IBM study finds chief marketing officers worldwide struggling with shift to digital advertising, 80% or more still heavily use market research and competitive benchmarking, 82% plan to increase use of social media over next three to five years

Kendall Sinclair

Kendall Sinclair

Oct 28, 2011 – National Post

DON MILLS, Ontario , October 28, 2011 () – With concerns about a possible dip in the global advertising market, marketers and ad agency executives are still sweating over the massive cultural shift from the world of traditional top-down, corporation-to-consumer messaging to a social, digital realm that has given consumers a lot more power.

Communications and computing giant IBM Corp. recently conducted a face-toface study of 1,734 top chief marketing officers around the world to talk about trends and to ask what matters are keeping them up at night.

Ad spending is falling: The global ad industry grew 5.7% in the second quarter of 2011, according to Nielsen's quarterly Global AdView Pulse, but ad spending fell in nearly half of the world's key markets during the period because of economic concerns, th e first major decline of that scope since the third quarter of 2009 during the global recession.

At the same time, chief marketing officers are grappling with the shifting sands of digital advertising as customers disseminate their experiences about brands online.

"There is a broad recognition that there is a fundamental shift in the way consumers interact with companies, and the way companies can engage their consumers," said Paul Erickson, executive consultant at IBM Canada's Global Business Services.

Tracking the efficacy of marketing "is almost moving from [traditional] batch process to much more of a realtime interaction with consumers." The shift "provides marketers a way to help build brands and reinvent customer relationships."

The study found chief marketing officers still rely predominantly on traditional research methods to guide strategic decisions: 80% or more surveyed still make heavy use of market research and competitive benchmarking, and 68% use sales campaign analysis. While 82% of chief marketing officers said they plan to increase their use of social media over the next three to five years, only 26% are currently tracking blogs, 42% are tracking third-party reviews and 48% are tracking the consumer reviews to help sh ape their marketing programs.

It's a confusing terrain, to be sure. While marketers are just getting used to new measurement modes for online marketing and social media, the fastest-growing digital category, the exploding mobile media market, does not have good standards for measurement, says a recent report from the Interactive Advertising Bureau.

"Mobile measurement is challenged by serious methodological and technological limitations," the report from the digital ad association says, adding the pace of mobile marketing investment is moving faster than the industry's ability to measure it effectiv ely and reliably. Mobile commerce, meanwhile, is expected to grow at a compound rate of 39% a year between now and 2016, when it is expected to reach $31-billion.

One of the biggest challenges chief marketing officers cited, Mr. Erickson said, is the explosion of data. Every day the digital realm creates 2.5 quintillion bytes of data, IBM says; 90% of the world's current data has been created in the past two years alone. More than 70% of chief marketing officers said they have not been fully able to deal with the impact of the data and are worried how their marketing departments will manage all of it.

Chris Fehrnstrom, chief marketing officer at wine company Constellation Brands, which includes Canadian brands such as Naked Grape, Sawmill Creek, Iniskillin and Jackson Triggs, says his company has tried to manage the data explosion by first making sure all of the internal management teams are looking at one set of data.

"In some cases we will use an outside vendor for our customer insights, but in terms of the internal sales data we have adopted one technology platform," he said.

"Several years ago you would go to a business meeting and have 20 people sitting around a table and everybody had a different view of how the business was doing because they were pulling the data in a different way. We realized this was creating not only inefficiencies in coming to key decisions, but also inefficiencies in too many resources being wasted on data analysis."

There is "an unbelievable opportunity in terms of the richness of the insights that we can gain from data - but you can very easily get lost in the data," he said.

The study also found chief marketing officers are feeling greater pressure than ever to provide financial evidence of a return on marketing investment, having to quantify the payback from investing in advertising, new technologies or research.

Of chief marketing officers, 63% believe return on investment of marketing spend will be the most critical measure of their success by 2015. Nevertheless, just 44% said they believe themselves to be fully prepared to be held accountable for marketing retu rn on investment.

The respondents to the study, conducted between February and June this year, came from a wide variety of organizations, ranging from 48 of the top 100 brands listed in the 2010 Interbrand global brand rankings.

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