SapientNitro Global Marketing Series: CMOs Reveal Obstacles To Global Marketing by SapientNitro

SapientNitro Global Marketing Series

CMOs Reveal

Obstacles to Successful Global Marketing Article

of 3 The Evolution of Global Marketing | By Freddie Laker and Hilding Anderson

Executive Summary CMOs are struggling to adapt to a world that is fundamentally different from when they started their careers. Disruptive digital technologies and the new expectations of the global consumer are forcing global firms to adjust and innovate. At SapientNitro, we have made a significant effort to understand how these changes are impacting large global organizations. What we found was surprising: just 15% of senior marketers are prepared to deal with the rapidly changing consumer, and just 8% believe agencies are succeeding in their support of global brands. This should be a wake-up call for global marketers. To further develop an understanding of the causes and implications of these trends, we have conducted a 6-month study of 114 CMO-level marketers, including oneon-one interviews with former or current CMOs including The Home Depot and Intercontinental Hotels. Our research has culminated in three articles. The first is focused on identifying the obstacles, and understanding the implications of these new challenges. The second posits a new “Global Marketing Mindset” of the future CMO — one more comfortable with technology, consumer insight, analytics, and multi-disciplinary strategy teams. The final article explores the implications of these trends for agencies — how agencies can better support large global brands; it also points out major areas where they are currently failing.

Together, these pieces represent our perspective on the future of global marketing. While it is a challenging future, it also is full of opportunities for innovative, adaptable, and entrepreneurial leaders and businesses.

intROduCtiOn

new GlObal MaRketinG CHallenGeS

Global CMOs and senior leaders are facing distinctive new challenges, which have arisen just in the last few years. Amid this wave of disruptive technology and its application to building multi-channel experiences, marketers are reinventing their tools and approach.

DISruPTIve TeCHNOLOGy

In our research, we identified five significant and new challenges: disruptive technology, the connected consumer, the localization challenges of digital, the challenge of global multi-channel projects, and a mismatch of organizational structures. In total, these trends are driving a new marketing environment, which is dramatically more difficult than even five years ago. For example, it is much more difficult to manage your global brands across disruptive technologies of social media, mobile apps, and in-store digital experiences. recent developments in multi-channel digital experiences offer opportunities to grow revenue and connect with consumers, but require investments much too large for a single market. It is clear we live in a time of major new challenges for global marketing. In the following sections, we will explore the nature of the challenge, and also note the implications of each.

The first obstacle identified is the rapid growth of new, disruptive technologies. These are reshaping how consumers can be reached, and how marketers develop campaigns to launch and reinforce their ecommerce or brand-building goals. Consider the technologies that have been introduced or achieved meaningful market shares in the past five years: media tablets, mobile-centric applications and interfaces, personalized and social user experience, internet-aware devices, app stores and marketplaces, in-memory computing, personal sensors, location-based services, mobile commerce, augmented reality, in-store kiosks, touch-screens, and many more. And more change is coming, with NFC (near field communication) and mobile payments reaching a tipping point, while digital tools are affecting the way we order coffee, drive cars, exercise, even monitor home electricity consumption. Little wonder then that senior marketers are struggling to adapt in this new world. The proliferation of new technologies represents a set of obstacles to global marketing. First, the senior marketer now has to be knowledgeable about the latest and greatest technology. But they aren’t today. Just 1 in 5 senior marketers

consider themselves ‘very knowledgeable’ about technology, and yet by 2017, these CMOs will purchase more technology than the CIO 1. Second, the level of investment required to adapt to these new technologies is placing pressure on the local – global relationships which are core to the nature of global marketing. even when CMOs want to adapt and roll out these new technologies, often the cost is prohibitive, the rOI is non-existent, or both. Local affiliates are not likely to be able to afford to develop or roll out the latest technologies. And if they do, they may not be consistent with the global brand standards. Third, the very nature of marketing has shifted as a result of these disruptive technologies. Instead of traditional one-to-many marketing, a new focus of personalized, social media-driven one-to-one marketing is now the rule. In our research, social media platforms — most of which didn’t exist at scale five years ago — ranked as the number one concern for senior marketers. New media channels are also part of this rise of one-to-one marketing: 89% reported that the proliferation of media channels has significantly increased the challenges of global campaign management.

Gartner 2012

FIGure 1:

FIGure 2:

GLOBAL MArkeTING IS MOre IMPOrTANT THAN 5 yeArS AGO

COMPANIeS Are STruGGLING TO ADAPT

% of respondents who agreed or strongly agreed to the question The importance of managing global campaigns is greater than it was 5 years ago. The interconnectedness of today’s consumer is breaking down the barriers between global and local marketing.

43%

50%

45%

32%

88%

82%

% of respondents who strongly agreed to the question Our global marketing organization is prepared to deal with rapidly changing consumer trends around digitalization and globalization. Our marketing activities are fully integrated and working together (e.g. digital activities are in sync with traditional media campaigns).

15%

FIGURE 1 The core challenge for today’s global marketer: global marketing is recognized as more important than 5 years ago, even as global and local marketing distinctions break down.

FIGURE 2 To survive in the new marketing world, marketers must be flexible. yet a minority of marketers feel prepared to deal with integrating their marketing activities to reach these consumers.

Source: Q2 2012 online survey to 114 senior marketers with global responsibilities

The implications of these new disruptive technologies are clear.

The connected consumer

First, the new global CMO will have to be much more knowledgeable about technology in the future. In our survey, we compared CMOs who assessed themselves as technology-savvy with those who did not. What we found was that technology-savvy marketers felt twice as prepared to manage these changing consumer trends as those less savvy.

A second major obstacle is the rise of a whole new class of consumers: those who are wealthy, educated, technology-savvy, and accustomed to buying and sharing what they want when they want it. Highly resistant to traditional advertising, they share what they love, and rely upon multiple sources for their search and discovery process.

In addition, we saw differences across the board in how these new CMOs thought about their marketing opportunities. They placed a higher importance on global campaigns, they recognized the importance of centralized IT infrastructure investment, and they appreciated the interconnected nature of the consumer.

The old book used by power brands of the last half of the 20th century is less effective with these consumers. Firms such as Nike and Coca-Cola — which have expanded domestic “power brands” internationally — must decide whether to develop regional or local brands that cater to local tastes. Other brands such as Unilever or Nestle — historically country-specific brands — must decide whether to consolidate in the digital arena.

It goes beyond understanding these new technologies — the future senior marketer must also assemble the right team to use analytics and deep consumer insights to make the right decisions that drive the business forward.

For example, viral marketing, social media, online communities, amplification, and buzz management are designed to spread as widely and broadly as possible.

Furthermore, there is a fundamental disconnect between the old and new ways of marketing to these consumers. Many new digital marketing methods are not effective when limited to traditional, country-based global barriers.

As a result, many assets designed for one country or one consumer are now rapidly shared around the world. Mobile apps, creative imagery, and regionalspecific prices all are now visible globally. Consumers are even ordering products from one country, and then reselling them locally. The implication of these obstacles for global marketing is significant. Global marketing’s core challenge has traditionally been delivering relevant messages to the local market. But digital tools and platforms make this more challenging — additional assets, more campaigns, and faster change only add to the complexity. Digital marketing platforms 2 — meant to boost efficiency — also impose constraints. The new global consumer requires a delicate dance of local, regional, and global campaigns — simultaneously. For more on digital marketing platforms, see the article “Digital Marketing Platforms: Taking Back Control” by Dan Barnicle. 2

Figure 3:

How Are Tech-Savvy Marketers Different?

To what extent do you agree with the following statement: The importance of managing global campaigns is greater than it was 5 years ago.

Tech-Savvy1

Non-Tech Savvy

% who strongly agreed

55%

29%

+25.4%

Back-end IT infrastructure to support digital marketing is best built/funded at a global level.

43%

24%

+19.5%

The interconnectedness of today’s consumer is breaking down the barriers between global and local marketing.

40%

24%

+16.3%

Our global marketing organization is prepared to deal with rapidly changing consumer trends around digitalization and globalization. Building our brand’s Social Media communities is best managed at a global level.

23%

28%

FIGURE 3 Much of the new breed of CMOs emphasizes the importance of deep technology knowledge on top of marketing expertise. How do these marketers ‘think differently’ from traditional marketers? Most notably, according to our survey, they recognize that the importance of managing campaigns globally is much more important than it was just five years ago. They are impacted by these changes more than nontech savvy marketers.

Difference

12%

They also note the importance of global funding of back-end infrastructure and the challenges on changing consumer behavior. Finally, they’re less concerned about creative capabilities when selecting agency partners relative to non-tech savvy CMOs.

+10.9%

18%

+10.4%

24%

+22.7%

Source: Q2 2012 online survey to 114 senior marketers with global responsibilities

How important are each of the following capabilities when selecting agency partners?

Cross-channel expertise in both digital and traditional commerce

Best-in-class creative

46%

52%

71%

-19.0%

Tech Savvy is defined as those who agreed or

strongly agreed to the statement ‘I consider myself to be very knowledgeable about technology (e.g. the back-end infrastructure for marketing programs)’

WE USE SMARTPHONES IN-STORE

FIGure 4A:

CHOOSING WHere TO INveST IS GrOWING MOre DIFFICuLT

WE ARE SOCIAL MEDIA MEGA USERS

WE USE FEATURE PHONES TO GO ONLINE

WE WATCH TV ONLINE

deSpite MuCH talk Of a “GlObal COnSuMeR”, tHeRe iS nO SinGle MOdel Of GlObal beHaviOR

WE MAKE MOBILE MONEY TRANSFERS

% of respondents who agreed or strongly agreed to the question The proliferation of media channels has significantly increased the challenges of managing a global campaign in the last 5 years.

39%

49%

89%

NeW LOCALIzATION CHALLeNGeS OF DIGITAL

FIGure 4B:

SOCIAL MeDIA rISeS TO Be A TOP CONCerN – GLOBALLy % of respondents who agreed or strongly agreed to the question

Q: What are the most important global trends in marketing that will impact your business in the next 3-5 years? explosion of Social Media

46%

Growing importance of emerging markets

44%

Blending of offline/online experiences

WE PREFER PREPAID PLANS

41%

FIGURE 4B Managing global campaigns in the new global and digital world was identified as a key challenge. In particular, social media, and blending online / offline experiences were key global marketing challenges. Source: Q2 2012 online survey to 114 senior marketers with global responsibilities

Thirty-five years after Sony and other global companies applied “think global, act local” to the business setting, the battle between centralized management and local marketers rages on. But our research suggests the nature of this conflict is distinct from the past.

The regional flexibility has to be there. We have to support localization due to consumer differences, or brand equity maturity differences… The trick is to find the sweet spot where a campaign is only partially planned.

What we’re seeing in the research is a new type of challenge for global marketers. In fact, 75% reported that tailoring campaigns to local values is moderately or extremely challenging today, and over a third believe it will be even harder within three to five years. Despite much talk of a “global consumer,” there is no single model of global behavior. Increasingly, consumers now have visibility into other regions, while also having a greater expectation of local relevance in marketing. Coping with the diversity of this consumer — one who has a strong regional subculture and is also a global consumer — is a key challenge. Mobile is a great example: major regional differences — pay-as-you-go plans, varying SMS fees, and the lack of smartphones in much of the world — mean use of these tools should be tailored. A recent study looked at ads that tested exceptionally well in one country and found that just over 1 in 10 did equally well in another country. Moreover, 1 in 10 of those exceptional ads actually performed below average when tested in another country. So while using the same ad campaign across borders may offer cost efficiencies, the savings realized may not outweigh the benefit offered by local engagement 3.

Senior Latin American Marketing Director, CPG, experience: North America, Central America

And tensions between local and global organizations — challenging for 82% of senior marketers — are not making it any easier. recent developments in digital platforms have, in many cases, placed local marketers on the defensive; once masters of their own digital domains, many are increasingly constrained by these tools. And they’re pushing back. Perhaps this is why 38% report that tensions between global and local organizations regarding roles and authority will be more challenging in the next three to five years.

Clearly, digital marketing platforms are both a solution and a constraint. But other internal challenges exist, which include a lack of strong in-house digital expertise to customize campaigns locally. The implications include an increased investment in new digital tools — such as the digital marketing platforms — and increased efforts to consolidate global agencies. Localization remains critical, but these new tools are becoming essential in order to optimize the local and global customization of campaigns. 3

“Culture Clash: Globalization Does Not Imply Homogenization”, Millward Brown’s POv, May 2009.

Figure 5:

Coping with a global consumer WHO HAS A strong regional subculture is a key challenge

Local Relevance In The Global Arena is Getting Harder Q: How challenging do you consider each of the following for your marketing organization? Is this less challenging, more challenging, or about the same as it was 5 years ago? In 3-5 years?

Relative To 5 Years Ago

Today

Expected Change In 3-5 Years

% responding moderately or extremely challenging

82%

12%

35%

42%

12%

34%

38%

FIGURE 5 Tailoring and customizing your marketing to a local market is moderately or extremely challenging for marketers today. And four times as many marketers believe it will be harder in 3 to 5 years rather than easier.

regional

13%

less

local

Tensions between global vs. local organizations regarding roles and authority

78%

global

less Tailoring campaigns to local values/ customs/ norms

Source: Q2 2012 online survey to 114 senior marketers with global responsibilities

Lack of Multi-Channel Marketing Most senior marketers understand the importance of the multi-channel customer. But our research revealed that too few global marketers are thinking across channels from a media or from a device perspective. A full 37% don’t believe that “their marketing activities are fully integrated across digital and traditional channels.” The core challenge today is not how to develop a country’s multi-channel strategy — that is well documented — but rather how to develop a multichannel strategy that ensures consistency globally, at the right cost, and that also provides the recently discussed flexibility for localization. The first element of the challenge is how to ensure consistency across many devices, platforms, and regions. This includes both processes around security

(e.g. Personally Identifiable Information (PII) used for digital offers or rewards programs), and ensuring the correct assets are (re-)used. Regional or country-teams often have their own ways of doing things, some of which may need to be overcome. The second element is managing costs. Each country must be knowledgeable about digital, and should not create its own digital assets for every campaign. Rather, invest once and reuse globally is a better approach. Consolidation of local agencies is one common solution. This is particularly important in strategies relying upon sophisticated in-store or mobile experiences. Large investments such as global multi-channel store experiences supporting mobile, kiosks, and POS systems are extremely challenging, costly, and should be centralized.

The final challenge is to ensure the right flexibility for the local regions. As we talked about earlier, despite the overarching trend of globalization, local markets remain very distinctive. But for global multi-channel marketers, the bar is set much higher. There are massive differences in the cutting-edge technology that can be used to deliver multi-channel experiences. Obviously, mobile devices and mobile plans vary. More significantly, the consumer’s expectations vary: in some countries such as Indonesia or South Africa, SMS is a preferred method. In others, Apple’s app store or Android Market are the best. In-store support for kiosks, and assumptions around wireless access in store vary greatly. Character sets, comfort with touch-screen wall displays, standards around photography in changing rooms, support for social media platforms — there are hundreds of differences small and large in building cutting-edge global multi-channel marketing experiences.

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At a recent Forrester Multi-Channel Conference, Laura WadeGery (Executive Director, Multi-Channel eCommerce from Marks & Spencer), noted that boosting the in-store team’s comfort with multi-channel was key; she emphasized providing desktops in staff restaurants, and making sure incentives from online sales were linked to individual store performance. The result was a confirmation of the value of multi-channel. Wade-Gery noted “the more different touchpoints customers are engaging with us, the more they’re worth

The bottom line is that too many global marketers have not overcome the challenges in speed, cost, and flexibility of truly global multi-channel marketing. Until senior marketers embrace and invest in global multi-channel platforms, they will continue to miss out on the substantial benefits of cross-channel experiences.

Multi-channel Marketing Is Growing More Difficult Q: How challenging do you consider each of the following for your marketing organization? Is this less challenging, more challenging, or about the same as it was 5 years ago? In 3-5 years?

Relative To 5 Years Ago

Expected Change In 3-5 Years

% responding moderately or extremely challenging less Coordination of marketing efforts across multiple traditional media and digital channels

82%

11%

less

53%

15%

43%

Figure 6A:

But Marketers Had Mixed Messages About Whether To Centralize Or Allow Local Control Disagree or Strongly Disagree Multi-channel commerce initiatives are best coordinated at the global level (e.g. e-commerce, mobile commerce, kiosks, in-store, rewards programs).

Local markets should have substantial independence in controlling their marketing mix.

23%

15%

20%

21%

Neither Agree nor Disagree

Agree or Strongly Agree

57%

64%

FIGURE 6A/B Operationalizing multi-channel marketing is hard – few marketers have figured it out. These data also revealed a central tension – the desire for commerce initiatives to be centralized, while local markets should have ‘substantial independence’. Source: Q2 2012 online survey to 114 senior marketers with global responsibilities

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Why Such Slow Adoption of Global Multi-Channel Marketing?

Figure 6A:

Today

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to us,” saying that multichannel customers were worth 4x as much as those who connected only with one channel.

Effective global (and regional) marketing in the 21st century is often best done through multiple channels and devices; today the modern consumer is integrated, and multichannel customers generate up to 4x as much as those who shop through single channels 4. But why have marketers been so slow to adapt? First, the global or regional leadership at many large multi-nationals is very comfortable with traditional single-channel campaigns (e.g. TV). These campaigns remain very effective, can be fairly well measured, and have tremendous reach and scale. Second, digital skills are too often splintered globally across companies and agency partners. A proliferation of specialized partners, and strong organizational silos, result in substantial coordination costs to build sophisticated multi-channel campaigns. Third, many agencies driving global creative and marketing strategies are not as familiar with the digital tools available — especially in-store and multi-screen experiences. For example, building the MetLife Stadium experience — in which visitors to the NFL Meadowlands Stadium (home of the U.S. National Football League franchisees - the Giants, and the Jets) are able to engage with the brand on 52” LCD displays, enter into various contests and games (e.g. take pictures of themselves with Jets or Giants painted faces) - required knowledge of various touch-screen, SMS, and ecommerce tools. Building these digital experiences is expensive, which further slows the rollout. In the end, it will be a slow process to maturity for executive leadership, in-house digital, teams and agencies, global multi-channel marketing campaigns will be the standard, not the exception. 4

M+S Forrester Strategy Summit May 2012

COOrDINATION WITH OTHer TeAMS INTerNALLy — OverCOMING SILOS One of the most interesting new challenges in global marketing relates to the rapid development of new technologies, and the slower pace of skill development within organizations. Too often when we meet with senior leaders to discuss digital experiences, all three executive branches — the CMO, CeO, and CTO — will attend. The overlap of authority represents a fundamental failure to efficiently organize for the new global marketing environment. essentially, global marketers are finding that while there are deep repositories of knowledge around ecommerce personalization, data, and analytics or social media platforms in various locations, coordinating access to these groups is quite difficult. For example, several CMOs noted that individual countries can have their own skills on staff, along with relationships with agencies that can provide skilled people — particularly in the digital space. But the location and depth of these skills was not apparent to the central management team. This was confirmed in our survey: 53% of marketers strongly agree that coordination is much more challenging today than three years ago. Silos and lack of coordination remain a major challenge even in centralized marketing organizations; “siloed” thinking is exacerbated when multiple countries are involved.

In fact, among marketers who have a high degree of technology savvy-ness, there is a greater realization of the importance of close collaboration (61% vs. 41% strongly agree among those two groups (tech-savvy and non-tech-savvy respectively)). unfortunately, lack of coordination is quite common. One interviewee at a large automotive manufacturing firm noted completely separate interactive marketing and traditional marketing departments. Furthermore, a third group — IT — remained disconnected. “everything in interactive is run by (reviewed by) the marketing team. It should be a combined marketing and IT team.” The combination of silos of expertise, the high cost of digital, and country managers unwilling to adapt shared platforms and standards result in the global marketing team struggling.

83% Of Marketers agree that inVestMents in Digital haVe increaseD the iMPOrtance Of clOse cOllabOratiOn betWeen it anD Marketing.

FIGure 7:

TeAM COOrDINATION IS A key OBSTACLe TO eFFeCTIve GLOBAL MArkeTING

And, surprisingly, it is getting worse. Q: How challenging do you consider each of the following for your marketing organization? Is this less challenging, more challenging, or about the same as it was 5 years ago? In 3-5 years?

In part, this relates to the multi-channel experience — the future of the customer experience — requiring more collaboration. even in the case of in-store experiences, IT, store management, mobile, and marketing teams all must sit at the same table. Our survey explored this topic, and found that 83% of marketers agree that investments in digital have increased the importance of close collaboration between IT and marketing. In addition, 77% report gaining access to skills and people as moderately or extremely challenging.

MObile

TODAy

reLATIve TO 5 yeArS AGO

exPeCTeD CHANGe IN 3-5 yeArS

% responding moderately or extremely challenging LeSS Coordination between digital and traditional marketing teams

75%

Gaining access to the appropriate skills and people across the organization

77%

LeSS

16%

13%

56%

36%

24%

18%

37%

38%

FIGURE 7 Coordination across teams – not just across marketing channels – surfaced as a key obstacle to effective global marketing. Senior marketers reported that digital and traditional coordination is much more difficult than it was five years ago. Geography, language, skills and internal politics all conspire to create silos which reduce marketing effectiveness and increase costs. Source: Q2 2012 online survey to 114 senior marketers with global responsibilities

stOre

Marketing

About our research Building on our team’s three decades of multi-channel marketing experience, SapientNitro conducted a series of 20+ detailed interviews with senior marketers within and outside of SapientNitro, and followed it up with a far-reaching survey to 114 senior global marketers and global CMOs. We also reviewed existing literature related to this topic. The majority of the research was conducted in Q2 2012.

summary The global marketing landscape continues to evolve. Senior marketers are confronting old challenges with new tools. In this paper, we identified the core challenges facing these new, technically adept senior marketers. Many of these new marketing methods are increasing the challenges faced by global marketers. From viral marketing spreading beyond the original country, to instore experiences that are too costly to develop country-by-country, to security concerns about sharing Personally Identifiable Information, new digital marketing methods are shaping how senior marketers operate. The future CMO will require a new set of skills and an entirely new mindset to operate effectively in the new global environment. Our second article in this series, “The New Global Marketing Mindset,” explores details of the five major elements of the new mindset to allow your business to operate effectively in this changing world.

We have captured this research in three articles — the first focused on new global marketing challenges, and second on key elements of the global marketing mindset, and the third on five ways agencies are struggling with global brands today.

About THE AUTHORS FREDDIE LAKER – is VP of Global Marketing Strategy and has extensive experience working across a broad range of global clients. He actively speaks at leading conferences around the world on topics ranging from global marketing trends to emerging disruptive technologies. HILDING ANDERSON is a Sr. Manager of Research + Insights, and focuses on digital strategy and the emerging digital consumer for SapientNitro. He is also the editor for Insights 2013, Sapient’s annual digital trends report.