Senior Buy-InBy Jake Wengroff | Posted 09-08-2010
CMO and CIO: Art Plus Science Equals Success
With the C-suite keen to see ROI for every dollar spent, marketing departments are under more pressure than ever--tasked with making sense of a complex media landscape, a range of new devices and endpoints, and shifting, demanding customer buying habits.
The rise of social media, search, and mobile channels has created a fight to the finish for customer attention. As a result, marketers increasingly need to know how to quickly adjust their marketing mix to deliver results. Granted, software and systems are available that promise to not only automate the process, but to also make life easier for marketers while providing that all-elusive ROI. The question is: How are CMOs and their teams supposed to make sense of all that is out there?
Enter the CIO, CTO, and other information technology folks.
Marketers have been using software and other technology tools for quite some time. Marketing automation, campaign management, and databases have all traveled through agencies and corporate marketing departments. Such programs were used insularly, usually by only select staff members, and rarely needed the assistance of other departments. Social media monitoring and demand generation are perhaps the hottest marketing tools right now, as can be expected.
Such programs primarily focus on execution. However, to demonstrate ROI and measure marketing effectiveness, marketers need insights into buying patterns, audience interactions, and overall customer perceptions and behavior. Such insights are provided by analytics software, which is usually handled by the CIO's organization and is only recently being adopted by the marketing department.
In some companies, analytics is a standalone department and job function, usually reporting to finance, accounting, sales, or administration. Interestingly, German business software maker SAP has a business information officer who reports jointly to both the CMO and CIO of the company. Most retailers have analytics people who provide essential data to the marketing department, with insight that affects merchandise mix, store design, promotions, and any possible customer touch points.
Having analytics report to marketing is fairly new, yet it holds the most promise for marketers to be able to tell their story and provide value to the company's bottom line.
In a recent survey conducted by consulting firm Accenture, 65% of global marketers said their operational success depends on mastering customer analytics, followed by offering innovation, customer engagement, and marketing operations.
Agencies, which traditionally handle creative or media-buying duties on behalf of their clients, have gotten in on the analytics act, too. For example, last year Interpublic, owner of McCann-Erickson, Draft FCB, and other agencies launched Geomentum to provide analytics and insights for retail clients that are seeking to maximize the value of their chains at the local-store level.
From all angles, "Customer analytics is a huge, untapped opportunity for marketers," says Kevin Quiring, senior executive in the North American marketing transformation practice at Accenture. Marketers might be thrilled that they survived the "nuclear winter," he says, but analytics provides the strongest way to bridge the gap and reduce the friction between the CFO and CMO in any organization.
Can marketers be trained in these new technologies, and can IT folks learn what marketers do? A transformation is clearly under way, as a cultural and educational shift occurs across organizations.
"The reason for the rift between marketing and IT is that the skills needed to manage marketing technologies are distinct and specialized from that of IT," explains David Bernard, principal of DB Marketing Technologies, a consulting firm in New York. "IT traditionally did not have the resources to support marketing, and marketing people, mostly being creative or media types, are not IT people."
Lisa Welchman, founding partner of Welchman Pierpoint, a Baltimore-based consulting firm that advises enterprises on developing strategies for managing complex Web properties, says two things need to happen: IT needs to become more flexible than it traditionally has been, while marketing teams need to learn how to effectively leverage performance and success metrics.
"What this really means is resetting roles at the C-level," Welchman says. "Right now, no one wants to sit at the table and have an adult conversation about their Web presence. So companies can't take advantage of new technologies because they can't even talk to one another. CIOs are letting one of their most strategic business assets drift off."
Marketing and IT are married in certain industries. The more likely transactional relationships exist, the more likely IT is integrated with marketing. These include companies in the financial services, banking, and retail industries.
"Forget the CMO--the next big industry title will be the CMTO," suggested Shiv Singh, PepsiCo's director of digital, North America, during the recent Social Media Insider Summit. CMTO stands for chief marketing and technology officer. "Each time I catch up with my CMO, I ask her how much she is learning about marketing technology," Singh said.
Clearly, both functions can and should create a more symbiotic relationship. After all, they're both cost centers, vying for a piece of the pie--and credibility--within the organization. CMOs and CIOs both want to be considered a "need-to-have" rather than a "nice-to-have."
In small and midsize organizations, it's much more common for CMOs and CIOs to work closely. At Ergotron, a St. Paul, Minn.-based ergonomic technology peripheral designer and manufacturer with 1,400 employees and expected 2010 revenue of $190 million, CMO Jane Payfer and CIO Jim Fischer collaborate regularly. Because she wasn't allocated regular advertising dollars, Payfer, who has a technology marketing background, sought the assistance of the IT department to cooperate on online marketing initiatives, channel partnerships, and even product design. Two members of Fischer's team attend weekly marketing meetings to provide regular support and feedback. "In this way, we have more of an impact on what our customers are seeing day to day," Fischer says. In addition, Payfer's team's technical knowledge has increased. "The siloed effect just isn't evident anymore," she says.
However, even in larger organizations CMOs and CIOs frequently collaborate and discuss issues most important to the bottom line. For example, SAP CMO Marty Homlish and CIO Oliver Bussmann chat regularly and understand the necessity and priority of integrating their two functions. Both internally and externally with clients, SAP urges IT to pave the way for marketing effectiveness, and for marketers to become more closely aligned with their CIOs or CTOs. "The challenge is making sense of data," Homlish says. "With 487 billion gigabits of data floating in the entire universe, the point is to turn insight into foresight. This is where the art and science of business comes together."
Of course, having SAP's CMO and CIO aligned so closely makes sense, since the company is in the business of selling business software. However, not all software or technology companies follow the same principle. "It's not the relationship you would always expect," warns Mike Hayes, chief strategy and operations officer at Geomentum, the division of Interpublic that works with retailers.
Homlish meets regularly with clients to demonstrate marketing ROI using analytics tools, and points to a regular 20% improvement in campaign response when marketers apply analytics to campaign management and automation.
What usually joins CMOs and CIOs is the ability to support and galvanize their sales teams. "CMOs and CIOs both know that their most important client is the sales organization," Homlish advises. Indeed, the ability to drive sales and revenue acts as a painkiller for any C-suite executive.
Adds Welchman: "It's not about marketing or IT expertise--it's about culture and communications. It really is a change-management issue."
Working with the offerings of their IT departments, marketers can gain tremendous credibility with other departments by demonstrating how their day-to-day tasks have a strong effect on the organization's bottom line.
"Fundamentally, [senior management has] to understand that you get their business. You see the opportunity as consistent with theirs, but as a marketer you look at it with freshness," explains independent consultant Tom Butta, who is formerly CMO of Red Hat, NICE Systems, and PTC Corp.
"Marketers need data and the ability to interpret data if they wish to be taken seriously by senior management," adds Scott Slatin, founder of Rivington Media, a search consultancy based in New York. "Beyond marketing automation tools or campaign management software, senior marketing people need to rely more on analytics to provide answers that solve business problems."
But not all CMOs and senior marketing executives agree. With the advent of the software-as-a-service (SaaS) model, they say they actually have had to deal less with their IT departments than ever before.
"IT usually only cares about the impact of the software on the network and security," explains Denise Persson, CMO and vice president of marketing for virtual events provider ON24. "Nowadays, it's the reverse--everything is cloud-based--so there is no need to involve IT." Persson explains that the ON24 marketing department uses Marketo for campaign automation, Vocus for social media, and Salesforce.com for CRM, although that is used across the entire ON24 organization, not just in marketing.
She did, however, explain that because she is marketing a technical product to nontechnical buyers--marketing and communications professionals--she often needs to lean on members of her IT team to present the technical capabilities during the selection process.
Indeed, several benefits exist for using SaaS, cloud-based solutions instead of traditional, on-premises solutions. Most SaaS providers provide low-cost trials, short contract lengths, and minimal integration or installation requirements, making it very easy to start. Many also offer the "freemium" model, meaning the basic service is free, but then upgrades to more bells and whistles require paying up.
Some of the largest marketing, CRM, and analytics providers offer SaaS, which means marketers would rely on their vendors--not their internal IT departments--for training or assistance.
"However, at issue with SaaS is licensing," cautions Vanessa Alvarez, senior industry analyst for research and consulting firm Frost & Sullivan."The software would be accessible most likely from several devices, and as devices proliferate in the workplace, the user must ask the provider, 'How many licenses would be needed for accessing the software through these various endpoints?'" If more endpoints are involved, more licenses are required, increasing the spend.
Home Sweet Home
Though technology continues to suffuse the role of agency executives and brand managers across the world, does this mean the basic mission of marketing will change? Will marketers be tasked less with creativity and more with metrics, analytics, and reporting?
"Marketers still need to create that strong brand experience," ON24's Persson says, indicating that the basics of marketing cannot be ignored, regardless of available tools.
So while the use of analytics tools might now pervade the marketing department, companies still need to rely on messaging and brand support. Analytics can provide insight regarding the most perfect time and platform in which to send a message, and also what messages are most effective in resonating with clients and prospects. But in a cluttered ocean of messages, what should that message be?
As such, the fundamentals--the art--of marketing will live on. And the science of IT is there to make sure it gets noticed.
This article was produced in cooperation with Adobe Systems' CMO.com
Jake Wengroff is Global Director, Corporate Communications, Frost & Sullivan. Twitter @JakeWengroff