The new capability agenda for marketers and their partners

The media and marketing ecosystem is being reconfigured and transformed by digital developments. Brands find themselves operating in a quickly evolving environment in which new combinations of technology, experiences, and content are rapidly replacing traditional advertising.

These developments are creating a major dilemma for the leading marketers, which control more than US$500 billion in advertising budgets. In a world of proliferating choice and supply, where do marketers focus time and resources so they can engage target users most effectively and efficiently? Many marketers are actively formulating answers to this question.

They know they need different skills and ways of working to catch up to changes in users’ media consumption. They also know they need new partnerships to design the content and distribution methods required to engage them. Given these developments, marketers’ chief interlocutors — media (publishers) and marketing service providers (agencies) — will have to evolve substantially to remain relevant.

Media companies need to create new advertising products, rethink their content distribution strategies as social media and mobile grow in significance, and use data to slice and dice their audiences in ways that deliver more targeting value for their customers. Finally, marketing service players must shift to focus more on content and intellectual property development, evolve from a services supplier to a strategic business advisor, and accelerate marketers’ ability to move from experimentation to scale across as much of their customers’ marketing and media mix as is feasible.

Digital video. Social media. Native advertising. Programmatic. In-app advertising. Messenger advertising. These are just a few examples that were not meaningfully present in the modern marketing repertoire just a few years ago. Today’s marketer has more options to reach her target audience than ever before. And yet, it has never been more difficult to earn the attention and engagement of that user. We call this conundrum the marketer’s dilemma. This has become especially acute because three major developments are actively reshaping the capability requirements of marketers, media publishers, and marketing service providers such as agencies.

The new ecosystem has changed the fundamental calculus for marketers. It used to be how to move methodically from awareness to purchase in the classic marketing funnel. Now, every interaction with a customer is an opportunity not only to move that customer toward a transaction, but to drive the transaction at the very next step. “Everything is one step away from purchase,” as one chief marketing officer (CMO) put it. This change is placing new pressures on — and expanding the role of — senior marketers. Former distinctions between the upper funnel of brand advertising and the lower funnel of direct response marketing, between marketing and sales, matter less and less.

The new calculus: to engage and convert as precisely, promptly, and personally as possible. Even if her expanding influence isn’t always evident in organizational reporting lines, the CMO, who has long been at the forefront of dealing with the impact of digital, is finding her informal influence rising over a converging system of customer experience touch points.

During the past six months, Strategy& conducted a series of in-depth interviews with CMOs and senior marketing executives from a broad variety of sectors such as consumer packaged goods, technology, media, hospitality, and retail. Our conversations focused on their changing priorities, their strategies to cope with growing marketing and media complexity, and their expectations for an increasingly converging landscape of vendors, media channels, and partners.

So what can help solve the marketer’s dilemma? In this brave new world there is no longer a one-size-fits-all model for marketers to follow. But marketers can take certain steps to reimagine their marketing capabilities system so that it is ready for the future. In our interviews, five key themes emerged with respect to the critical capabilities that marketers need to navigate the new ecosystem. At the same time, marketers’ chief interlocutors — media companies (publishers) and marketing service providers — will have to evolve substantially to remain relevant. Media companies need to create new advertising products, rethink their distribution strategies as social media and mobile grow in significance, and use data to slice and dice their audiences in ways that deliver more targeting value for their customers.

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