year.” Both Cox and Wingrove espoused the virtues of their surveys, perhaps their least tech-savvy form of data collection. Many airlines send passengers a survey post-flight to ask about their experiences at various touch points. The JetBlue survey, which is only sent to one-third of the

passengers to avoid communication fatigue, asks passengers what made them choose JetBlue, if they would recommend it to others, how they booked the flight, how the preboarding and boarding experiences ranked, if they selftagged their luggage at one of the new kiosks and how they interacted with flight attendants among many others. More questions are asked than most survey takers respond to. “We understand that someone may want to start a survey and not end it, but once they’ve started a survey and completed just part of the process, we’re able to collect the data up to what they had desired to complete,” Cox says. Therein lies the first issue with surveys: If many do not complete them, perhaps only problems identified at the beginning of the questionnaire are corrected. The second issue is a matter of when the airline delivers the survey postflight. If customers don’t receive the survey e-mail promptly, they may forget the details of their experience. The third problem is emotional. “The research on survey response is that it tends to be answered by people who are really happy or people who are really upset,” says Deshpande. “Typically, you get fewer of the people who are really happy. Six times as many people who had an unhappy experience will provide feedback than people who have a happy experience. I don’t take great comfort from feedback surveys, especially in the hospitality industry.” These data pose the question of whether surveys put the onus of satisfaction on the customer: Provide insights, or risk having a poor experience in the future. Customers clearly aren’t thinking this way, as The Wall Street Journal reported in 2013 that many broad e-mail questionnaires get response rates under 5%. At the time, in 2013,

MARKETERS DESCRIBE THEIR MOST MEMORABLE FLIGHT

he best experience on an airline I ever had was when I had a flight delay on Southwest. The flight delay was supposed to be an hour, but then they figured things out and were ready to leave 20 minutes earlier than they thought. The gate agent, who I’d talked to, noticed that I hadn’t checked in and found me at the bar, so I didn’t miss my flight. - Traction CEO Adam Kleinberg

very time I walk into the Delta Sky Club I have a great experience. I gladly pay the $600 annual fee out of my own pocket for the chance to relax or get real work done in this oasis amid airport insanity. Plus, Delta has recently upgraded the seating, food and beverages at many of its clubs. You’re almost happy to stay a little longer when your flight is delayed. - Ahalogy CEO Bob Gilbreath

’m not a traveler who needs or expects a ton of personalized service. My best trips involve the airlines operating on schedule, with cabin equipment working as promised and the ability to sort out problems when they arise. The biggest shortfalls to this standard are unreliable regional airline flights into or out of hubs and unrealistic scheduling and capacity flexibility—for example, 30-to-40-minute connection times that involve different terminals. - John Strong, an aviation expert at the College of William and Mary

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United said it received 10% of its blast surveys back; JetBlue said 15% to 20% of customers responded; American said its selective surveying earned an 18% response rate and Virgin America saw a 20% response. JetBlue, for one, is acknowledging it may reach a point where passengers won’t fill out its surveys. “I continually tell my team, ‘Imagine a day where nobody filled out a survey for us,’” Cox says. He says that when customers put trust in the company by downloading their app, for instance, the data JetBlue can collect should be insight enough. “With millennials becoming a more prominent part of our customer base, and those coming after, they’re not going to fill out surveys. They’ll think, ‘You know when my plane got there, you know when my bag got to the carousel versus when I got there. You know how that would make me feel.’” Perhaps a more telling survey comes by way of the American Customer Service Index. In 2017, U.S. airlines as an industry drew a score of 75 on the 100-point scoring system. It’s the best score the nation’s airlines have ever received, but still keeps them in the bottom third of more than 40 sectors the ACSI measures in the U.S. economy. The authors of the report summary note that “much of the increase in passenger satisfaction appears to be driven by price,” which isn’t commonly considered a key indicator of customer satisfaction. “Customer satisfaction has never appeared to be a goal for airlines,” ACSI Chairman Claes Fornell said in a press release. “Compared to other industries, the financial return on passenger satisfaction is not much of an incentive. The exception is in the few airports where airlines actually compete with one another— or when they treat passengers spectacularly badly in public.”

Airlines have plenty of data, but they don’t always use it proactively to enhance customer experience. Rather, it’s used to make a reactionary decision. Using United Airlines as an example, Strong explains that before the Dao incident, the discussion about overbooked flights largely centered on who would and wouldn’t get bumped, instead of reimagining the bumping process altogether. “What [the airlines] realized upon doing customer research after those terrible experiences was that if we just make it easier to volunteer and we pay some more money, we can solve a lot of problems before they become problems,” Strong says. The experience proves Fornell’s theory that the financial return on customer satisfaction is sometimes only incentive for airlines when there’s bad PR. Strong suggests that the culture of how data is viewed and used is the root of the problem. Airlines consider their business a logistics operation, not a customer operation. “[Operational issues] have been the ethos of the airlines for a long time,” Strong says. The marketing and customer service teams are doing a good job of listening to customer surveys after the flight ends or using data to identify and attract customers, he says, but realtime responsiveness is lacking. The employees should be more empowered with customer data. In particular, he says, data should help mitigate problems before they arise.

USING DATA TO UNITE, RATHER THAN DIVIDE The divisions between ticket classes, problem solving and customer satisfaction are particularly glaring in a space where everyone is watching. Coach passengers must trudge past first-class amenities

as they take their seats. The entire plane can witness a single passenger’s poor treatment by staff (along with many on the internet, if the incident is recorded). Hundreds or thousands may learn about a lost piece of luggage if the passenger takes to social media to complain. In a communal setting, airlines and their passengers would be better off if customer analytics were used to first improve everyone’s experience. Consider the two highest-ranking U.S. airlines on the ACSI list: JetBlue and Southwest. The latter has banked its reputation on a lack of segmentation. There are limited options or products when purchasing a Southwest ticket: Business Select, Anytime or Wanna Get Away. The only perks to the most-expensive tickets are refunds, a free “premium drink,” more Rapid Rewards points and priority boarding. Southwest planes don’t have visible passenger seating distinctions. The only notable add-on is EarlyBird Check-In. “Southwest has decided that even though they know there are lots of people who will pick and choose whether they want this feature or that feature, there’s also a customer segment that just wants a consistent product,” Strong says. The low-cost airline’s research dictated the decision not to break out separate products or fees. Paul Sacco, Southwest’s director of customer intelligence and strategy, says the company chose not to follow the industry trend of charging for bags because its customer data showed both infrequent leisure travelers and its most-frequent business travelers used the checked bag service and appreciated the free benefit. Sacco acknowledges that personalization has become a customer expectation, but maintains that the core service needs to back that up. The airline’s research on its

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customers speaks to the importance of both well-functioning logistics and positive customer service. “We have found that on-time performance and positive interactions with our customerfacing employees are the strongest drivers and predictors of customer satisfaction and customer likelihood to recommend Southwest,” Sacco says. Southwest received an ACSI score of 80, ranking second on the list among U.S. airlines. The company’s other metrics, such as canceled flights and on-time arrivals tracked by the Department of Transportation, are less impressive. It suggests the work Southwest has done in transparent pricing, egalitarian seating and pleasant customer service simply matters more to its customers. The customer service aspect is particularly compelling. Southwest gates in some airports in December were impressively decorated with handmade snowflakes and old-fashioned sleds, a stark contrast to the sparsity of other gates. And in the era of viral videos, it’s also worth noting that the top four clips that appear on YouTube when searching “best flight attendant” are of Southwest employees. JetBlue topped the ACSI airline rankings—besting Southwest by two points—by striking a balance between a positive baseline experience and added perks. The building blocks have been customer data and analytics. For example, JetBlue noticed that it had consistently negative trends in Philadelphia. A review of both logistical data and customer reviews showed there was a timing issue: Flights weren’t late, but passengers were arriving at an hour that coffee shops in the airport weren’t yet open. “All of these negative [reviews] were because people weren’t getting

their cup of joe before jumping on this flight from Philadelphia to their meetings and feeling prepped and primed for that,” Cox says. “We could have just stopped at, well, people in Philadelphia, they’re just angry. But, instead, we dug deeper to see what was really needed. We could easily partner with the coffee shops there and ask them to adjust their hours. Immediately the scores popped back up to a more reasonable and expected area.” Cox says as customer expectations have risen, JetBlue has worked to keep up while maintaining the base. The airline may be known by budget-conscious consumers who follow JetBlue’s flash sales, but it also offers products like Mint, its premium service, as an upgrade. Like Southwest, the airline doesn’t rank particularly well on traditional metrics (2017 was JetBlue’s worst year for flight delays since 2007), so price and customer service once again outrank other factors. Being on-time certainly matters, but Strong’s observation that airlines focus too much on logistics appears to be true. United ranked highest for fewest canceled flights and second for most on-time arrivals, but ranked toward the bottom on customer satisfaction scores. It’s a prime example of why airlines need to shift their data focus to customer service, but they also need

to understand their actions are in full view by an entire airplane of customers. There’s an obsession with customer data and personalization right now. The theory is that individualized experiences breed loyalty; but here’s a caveat: Most of these experiences don’t happen with everyone else watching, or at others’ expense. When Target’s “pregnancy prediction” score determines a customer is expecting, it doesn’t offer deals on baby-related items in full view of childless couples. When Starbucks customers join the loyalty program, they don’t get to brandish their cards to cut in front of non-members in line. Airline customers may each be unique, but they have a communal experience when flying. The surveys, formal and informal, suggest everyone benefits when the general population is content and the loyalists are (discreetly) acknowledged. No matter where a person sits or how much they pay, every passenger feels the same turbulence. m

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MESSAGE OVER MEDIUM: Why Advertisers Must Tune Up on Principles in the Digital Age

In his new book, Ogilvy on Advertising in the Digital Age, Miles Young implores advertisers to remember the fundamentals of their craft, lest they fall victim to the “tragic and comic plots, sub-plots and counterplots” of advertising

By Hal Conick

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t’s 17 degrees in Oxford, England—an unusually cold evening, even for December— and Miles Young is trying to keep warm within the medieval architecture of one of the city’s oldest schools. After years leading Ogilvy & Mather, one of advertising’s most

prominent agencies, Young is now the warden (or the head) of the University of Oxford’s New College, a 648-yearold institution many Americans would recognize from the “Harry Potter” films. In 2016, Young left his role as CEO and chairman of Ogilvy & Mather, but his frenetic schedule surely keeps him warm, even if the insulation of the school’s historic buildings leaves something to be desired.

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In addition to running one of Oxford’s premier colleges—Young operates New College on the same principle with which he led Ogilvy: “Listen in order to survive”—Young continues to work as a nonexecutive chairman at Ogilvy on an as-needed basis. Most recently, Ogilvy sent Young on a 16-hour flight to Shenzhen, China, to assure a major client that it was in good hands with the agency, that it wasn’t taking a wild risk. It’s no wonder why Ogilvy would send Young; his stately voice, affable smile and years of experience coalesce to ease the anxiety of clients. This same sense—we’ve done it before and it isn’t wildly risky—filigrees Young’s newly released book, Ogilvy on Advertising in the Digital Age. The book serves as a codicil to David Ogilvy’s “master text” Ogilvy on Advertising, Young says. His thesis is to get practitioners to reread Ogilvy’s book and get back to basics. “It is still pure, pure gold,” Young writes in the book’s introduction, which he composed in Ogilvy’s retirement estate in the south of France.

Young says Ogilvy on Advertising is the “best book ever” because it was written by an advertiser rather than an industry rubberneck. “It is a polemic of its time because David was angry when he saw people becoming too complicated and confusing media,” Young says. “Its message is still as relevant today. That was my objective: to provide a postscript to his book.” Young didn’t want to frivolously write this postscript; he had noticed a lack of smart writing on digital advertising that carried the weight of case studies, real-world examples and interviews with the industry’s experts. He used the principle of listening to survive and interviewed digital marketing and advertising experts across multiple disciplines, including digital marketer Martin Nisenholtz, digital designer Bob Greenberg and advertising executive Chuck Porter, founder of CP+B. Marketing News spoke with Young about the digital marketing landscape, why companies that employ a digital marketing director are in trouble and why he believes advertising’s message will always be more important than its medium.

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Were the digital specialists you spoke with for the book similar to the advertising and marketing professionals you’ve known over the years?

They hold a similar view that I have and people like David Ogilvy would have had: You must never confuse the medium and the message. The medium is only the medium. It may change, and it may be better in many ways. It may be more efficient, it may be more interactive or maybe more user-friendly, but it is the medium, and it’s not the message. The message is something that you have to frame, go through a process of discovery about in a disciplined way, assess the relevance to your target and then express in a way that gets people to notice and engage with it. Those core principles are unchanging, but an overemphasis or obsession with the medium can devalue the importance of the message. A large part of the content pushed out onto the internet is never viewed, never listened to and never used, which is highly wasteful. Every one of those individuals I spoke with for the book would profoundly agree with that statement, but in different ways. Bob would probably be inclined to emphasize the importance of design as a component of messaging, and Chuck would probably be inclined to emphasize the role of strategy behind messaging, but the core principles would remain the same.

These are the parts of the message that a classic, 1960s direct marketer would use, too, I’m sure.

Yes, absolutely. You measure real results; you don’t measure intermediary results. This is also an issue in a culture that grew up on clicks. You should still try to use those, but also get beyond them and into the relationship with sales and other marketing variables. A lot of bad measurement is done in an unsophisticated way, which can be worse than no measurement at all. In the early stages of the digital revolution, that was what it was like and everyone was measuring by clicks or even by tweets.

Was the digital revolution at Ogilvy initially poorly measured?

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Not really. We’ve always believed in getting back to the sales effect, but it is still very difficult because digital has collapsed the different disciplines that existed. You had direct marketing, which is highly quantitative and disciplined. You had advertising, which is slightly less quantitative and slightly less disciplined, and you had public relations, which is much more qualitative and made attempts to measure itself a little bit difficult. The digital revolution encompasses all three, so you may be very happy if you get a surge in retweets if you’ve got a public relations perspective, but it wouldn’t lift many sales in an advertising objective. You’ve got to disentangle your objectives and not confuse them.

A couple of times in the book, you frame the drive toward digital as a zero-sum game for companies leading the digital revolution. What is the problem with falling into zero-sum games?

Both sides fall into those games. It’s very understandable that if you’re selling digital media, you want to convey the impression that any nondigital medium is dead, dying or out of date, … and [that] was the narrative of Google and Facebook—and still is to some extent. The cry was, “TV is dead,” but TV isn’t dead. TV may be transforming. It may be very different. It may be useful only insofar as it is complemented and made digital, but in most parts of the world, TV is very much alive and has not diminished even in share terms. The digital narrative is a false narrative, but it’s designed to create sales. If you go to Cannes [Lions] International Festival of Creativity, you’ll find the beaches full of real estate properties owned by digital media professionals who are pushing that message. It’s totally understandable, but it’s not the whole story. TV remains the easiest and quickest way of gaining awareness for a new product among a mass audience. Digital is fundamental, but it’s not fundamental alone. That’s what I was trying to argue against in the book: There’s this false argument that you have one or the other, but you can’t have both.

You’re right. You need to have selfconfidence. The problem with a lot of journalism is that it started to give content away for free, and then it couldn’t afford to pay journalists enough to generate good content. But where media owners invest in content, readers remain. That is the lesson and so far, it’s a decision which you can make, but it’s at your own risk. Magazines like The Economist or Forbes are doing well in their transformed forms, but that’s because the content is good and readable. You have to invest in content. It’s like investing in any other product benefit. It’s a confidence issue. In a funny way, I think those zero-sum scare-stories have damaged the confidence of traditional media owners.

Q A

How can they rebuild that confidence?

Only by recognizing that content is king. Everything is about quality content. In the press media, it’s possible to demonstrate that you can get people to pay for content. There are models in the [Rupert] Murdoch world and Daily Telegraph in the U.K. that seem to be quite successful now. People are getting used to paying for different types of content. In other words, they must accept the relationship between cost and a premium. It will take time, and I’m sure there’s more bottoming out to be done, but if people want content, they’re going to have to pay for it. Good content can’t be given away for free.

As you said in the book, Google and Facebook are dominating the digital advertising market. What is their role in the digital revolution?

TV seems like it’s falling into the same trap that journalism and music fell into, where content is given away for free, and creators are unsure how to stop.

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They are on very ambitious missions and, at some stage, society is going to have to ask, “Can three huge conglomerates”—I would add Amazon—“really carry on expanding horizontally? Is that in the public interest?” That’s a debate that’s happening more in Europe than in the States. It reminds me a bit of the debate that was going on before the First World War with the large oil companies. Of course, Theodore Roosevelt did take them on and created antitrust legislation, which to some extent controlled these companies. I don’t think we’re at that point yet, but there comes a point where too much concentration of power in media or anywhere else isn’t in the interests of advertisers or the public. It just needs monitoring at this stage, but it’s an issue that will become more apparent in the next 10 or 20 years.

today is digital. While there may be choices, you assume that you’re going to be digitally driven, you’re going to have the ability to have two-way interactions with your customers, you’re going to have the ability to collect data and deploy the data and you’re going to have the ability to be transparent. The alternative is to carry on behaving as you are, and bring in digital people when the marketing plan is buttoned-up and ready for publication. That is the besetting problem with the marketing mindset—it’s an attitudinal thing. As soon as you hear the words “digital marketing director,” you know there’s a problem, because it means that digital is put into a silo. Everything is digital. I really believe that in 20 years, if we’re having this conversation, we won’t be using the word “digital” because it won’t be necessary.

Q A

Is there a way that advertisers could become less reliant on social media giants?

Not really, but there might be if, for instance, the Chinese properties started to seriously come into the West. You’ve got WeChat, and you’ve got Chinese search engines like Baidu, and they’re starting to come to developing nations. They’re getting into South Africa, India and Southeast Asia. They’ve cleverly avoided getting into Europe or the States yet, but at some stage, they’ve got deep purses and may decide to compete. To some extent, the platforms are Balkanized in the West. You have one platform for payment, one for entertainment, one for video, one for search, one for messaging and for photographs. But with WeChat, you’ve got all in one, and it’s arguably quite a competitive proposition. I suspect that in the future, there may be competition, which would be a good thing.

How can each of these sides—digital and traditional marketers—be holistic in their approach?

It’s a mindset thing for marketers. The question is, do you have a digital heart? And if the answer is “No,” then it probably means you’re just digital because you have to be. The difference comes when you ask if your marketing starts with the notion that everything

It just becomes part of the process, you’re saying.

It’s been part of the process, exactly. It’s a psychological issue of deep acceptance, and then once that’s there, it all follows easily. Of course, there are things that you can do to make sure your company digitizes. You can set targets, for instance, by saying, “We must spend 40% of ad spend on something digital.” These sorts of things help, but they’re the stick. The carrot should be something that’s about a belief in this way of doing business.

I often see marketing reports or surveys that suggest companies are far into digitization but haven’t seen return on investment yet, or they’ve had trouble measuring its potency. That seems to indicate a miscommunication within the ranks.

I think that’s right. That’s digital as a gimmick, digital as a religious symbol or digital because everyone else is doing it. Those are the wrong reasons to get into digital. There’s no reason to do digital unless it’s a matter of principle, and that’s the way the world is now. It’s essentially digitized, but you then ask yourself, “What was my marketing objective? What’s my task? What are my best channels? Am I using TV or press or whatever in a digital way? If not, why?” If you go through all the

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normal disciplines, but you don’t produce an analog media program, and then you say, “Now we need to add to digital,” it’s the wrong way to do it.

Does this conundrum work the same way for companies with the opposite problem—those that rely too much on digital instead of advertising’s principles?

Starbucks did that at one point, moving out of traditional advertising altogether and making a big thing about it. Its brand started to suffer because it wasn’t putting a proper level of investment in communicating what it stood for toward a large enough audience. Starbucks is a mass brand; if you’re a mass brand, you need to communicate to your mass audience, and digital doesn’t have the reach or the scale and isn’t always the best way of communicating an image. Digital is an essential part, but it can’t be the only part. Starbucks stepped back into more traditional advertising and started advertising in newspapers and more traditional outlets, which it had claimed were no longer relevant a few years prior.

You wrote about how people oversimplify the way generations think and act. Millennials are at the center of this right now. Is this a result of overreliance on analytics or simply a flawed way of thinking?

It’s a flawed way of thinking to label too much. Millennials were labeled by people who didn’t like millennials, so they were stigmatized and described as the “me generation” and seen as selfish. It made a great media story; it was front-page news, but it was too simplistic. Certainly people born within certain periods do have some characteristics in common, but when one started looking to millennials, they were far from selfish as they had been labeled. They’re actually quite altruistic and, rather than wanting to selfishly drive big cars down the road, millennials don’t particularly like cars at all. A much more rounded picture emerged of this generation, but the label “millennial” stuck. In a way, people have learned. There aren’t so many comments about centennials because there isn’t an identifiable stigma that people have found that relates to them. Stigmatizing millennials was journalism gone a bit mad, to

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be honest. And then we all became complicit in it and started to have millennial conferences and think tanks. I’m not saying you can’t use the word “millennial,” but it has become a very narrow label and therefore potentially misleading. You have to be careful when you label generations, certainly.

You wrote that the principles of advertising haven’t changed over the years. Do you think there’s a point when digital may change them, or will it always simply be a medium?

Another big change in the digital world is in customer loyalty and expectation. People aren’t blindly loyal to brands anymore and have high expectations—including for brands to comment on controversial topics. How can marketers and advertisers use industry principles to attack these issues?

E-commerce is probably the biggest point of transformation because it is changing the way in which people buy. It’s not putting shops out of business, but it is dramatically transforming the nature of shopping. E-commerce is the biggest tangible impact of the digital revolution. But in communication terms, it’s a bit like old-fashioned direct marketing. You want to know cost per sale— basically, how much can you invest to sell X? The affordable investment, and therefore digital, has become e-commerce. Digital has become a bit like analog direct marketing or mail order where a company like Sears would know exactly what the allowable cost per insertion was via A/B tests. Those old-fashioned disciplines are being reinvented now for e-commerce because you want to understand those metrics. But there’s no doubt that this is a very significant behavioral

The question is, do you have a digital heart? And if the answer is “No,” then it probably means you’re just digital because you have to be. The difference comes when you ask if your marketing starts with the notion that everything today is digital.

change. I’m sure it will continue and it won’t put bricks-and-mortar retailing out of business altogether, but it’s creating a strong presence in retail and indeed wholesale.

Brands, like all institutions, are less trusted than they used to be. The transparency of the digital world can shine a very harsh light on companies and their motives. Companies may or may not survive that, but they seem to be pretty durable. The overall impact is the degrading of people’s respect for brands slowly over time. Now a big question is how alterable is that trend? Can you turn the tide? I think you can, but brands have to demonstrate much more than they [currently] do that they really matter to people. They have to have a discourse that ignites the interest of people and they’ve got to demonstrate behavior that gels with the customer. It’s going to be more difficult to do branding well, but if you do it well, loyalty will come back.

How do you think David Ogilvy would have taken on the digital revolution?

He was a bit suspicious at first because he thought it was a lot of geeks talking jargon. He did experience a few presentations of that sort in his later years, but I also think he would have been totally wowed by digital media’s ability to collect data and to measure impact. David Ogilvy said, “My first and last love is direct marketing.” When he retired, he moved out of the advertising agency into the direct marketing agency … and his reason was that advertising people were too imprecise and too head-in-the-clouds, while direct marketing was the real nitty-gritty discipline. Well, now digital has brought nitty-gritty back into the picture. And he would love that. m

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RECRUITING

Five Ways To Evaluate Interpersonal Skills in Executive Candidates BY CAMILLE FETTER

 cfetter@talentfoot.com

valuating interpersonal (aka soft) skills in executive-level candidates is one of the most challenging responsibilities of a hiring manager. A candidate’s interview behavior may not represent how he acts in general because very few people display their authentic selves in interview settings. It’s especially difficult to gauge assertiveness and extroversion in an interview. Candidates know they’re being judged and evaluated, so they don’t want to come across as egotistical. Gauging a potential executive’s

interpersonal skills is crucial, but how can you get to know him with only an interview? And what if you need to hire a new team leader within a few days? There are five ways that hiring managers can reach the most accurate evaluation of interpersonal skills in executive candidates.

Meet Your Candidate in an Informal Setting If you only have a few days to hire someone, holding your interview at a coffee shop or over a meal is the best

career advancement

way to fast-track the hiring process by observing your potential employee in a casual environment. Observe how the candidate behaves from beginning to end. What’s your impression within 30 seconds of meeting her? Is she quiet and reserved, or warm and outgoing? Does she stand up immediately and give you a firm handshake while maintaining eye contact? Notice how she engages with the barista, server and host, depending where you are. Do people seem to like her or feel put off by her behavior? You’ll quickly be able to tell if the candidate is outgoing and friendly or quiet. On the executive level, the people who thrive are those who connect easily with others and show compassion and empathy.

Plan Specific Situational and Behavioral Questions Posing open-ended, situational and behavioral questions helps you get to

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career advancement

RECRUITING

a candidate’s interpersonal skills. An example of a situational question would be, “If you got into a conflict with a co-worker over originality and idea ownership, how would you handle it?” Behavioral questions force candidates to pull from their past. For example, “Describe the biggest challenge you’ve had in your career so far. How did you navigate it?” Pay attention to how the candidate receives these questions. Do they make him nervous and tense, or at ease? Does it seem like he’s answered similar questions before? I like to see candidates use the STAR method to answer these questions. STAR stands for situation, task, action, result. Candidates describe the situation— usually a challenge—then the task, which is what needed to happen to rectify the situation. The action is what the candidates did to reach success or overcome the challenge. The result is what happened. An example would be, “We lost two key advertising clients, and we needed to fill their places within a month. I reached out to my private network and held multiple coffee meetings to acquire new clients. We filled the two open ad spaces and took on an additional two clients due to my series of meetings. That resulted in a 40% increase in revenue.” Using the STAR method shows candidates have interview experience, and it allows them to objectively outline their successes without coming across as overly confident. When used effectively, the STAR method helps candidates state the facts of what happened to demonstrate their soft skills. Before the interview, draft at least three situational and behavioral questions that relate to the position you’re hiring for. This will help you identify soft skills, such as ability to communicate and work under pressure. When you prepare questions, you won’t have to resort to general queries that don’t tell you much about a candidate’s personality. You’ll quickly find out how dynamic the person is.

An interview is a two-way conversation, with the hiring manager leading. You want your candidate to show interest in you without trying to take the reins on the interview.

Get the Inside Story from Your Candidate’s References Remember to ask your candidate’s references about their interpersonal skills. It’s easy to focus on the numbers and big wins when you call a reference, and those facts do matter. However, asking a past supervisor about your potential hire’s soft skills is one of the best ways to learn about their personality. Find out the most challenging aspects of the candidate’s personality, and how he dealt with conflict. A great question for a reference is, “How would Joe’s direct reports describe him and his communication style?”

Put Your Candidate Through the Lunch Test If a candidate doesn’t ask you anything about yourself for the entire interview, that’s a sign she could be self-absorbed and only in it for herself. An interview is a two-way conversation, with the hiring manager leading. You want your candidate to show interest in you without trying to take the reins on the interview. The conversation should be approximately 75% about the candidate and 25% about you and the company. The candidate is there to sell herself, but she’s also there to learn if she’s a match for the company, and to do that she needs to learn about you. A candidate can (and should) decline a job offer that isn’t the right fit, and she needs to ask questions to find that out. You’ll want to grab lunch with the right candidate after the interview; you wouldn’t want to spend more time with someone who talked about

themselves for the entire interview, would you? It’s important to surround yourself with people you genuinely like and will enjoy being with in the workplace.

Find out How They’ve Taken Initiative Did the candidate ideate a project with his current organization, or has he mostly executed other people’s ideas? Being able to take initiative and be assertive is crucial in any leadership role. Ask him what projects he’s executed from inception to fruition. At this point, you also want to ensure the candidate is humble by noticing if he’s credited his team or not. Is he always speaking in first person, or does he give credit where it’s deserved? Look for someone who uses “we” more often than “I.” No one wants an egomaniac leading their team. This is also a great time to find out how a candidate inspired his team and leveraged resources for a project. How did he inspire great work? And how would he describe his leadership style? I’m always surprised by how many executives struggle to answer this question. Self-awareness is extremely important, and being able to describe oneself accurately and honestly is a key indicator of it. If we’re not aware of our own behavior, we can’t grow and evolve. m CAMILLE FETTER is president and managing partner of TalentFoot, an executive search firm. She has been featured in AOL, MSN Careers, Crain’s New York Business, CareerBuilder, TheLadders and Today’s Chicago Woman.

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ORDER INFORMATION To place a classified ad in Marketing News, please contact Jordan Berthiaume at amaprint@yourmembership.com or call Jordan at (727) 497-6565 x3409. To post your job on AMA's online job board, go to http://jobs.ama.org.

POSITIONS OPEN ACADEMIC FACULTY NON-TENURE TRACK POSITION, TEXAS A&M UNIVERSITY — The Department of Marketing in the Mays Business School, Texas A&M University, invites applications for one new non-tenure track position. The position is at the rank of clinical assistant professor, starting in Fall 2018. Applications will be considered from all areas of specialization in marketing, but candidates must possess an earned PhD and have demonstrated excellence in teaching and service as well as have the ability to contribute to our research mission. Teaching responsibilities will include a six course load per academic year. Applicants must be willing/ able to teach a wide variety of courses. Service to the department and college will

also be expected. This may include such activities as serving on committees or advising student organizations. Mays Business School and our department offer an excellent environment for teaching, research and service. We have a collegial culture, reasonable teaching and service commitments, and relationships with world-class research faculty in related disciplines. Housed within the Department is the Center for Retailing Studies and the Professional Selling Initiative; exciting opportunities exist for collaboration with CRS and PSI member companies. For more information about the university and our department, please visit: http://www.mays.tamu.edu. Contact Janet Parish at jparish@mays.tamu. edu (979-845-1067). Texas A&M University is an equal opportunity employer.

PROJECT COORDINATION Apple Inc. has multiple positions available in Cupertino, CA: Producer (Req# 9K5LRN) Assist in prjct coordinatn fr prdct launches. Refer to Req# & mail resume to Apple Inc., ATTN: D.W., 1 Infinite Loop 104-1GM, Cupertino, CA 95014. Apple is an EOE/AA m/f/disability/ vets.

POSITIONS WANTED FREELANCERS AVAILABLE QUANTITATIVE RESEARCH SERVICES: Online Surveys, Survey Mailings (Discount Business Reply), Data Entry, Data Tabulations, SPSS & Quantum, MaxDiff, Conjoint, Opportunity Analysis, Coding, Reports and On-Site Consulting and Training. UGA graduate celebrating 18 years in business. Quick turnaround. Please call Jeanne Eidex at 770.614.6334.

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career advancement

ON THE RECORD

up every bit of content that we have about every one of our products and hope that customers can wade through and find what they’re looking for. We can narrow down that content and satisfy “I want to know” moments very contextually. [There are also] “I want to buy” moments. We have the ability, based on what [a customer] has done in the past, to determine if they’re just gathering information or if they may be looking for something very specific.

Traditionally Creative Marketers Play a Big Role in Data-driven Customer Experience Lisa Loftis of SAS considers the evolution of the customer experience and the role data and analytics play in customer strategy BY SARAH STEIMER | STAFF WRITER

 ssteimer@ama.org

ighteen years ago, Lisa Loftis cowrote Building the CustomerCentric Enterprise. If she were to update the book today, she would add quite a few chapters on how a digital focus has changed the game. Loftis is a thought leader on software company SAS’s Best Practices team, where she focuses on customer intelligence, customer experience management and digital marketing. Data and analytics are at the center of all three, which Loftis discussed with Marketing News.

How has the role of data in the customer journey changed since your book first came out?

Our capabilities and the types of data we deal with now have given us

the opportunity to know our customers more intimately and personally than we ever could before. That’s due to the digital explosion of data that we have from mobile. When we wrote that book, digital was just starting and those capabilities did not exist. Now we have the ability to understand exactly what a customer is doing, where they are and what their preferences are. And we have a way to communicate with them in real time.

Q A

Can you give some examples of what that looks like?

We can understand the “I want to know” moments when one of our customers or prospects is in an investigative stage and they’re looking for information. We no longer just throw

Marketers were once considered creatives. Now their role involves some sociology, some knowledge of the law and lots of technology know-how. What does a modern marketer need to refresh to avoid falling behind?

Creativity never goes away, but the most memorable creative, without the data behind it, is just spray and pray. We usually tune this to CMOs and the marketing director level, but young marketers can consider this: There are three characteristics needed to be successful today. They must have the ability to forge great change. Between 50% and 60% of revenues will be generated digitally in the next couple years. The customer is at the heart of multichannel business strategies, and marketing can’t be removed from the creation and shepherding of those strategies. The second characteristic is cogence, the ability to tell a clear and compelling story about why the organization needs to change in response to the multichannel business strategies. The third characteristic is cohesion, which is about creating and forging connections in a siloed organization. There is no situation where the CMO is going to have control over every customer touch point, but the experience strategies that marketers need to drive are going to have significant impact on those business units that marketers don’t own. They must have the skill set to build the roadmap, get it started and then be there as a guiding force. m

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advertisers’index

ADVERTISERS’ INDEX Quick source for contacting the suppliers in the February 2018 issue of Marketing News. 2018 AMA Marketing + Public Policy Conference ...................................... p. 19 URL: h ttp://ama.marketing/MPP2018

AMA’s Marketing Resource Directory ................................................................... p. 61 URL: http://marketingresourcedirectory.ama.org

2018 AMA Training Series Events ................................... inside back cover ttp://ama.marketing/ts URL: h

Customer Lifecycle, LLC . ........................................ p. 6 Email: info@customerlifecycle.us URL: http://www.customerlifecycle.us

2018 AMA Winter Academic Conference . ................................................. back cover ttp://ama.marketing/winter2018 URL: h

Marketing News ...................................................... p. 63 URL: http://www.ama.org/marketingnews

AMA Professional Certified Marketer® Content Marketing Program ........................ inside front cover URL: h ttp://ama.marketing/PCM-CM AMA White Papers .................................................. p. 21 Email: anelmes@ama.org URL: h ttp://www.ama.org/whitepaper

Thank you to the 2018 AMA Winter Academic Conference Event Sponsors and Exhibitors . ............................ p. 7 URL: http://ama.marketing/winter2018 University of Georgia / MRII Market Research Institute International ............................ p. 5 Ph. 706-542-3537 or 1-800-811-6640 URL: http://www.marketresearchcourses.org

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#OfficeGoals A peek inside the marketersâ&#x20AC;&#x2122; offices that make us drool

SAATCHI & SAATCHI aimed to consolidate its business

PHOTOS: ERIC LAIGNEL

units into one floor at its Hudson Street office in New York City. It enlisted the help of M Moser to create a new space that is edgy, modern and fitting of the creative brand and provides a collaborative environment. The interior has a floating, linear-slot wood ceiling strategically placed to create hub areas for collaborative space. Shared conference room and meeting areas dispersed along the perimeter provide acoustical privacy and balance. The main cafĂŠ space, located on the west side of the floor, offers sweeping views of the Hudson River. m

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