What Makes A Great CMO ?

I’ve often said that the best CMO is a CEO who believes in Marketing. But beyond this, what makes a great CMO? This is germane not only to CMO’s whose average tenure is about 2 years, but also to CEO’s who need Marketing to drive results.

What Makes A Great CMO?

CMO Competency Research

Egon-Zehnder International (EZI) has taken a close look at this and has some interesting insights. Over the past 5 years, EZI conducted 25,00o CMO appraisals across 300 companies to better understand what differentiates great CMO’s from average ones.

Assessed skills included: results orientation, team leadership, collaboration, strategic orientation, organizational development, change leadership, customer orientation, and market knowledge.

Markers of a Great CMO

EZI’s assessment shows that 2 factors stand out in differentiating great from average CMO’s:

1.  Results Orientation

“Results orientation means driving uncompromisingly for better outcomes, often achieving them through skilled use of robust analysis and benchmarking”

 

2.  Change Leadership

“Good CMO’s are adept at advocating change and communicating a clear and compelling new direction…they set clear targets that focus people on achieving the change and develop metrics that both monitor and motivate it”

You could easily summarize the above as “set a direction and then deliver on it.” And, this is entirely consistent with a previous post, “What Do CEO’s Really Want From Marketing?,” where I discussed Lou Gerstner’s definition of CMO success: great CMO’s build the brand and build the business.

Makers of a Great CMO

What Can CMO’s Do?

1.  Success Metrics — One thing that most CMO’s can do better is to develop clear Marketing success metrics and then use them to assess the performance of their Marketing efforts. I’ve written extensively about the need for Marketing to be more accountable, particularly with Advertising and Media.

• Does your advertising build your brand equity ? Which creative or media choices contribute most to this growth?
• Does driving your brand equity scores build your revenue and profitability ? Which equity attributes are most critical to better business outcomes ?
• Does your advertising build volume, share and revenue ? And, what’s the short and long-term ROI impact ?

2.  Reward Metrics – The same metrics can be used to reward your organization. Whether you recognize and reward people on an ad hoc basis, or with more formal annual Marketing Awards events, every CMO has an opportunity to continuously recognize great performance by individuals and groups by emphasizing progress on the same metrics.

Success Metrics & Reward Metrics

 

Set a Direction and Then Deliver On It

Like most good insights, it sounds simple but is, of course, hard to execute in practice. Lou Gerstner was right. Great CMO’s just build great brands and drive better business results. And, the Egon-Zehnder research just proves it.

Follow Randall Beard on Twitter

Get free updates of Randall Beard’s Blog by RSS reader

Get free updates of Randall Beard’s Blog by e-mail

Put Social Context Where It Matters Most – Next to Your Advertising

I was in Bangalore, India last week, and it seemed that cell phones were everywhere.  Increased cell phone penetration – now estimated at over 500 million — and the ability to access the web cheaply and from anywhere, is driving rapid change.  In fact, a headline in The Economic Times read:  

“TWEET EQUITY:   Consumers are exchanging notes online, even posting complaints on the CEO’s Twitter page, leaving companies with no choice but to rethink strategies in a world where consumer behaviour is being driven by online exposure.” 

Buzz Builds the Social Media Ecosystem

The social media phenomenon is global, there’s no doubt about it. “Earned” media (e.g. user generated reviews, blogs, organic search, Facebook fans, Twitter followers, etc.) continues to increase in importance, no matter where brands reside.  And as I’ve written about before, traditional “Paid” media (e.g. traditional TV, Print, paid search, etc.) is still viable.

So the bigger challenge for Marketers today is how to integrate the two into one larger Marketing communications interlocked plan. To do so, Marketers need a much better understanding of how they influence each other.

Questions About Earned Media

I talk to leading CMO’s, Media Heads, and Heads of Research and Insights at major CPG companies on a frequent basis. Virtually all of them believe that earned media is growing in importance, and probably impacts other paid elements of their Marketing mix, but few have the research to really know for sure.  

Questions I routinely hear include:  

• What’s the real value of a Facebook fan?  

• Do positive blog posts make my advertising more effective?  

• Does advertising drive more positive buzz?  

These are great questions, but unfortunately, they’re mostly just that–questions without answers. This is changing, however, as new research sheds light on how social media affects traditional paid advertising.  

Facebook Fans: Build Value through Social Media

Measuring the Impact on Paid Advertising

One recent example is the initiative by Nielsen and Facebook to study the impact of social context on ads placed on Facebook (Disclosure: I work at Nielsen).  

Nielsen and Facebook surveyed over 800,000 users, about 125 Facebook ad campaigns and 70 brand advertisers. Users were grouped into a control group (no ad exposure), a standard ad group (exposed to the ad only), and an Ad + Social Context group (exposed to the ad and the fact that their friends were fans of the brand–see below).  

The Value of Facebook Ad Impressions (image from Nielsen Wire)

Key Learnings – Where’s the Biggest Impact ?

The basic Ads on Facebook drove higher recall, awareness and purchase intent than the control group not exposed to ads. And, as you would expect, the ads with social context around the ads drove better results than the ad only group.

	No Ad Control	Ad on Facebook	Ad on Facebook with Social Context	Index Context Ad vs. No Context Ad
Ad Recall	100	110	116	1.6x
Awareness	100	104	108	2.0x
Purch. Intent	100	102	108	4.0x

What’s more interesting to me is this:  the results from having ads + social context improve as you move down the Marketing funnel from ad recall to purchase intent. That is, the ads with social context achieved 4x the purchase intent of the ads with no social context, while they recalled only 1.6x better. 

It seems that positive earned media, in this case knowing that “your friends are fans of the advertised brand,” makes more people notice your advertising, but has the greatest impact on the most important metric prior to purchase: Purchase Intent. It’s the power of an indirect recommendation from people you know. 

Putting the Learning Into Action

So, now we know that social context makes advertising more effective. The next obvious question is how brands can get more of it. And then CMO’s will have a new challenge: getting positive earned media where it matters most–next to their brands advertising.  

Follow Randall Beard on Twitter  

Get free updates of Randall Beard’s Blog by e-mail  

Get free updates of Randall Beard’s Blog by RSS reader

What Happens When Your TV Goes Wireless

In case you haven’t noticed, TV’s are going wireless. According to research from the Leichtman Research Group, 24% of all households have a TV connected to the internet. What does this mean for advertisers?

All Wireless Connections are Not The Same

Users differ in how they’re wirelessly connected. Some are connected thru a video game system, some a Blu-Ray player, and others are connected directly thru the TV set itself. In fact, some firms are projecting 40% household penetration by 2013.

Consumers Connect: Wireless Enabled TV

Are Consumers Disconnecting?

According to the same Leichtman research, 11% of adults watch a full length TV show on-line weekly. But surprisingly, very few consumers (4%) say they are likely to disconnect their TV service to watch TV only on-line.

This is supported by broadband service penetration level trends; the top 19 service providers added over +4 million subscribers last year. So, don’t expect a wireless revolution against the carriers anytime soon.

Barriers to Adoption of Wireless TV

Some analysts are skeptical about the growth potential for Wireless TV. For example, Carl Howe of Yankee Group says:

“Somebody needs to work really, really hard on creating a very easy-to-understand and easy-to-use interface that not only the technically savvy could use, but also your grandmother could use.”

And a few players are making efforts to address viewer usability. For example, Verizon FIOS offers widgets for traffic, weather, and sports scores via their ”Widget Bazaar” store. More recently, they’ve opened the platform to 3rd-party developers and Facebook and Twitter apps have appeared. And you can bet more creative, user-friendly apps are on the way.

Verizon Fios' Facebook & Twitter Widgets Encourage Engagement

Another issue is content rights. Web operators or service providers will need to acquire the content rights for these services. There is already a legal framework in place that will support this, but it will require both time and money.

Finally, there’s bandwidth–or the lack thereof. Some people, such as Larry Hettick, an analyst at Current Analysis, have argued that the current service providers simply don’t have the capacity for millions of simultaneous users of on-line video:

“[Cable companies] didn’t build their connections with the capacity to download a huge amount of HD videos at one time…. If everybody starts to do that, the cable Internet connections will melt down.”

All of these issues are real, but they’re also solvable with enough time and money. We should assume that they will be.

Wireless TV — Potential Changes in Consumer Behavior & Advertising

As TV’s become increasingly wireless, I see at least five broad-scale implications:

1.  Consumer usage of on-line video will accelerate. As noted above, about 1 in 10 consumers already watch video on-line on a weekly basis. The expansion of on-line video to large screen wireless TV’s will accelerate growth.

Consumers want to watch content on the best screen available–and a large, high quality TV beats a PC, all things equal. So, enabling on-line video on the best home screen–the TV–will equal more on-line video consumption.

Content is King on Wireless Enabled TV

2.  Consumers will increasingly control how and when they consume TV. With wireless TV, consumers will have even more control of what and when they watch. They will increasingly browse video content for viewing on their own schedule, and traditional ads will be at risk.

It’s increasingly clear that consumers value on-demand video more than Linear TV, except for a select few programming niches like sports and news where live broadcast makes a difference. So, the balance will shift from big Linear TV/small on-demand to big on-demand/small Linear TV over time.

Sports Programming & Linear TV

Simply put, wireless will continue the trend of making it easier and simpler to watch the content you want, when you want it, and on the best screen possible.

3.  The on-line video advertising load will increasingly resemble Linear TV. As I wrote in a previous post, “Linear TV versus On-Line Video Advertising – Which is More Effective?”, we know that the same ads in on-line video beat Linear TV ads across almost every ad effectiveness metric. This is because of both higher engagement programming and less clutter on-line.

Wireless TV will likely erode these advantages. The program engagement advantage is due in part to the “lean forward” 1:1 consumption of PC based content–which will disappear when people are in a “lean back” viewing mode with their TV. As well, on-line video’s lower ad clutter advantage will likely decrease as service providers like Hulu improve their economic model with more ads. Most experts agree that on-line video economic viability requires some combination of ad supported revenue with higher ad loads + subscriber fees.

4.  New ad formats will become more important. Wireless TV makes it easier for consumers to consume content when and how they want, which will continue to make it easier for consumers to skip ads. As well, it’s likely that content models will emerge which are a combination of subscription and ad supported. For the subscription content, it’s possible that there will little or no traditional ads, while ad supported content will carry Linear TV like ad loads.

In any case, this means that “hybrid” ads which bridge program content and commercial ads, along with in program product placement, are likely to become more important.

5.  Advertising effectiveness measurement will need to account for Content Form Factors. In the future, there will be a myriad of ways to view the same program: via Linear TV, On-line PC, On-line via wireless TV, by Smartphone, etc.

Each of these content form factors will impact ad effectiveness. Advertisers need to know how their ads perform across these different forms (i.e. is my ad in “Lost” on Linear TV more or less effective than on wireless enabled web viewing on TV, etc.) and also how various combinations perform.

Implications

All of this points to an inexorable trend–advertising is going to get a lot more complex in the future, not less. The broader implication is that this increased complexity–driven in part by wireless TV–will require CMO’s to develop far more sophisticated approaches that require advanced algorithms, quantitative skills, and organizational savvy that doesn’t exist in most Marketing organizations today.

Follow Randall Beard on Twitter

Get free updates of Randall Beard’s Blog by e-mail

Get free updates of Randall Beard’s Blog by RSS reader

Why “Easier” is Better for Your Brand

Is “easier” better for your brand? Consider this excerpt from the article “Easy = True” by Drake Bennett: 

Imagine that your stockbroker…who’s always giving you stock tips–called and told you that he had come up with a new investment strategy. Price-to earnings ratios, debt levels, management, competition, what the company makes, and how well it makes it, all those considerations go out the window. 

The new strategy is this: Invest in companies with names that are very easy to pronounce. This would probably not strike you as a great idea. But, if recent research is to be believed, it might just be brilliant.”

If making it easier to pronounce the name of a company can influence stock market performance for the better, can making your marketing “easier” for consumers build your brand and Marketing ROI? 

Cognitive Fluency

A relatively new topic of research in the world of psychology these days is “cognitive fluency.” It’s the study of how the ease or difficulty in thinking about and understanding a topic influences our attitudes and preferences toward it. As a research topic, psychologists are learning that cognitive fluency affects our thinking in subtle, yet important ways. Many of which are very relevant for communicating with consumers. 

Apple Advertising — “Easier” in Action

Let’s take a real world example: the Apple iPhone. With the iPhone, Apple had a tough task: communicate the incredible multiplicity of apps so that consumers would immediately understand the ease and simplicity of accessing them to solve basic everyday problems.

iPhone TV Advertising - Simple & Effective

Now think of the Apple iPhone TV advertising. What I think of is simple, easy and wow. Showing the ease of using the iPhone, tapping cool new apps, and solving practical problems brings their value to life in a way that makes complicated and complex-well, easy. 

The Broader Advertising Landscape

In my experience, simple and easy to understand ads tend to be more effective. The impact of making something easy to understand has been show in research to influence consumer preference and choice. For example, Novemsky et al. demonstrated that even something as simple as fonts can make a difference; fonts which were easier to read doubled purchase intent versus more difficult to read fonts. 

Cognitive fluency suggests that making your Marketing easier to understand results in making it easier for consumers to do what you want them to do — consider and buy your brand. There are multiple angles you can take for making your brand easier. Or, just by making it your Marketing centerpiece as Staples has with their “Easy Button.” 

Staples Easy Button - Marketing & Cognitive Fluency

5 Areas to Make Your Marketing “Easy”

1.  Brand Equities – Every brand should have both strategic and executional equities.  Strategic equities include brand benefits and reasons to believe, while executional equities are the distinctive executional assets the brand wants to own (e.g. McDonald’s and the yellow arches; Bounty and the Quicker Picker Upper, etc). 

Once defined, brands should work to build strategic and executional equities into distinctive assets that distinguish the brand from competition through repetition and variation.  Repetition is important because it makes your brand more familiar and, as cognitive fluency learning shows, more familiar equals easier. 

McDonald's Yellow Arches: A Distinctive Brand Equity

2. Visual and Auditory Cues – Another smart way to build brand familiarity and make it easier for consumers to identify your brand is through visual and auditory cues. A great example of a visual cue is the Pantene ”hair flip” that communicates “shiny hair,” which has been part of virtually every Pantene ad for the past decade. 

Auditory cues are also important, as I wrote in a previous blog post “Why Your Brand Needs an Acoustic Identity.” Can you imagine the Olympics without the Olympic theme music, or a United Airlines ad without “Rhapsody in Blue?” Of course, when done well, visual and auditory cues can also become executional equities. 

3.  Congruent Context – Ease of understanding is also related to context. The more congruent a brand’s ad with the program content it sits within, the easier it is to relate to the ad. A Slim-Fast ad in the The Biggest Loser is easier to understand and remember than a Slim-Fast ad in another TV program about a different topic, even when the demographic make-up of the audience is the same. Why? The Biggest Loser viewers are thinking about weight loss, and so, it’s easier for them to digest the Slim-Fast ad message. 

4.  Packaging - Even packaging can make consumers’ lives easier. Ease of finding a package in store is a key metric many CPG companies use to evaluate packaging impact. The easier it is for consumers to find your package, the more likely it is that they’ll actually consider and buy it. 

Packaging - Critical to the In-Store Experience

5.  Pricing - Many companies have moved to “value pricing” with low everyday prices and modest merchandising discounts. Making it easy for consumers to understand your true value includes pricing strategies that don’t distort the real value. 

Easier is Better

Of course, the list above is only a starting point–almost any part of your Marketing Mix and customer experience can be made easier. Most CMO’s and Marketers would agree that easier is better. Yet there’s an awful lot of Marketing that isn’t simple, transparent, or easy. 

Why? My guess is that Marketers, like anyone else, need to think that what they’re doing is challenging and difficult. And the truth of the matter is that it is–great Marketing is hard. And one of the reasons it’s hard is that so few Marketers focus on making it “easy.” 

Follow Randall Beard on Twitter 

Get free updates of Randall Beard’s Blog by e-mail 

Get free updates of Randall Beard’s Blog by RSS reader

The Seismic Shift in Targeted Advertising and Media

At the recent “Media & Money” Conference in New York, I gave a presentation on “The Seismic Shift in Targeted Advertising & Media” (disclosure: I work at the Nielsen Company). For all of its negative press and terrible operating results, the airline industry has produced one brilliant success which has the potential to turn the advertising and media business upside down: yield management.

A Brief History of Flight

Regulated until 1985, the airline industry was relatively unsophisticated about how to price its product — seats — until Peoples Express burst onto the scene in the mid-80′s. Peoples low-price strategy quickly gained customers and market share. And the big airlines noticed. They responded in two ways–one obvious and one less so.

Yield Management - Next for Marketing ?

American Airlines responded with deep discount “Supersaver” fares, essentially matching American on key routes. This was the obvious response. The less obvious one was the introduction of yield management, which gradually brought a level of sophistication and data-driven pricing that yielded +3-8% improvement in revenue by most estimates. Yield management quickly spread to the hotel, car rental and other industries.

Yield Management — What is it ?

Yield management is appropriate when a business has a perishable resource and can segment customers which are willing to pay different prices for the same resource. In airlines, a seat is perishable as the revenue potential disappears once the flight has flown.

Simply stated, the airlines want to sell the right seat to the right passenger at the right time at the right price. Doing so requires sophisticated algorithms which account for capacity utilization, route scheduling, fuel prices, competitive pricing and the like. Seat prices now change by the minute based on yield management algorithms.

Yield Management — For Marketing ?

From an advertisers perspective, yield management is a good model of what an advertiser would ideally like to do:  place the right ad in the right program against the right target at the right price. In concept, it’s the same as airlines but on the buy side.

Making it Work

What’s required for yield management to work for advertisers?

• Digital – Digital is more easily measurable, more timely, and therefore more usable in a yield management model.
• Cross-Media Measurement – Marketers must be able to measure viewership across TV, web and mobile to optimize media allocations.
• New Measurement Tools – Marketers need to target viewers based on any segmentation dimension, buy media based on ad effectiveness by program, and measure ROI.
• Real Time Data – All three of the above are needed in real time – 24/7/365.
• Accountability – Advertisers must demand greater accountability for every media dollar spent.

For some, the surprising news is that all of the above are either in place or rapidly becoming so. The future is closer than you think.

New Measurement Tools

Two new measurement tools are critical to moving to a real-time Yield Management Marketing Model:

1. TV Program Engagement – TV Program Engagement is a measure of how involved consumers are in a TV program. Is it really a surprise that viewers are more involved in “Desperate Housewives” than “America’s Greatest TV Stars?” Who cares? Marketers should, because TV program engagement is highly positively correlated with ad recall. Higher engagement = higher recall.



2. Advertising Effectiveness – Ads are more relevant to consumers if the equity of the ad fits the TV program it sits within. Is it any doubt that an ad for SlimFast is more effective on the “The Biggest Loser” than a program with different content but similar audience size and demographics? Now advertisers can buy media based on their brands Purchase Intent by program or genre. Check out the purchase intent indices for another brands same creative unit across different program genres.

 

Barriers

The advertising and media industry has had decades to build systems and processes to support the traditional media model. The systems for planning, buying and allocating media for brands won’t change overnight. But the trends are there to see, and the Marketing organizations with the most foresight and vision will see that re-engineering these will yield great benefits.

So… When Do We Take Off?

All of the Yield Management puzzle pieces are now in place. In the future, advertisers will be able to: 

• Target the Right Audience – Media targeting will move from simple demographics to more sophisticated psychographic and behavioral targeting.
• Identify the Right Program – Viewership will be supplemented with TV Program Engagement data. Marketers will become more sophisticated in identifying high engagement / high ad recall programs to improve their ad recall effectiveness.
• Match the Right Ad – Marketers will care about and measure the impact of program fit with their brands. This will enable them to match ads to programs based on purchase intent data, for optimal impact.
• At the Right Time – Media planning will move from an annual, exception-driven exercise to a real-time, algorithm driven process, fueled by continuously updated effectiveness metrics.

All of this will be connected to purchase panel data. So all of the targeting, buying, planning and allocation decisions will be held to simple question: did I get an acceptable ROI?

This is the coming “seismic” shift in Marketing— ROI based advertising and media. Those who don’t get on board will be grounded in the new economy.

Get free updates of Randall Beard’s Blog by e-mail

Get free updates of Randall Beard’s Blog by RSS reader