Accenture Interactive

Insight Enabled Interactions Point of View Series

Title of brochure

The New Marketing Reality:

Forget strategy and focus on agility
By Perry Kamel, Accenture Interactive, Digital Consulting and David Cowles, Accenture Interactive, Data Management

Interactive digital technologies, fragmented micro-media, social mega-nets, mobility and mass personalization. A proliferation of customer touch-points and interactions across an ever more fragmented media environment are redefining conventional marketing, communications and commerce. Meanwhile, consumer expectations and access to information are on the rise, while attention, patience and loyalty are in sharp decline. Marketings control over branding, messaging and positioning are in unprecedented decline as peer-to-peer, crowd sourced, and affinity-based community interactions gain increasing influence. Against this backdrop, the required cycle time between developing insights, driving execution, and observing outcomes (and repeating the cycle) is accelerating at an unprecedented rate. Todays market tempo is already outpacing the rate at which most organizations can collect, synthesize, analyze, understand and act on information. Too often, the bulls eye has shifted before the aim has settled. So, surprisingly, the answer to, What then should our strategy be over the next two to three years? may be, Forget strategy. Instead, companies should embrace and institutionalize agility and intelligence through analytics. Granularity will become the new mantra to meet the challenges of individualized needs. Because the market is increasingly complex, dynamic and uncertain, what might once have been considered a strategy is little more than a hypothesis in todays changing environment.

Analytics: getting it right The capacity to continuously sense, respond, anticipate and adapt to consumer attitudes, intentions, needs, preferences and behavioral propensities, across an expanding array of media and digitally-enabled touch points, will likely define tomorrows market leaders. Getting this capacity requires a fundamental reinvention of analytic capabilities and approaches. Without such a transformation, strategy development will probably be gradually reduced to wishful thinking. In simple terms, to perform marketing analytics, the process falls into one of three major steps: allocation, execution, and verification. Allocation analytics is the first step in establishing an overall strategy of where to make marketing investments. This analysis is commonly known as MROI (Marketing Return on Investment) or MMM (Marketing Mix Modeling). The aim of the analytics is to increase returns by shifting investments from lower to higher yielding opportunities. This is largely based on defining the ROI curves for various marketing and media investment categories. A steep curve reflects a higher return per incremental dollar invested, whereas a lower slope reflects more modest

returns per incremental investment. With sophisticated econometric modeling techniques to build characteristic curves, marketers can typically gain between 2 to 5 percent increases in total sales, driven by more productive investment profiles moving dollars from flat to steep areas. Execution analytics is a logical follow on. Once resources are invested in different marketing initiatives, execution analytics measure the effectiveness with which those resources drive the desired outcomes. The stronger the execution, the better the results. The higher the results, the steeper the ROI slope. Because execution directly influences return, and to accommodate the quickening pace of market cycles, there is a need for continuous feedback with dynamic reallocation on an ongoing basisa constant feedback loop. Execution analytics supports that loop. Verification is ultimately about reconciling the planned and actual media and marketing initiatives to clarify and confirm the accuracy of marketing activities. Verification is an essential, though often neglected, area that provides greater visibility into, and integrity of, cause and effect relationships. As an example: A marketing plan may call for one million

on-target impressions. Actual results always differ from intended or planned results; so in our example, perhaps 1.3 million near-target impressions were actually delivered against plan, with a variance in both quantity and quality of results. Reconciling the two is essential to isolate and understand the causality in order to provide reliable models which inform effective allocation and execution decisions. Filling the gaps In reality, allocation, execution, and verification are inextricably linked. In practice, however, they are typically disjointed, separated by a myriad of air-gaps between a complex constellation of isolated systems and processes. Allocation-related analytics are often addressed by different parts of the organization with different systems, databases, and even different vendors than other areas. Execution-related analytics are often even more fragmented and disjointed, typically with siloed data sources, fractured customer interaction data, and isolated outcome oriented data streams. Verification-related analytics, if present at all, are typically relegated to an audit function and generally fail to provide essential feedback to inform more efficient and effective allocation and execution decisions.

While this state of affairs has been tolerable in bygone days, it is probably no longer sustainable in todays marketplace. There are two principal reasons why.
Vertical data integration is

fundamental for closed-loop, high-velocity, iterative analytics. Its the new market reality: complexity, velocity, uncertainty and innovation are concurrently accelerating. Closing the loop and accelerating analytic insights to support continuous reallocation requires vertical integration across data sources from allocation to execution and verification. This stands in sharp contrast to the vertical fragmentation associated with conventional approaches. Companies that dont have vertical data integration may not reap the benefits of the new marketing reality.
Horizontal data integration is

or less survivable. Thats often no longer the case. There are far too many dynamic venues to consolidate and analyze manually with any significant hope of achieving analytic velocity. Horizontal integration across the expanded array of data sources is required to support agile and intelligent marketing execution. A glance over the not-too-distant horizon Marketers be warned. Just as the new market dynamics require new data and analytic capabilities and approaches, so too will such innovative approaches likely further transform the market. This complex, dynamic and uncertain market benefits from higher velocity insight/action loops with near-continuous decision making and re-optimization. Near continuous re-optimization, in turn, requires increased flexibility in marketing investment allocation. This will likely spur a tectonic shift from up-front media buying toward discretionary near-real time spot purchasing of media; from episodic, calendar-based marketing programs and campaigns, toward a perpetual process of analytically-enabled, hypothesis-driven micro-campaigning.

As improved analytic insights support more relevant, real-time consumer engagement, and as increased relevance and timeliness helps to drive higher rates of return, the relative value of up-front approaches to media and marketing activities will increasingly be likely to give way to higher value direct engagement models. New market, new approaches Todays new market reality strongly supports a fundamental transformation in the analytic paradigm. There is a need to move decidedly toward vertically and horizontally integrated data and related analytic systems with high-velocity, closed-loop, iterative methods that smoothly connect allocation, execution and verification. This, in turn, encourages a shift toward more holistic, platform based data and analytic capabilities to sustain an agile and intelligent analytic paradigm. The goal: consumer-centric, insight-enabled marketing.

important to develop actionable insights regarding consumer behaviors. Channel proliferation is exacerbating the horizontal fragmentation across an ever expanding array of essential data sources. Historically, the marketing environment was dominated by relatively fewand far more stable options. Bootstrapping efforts to consolidate data across media and channels was inconvenient, but manageable; the consequences for lack of speed or accuracy were more

About Accenture Interactive Accenture Interactive guides companies on the journey toward agile, intelligent marketing. Our services cover all aspects of digital consulting, marketing analytics, and media management. Accenture Interactives methodologies and assets enable closer interaction between the marketing and technology functions, driving both organizations toward a common end goal: customer relevance. Visit our home page: www. accenture.com/accentureinteractive.

About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 190,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US $21.58 billion for the fiscal year ended August 31, 2009. Its home page is www.accenture.com.

Find out more about how to achieve agile, intelligent marketing by contacting: Perry Kamel a.perry.kamel@accenture.com David Cowles david.b.cowles@accenture.com

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