Jan 04, 2017
Traditional outbound marketing campaigns are far less effective at winning and retaining customers than they once were. To achieve sustainable growth in today’s always-connected, real-time world, marketers must deliver continuous, customized, two-way, insight-driven interactions with customers on an individual level. Brands that understand this and put the right Systems in place to scale are creating competitive advantages that are very difficult for their competitors to replicate because it’s not just about technology. It’s about delivering the perfect combination of content and context: the right Story, the right Strategy, and the right Systems. Forrester Research refers to this as creating a “Contextual Marketing Engine”.
In their 2016 survey of 115 technology, marketing, and customer experience professionals, Forrester found that, across the board, organizations’ investments revolve around implementing customer personalization initiatives, solving people’s challenges, and assembling digital experience systems. Forrester analysts suggest that contextual marketing engines create sticky, highly engaging environments for customer interactions. These Systems also yield proprietary data that you cannot replicate with traditional marketing methods or purchase from third-party data sources. The results translate into unprecedented levels of customer engagement, increased revenue, and better product experiences.
One company that is leading the way is Nike. In the three years leading up to 2012, Nike decreased their advertising spend in mass media channels in the US by 40 percent and still managed to grow the company by $9 billion in three years. They deliberately pulled back on their traditional outbound campaign spending.
So, what was the secret to Nike’s growth strategy?
Contextual marketing.
Nike began using customer health data collected from devices such as the FuelBand to nudge consumers back to its digital platform NikePlus every day. NikePlus is a contextual marketing engine that uses social sharing and fitness contests to generate more interactions, creating a scale that rivals paid media. At the end of the first year of operation, Nike Plus had 18 million members, with 15,000 joining each day.
The truth is that most of us don’t have the resources and/or the brand equity of a Nike to pull off this kind of transformation. For most marketers, we struggle mightily to practice contextual marketing at scale. That is, managing real-time coordination of digital interactions across all channels, with the right customer and the right message, at the right moment… It may be easy to say, but it’s hard to execute.
Why?
Here are several reasons why contextual marketing is such an onerous task for marketers and why Artificial Intelligence will transform the discipline of marketing in the immediate future.
1. Big Data Begets Big Complexity
Let’s face it: there are so many channels, devices, and segments creating so much data that it’s nearly impossible to do personalization and contextual marketing at scale. Humans are just not capable of wrapping their heads around the data, and they can’t possibly test the thousands, and perhaps millions, of messaging permutations to calculate the right solution for optimizing business results. Even the most talented marketers and data scientists are ultimately constrained by how much data they can identify and process. Machines are much better equipped to unravel the enormous complexities born from big data gathered continuously in an always-on, always-connected, real-time world.
2. Technology Amplifies the Gap Between Strategy and Systems
Most marketers are not trained to be technologists. In school, they learn about Marketing Strategy – how to research markets, segment and define them; how to understand customers and communicate with them; how to drive demand and desire, and how to communicate efficiently and effectively. It should come as no surprise that this is the kind of work that many marketers want to do. By contrast, rarely do marketers learn how to operate email or social media marketing platforms as part of their marketing degree program – even though this is one of the more common responsibilities for entry-level marketers. Technology vendors play an important role in providing certification programs and training, but for most marketers, much of their MarTech training is on the job. Thus, many businesses never know if they have the right talent to operate increasingly sophisticated marketing technologies. And, even for the most tech-savvy marketers, dealing with the integration of multiple data sources, workflows, rules engines, reporting, and analytics is a heavy lift. Often these tasks occupy so much of a marketer’s time that they have far less time to spend on more strategic marketing activities. As newer and more sophisticated technologies become available, the gap between a marketer’s time spent on Strategy versus Systems will continue to widen and leaders will seek alternative approaches to close that gap.
3. Demand for Customized Conversations and Personalized Experiences Accelerates
Thanks to advances by companies like Amazon, customers have come to expect more customized and personalized brand experiences. Most brands don’t have the deep pockets to make the kind of Systems investments that Amazon has made over the past decade. That said, once customers get a taste of an experience they like, they hold many other brands to the same standard. Marketers can’t deliver these types of personalized experiences without having the right Systems in place. They need to understand the customer and take immediate action to engage them at the “moment of truth”. That’s pretty tough to do if you’ve outsourced your marketing (and much of your data) to agencies, or if you’re counting on humans to keep up with the dynamic demands of customers and volumes of interaction data. There needs to be a better way.
4. Data May Be as Valuable as the Brand Itself
Customer data and insights into their relationship with a brand may end up being more valuable than the brand itself. Data has become the fuel for contextual marketing engines. Without data, there is no actionable insight. And without insight, marketers are flying blind. So, this raises an interesting question: how can a brand fully own their data if they are outsourcing execution and analysis to an agency or another third-party firm? Moreover, with the recent discovery of under-the-table rebates and lack of transparency in media buying practices, serious trust issues are raising questions about the risk and the value of outsourcing. Artificial Intelligence platforms offer a way for marketers to bring execution, analytics, and data in-house. Agencies will certainly continue to be a great resource for ideation and creative production. However, with AI, there is no reason why a brand couldn’t manage the execution in-house, own the data, glean insights dynamically, optimize offer efficiency, and grow revenues.
5. “Marketing and Innovation Produce Results; All the Rest Are Costs”
As Peter Drucker rightly pointed out: “Marketing is the distinguishing, unique function of the business.” Chief Marketing Officers have tremendous revenue growth responsibilities to the business – many CEOs are relying on their CMOs to deliver growth and ROMI (return on marketing investment). CMOs, in general, have one of the shortest tenures in the C-suite because of the pressure and urgency to generate results. Disruptive new marketing technologies represent a double-edged sword for marketing leaders. On one hand, they offer ways to help marketers cut through the clutter, distinguish the brand, and win customers. But on the other hand, marketing technologies can just as easily cut into and damage profitable customer relationships with interruptive and irrelevant campaigns. CMOs will seek out innovative AI-based Systems to execute their Strategies to deliver revenue growth and cost reductions – all while mitigating the risk of damaging customer relationships and ultimately tarnishing the brand.
“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.” – Peter Drucker
The common thread behind all the reasons that AI will transform marketing is the pace of change and sheer magnitude of new technology that marketers must deal with on a daily basis. The fact that many marketers aren’t trained properly to use the technology intensifies the problem. Artificial Intelligence and Machine Learning are poised to solve many of the complexities that exist within marketing Systems today – allowing marketers to get back to what they’ve always been good at: Strategy.
If you are struggling with creating continuous, customized conversations with your customer, a contextual marketing approach enabled by artificial intelligence may work for you. Learn how to apply a Transformational Marketing mindset to deliver the right Story, the right Strategy, and the right Systems to move your organization to the #TopRight corner of your industry with our new ebook: Transformational Marketing: Moving to the TopRight.
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