The Race Is On

THE RACE IS ON

KEEPING PACE WITH CONSUMER GOODS LEADERS IN DIGITAL MARKETING AND TECHNOLOGY

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Foreword...... 3

Key Findings...... 4

Methodology and Acknowledgments...... 5

Digital Marketing...... 6

The Transformative Vanguard...... 8 sidebar: Is Europe Ahead or Behind?...... 11

The Grail of Alignment...... 12

Facing the Challenges...... 14 sidebar: Q&A...... 16

The Transformative Lead...... 17

Investing in Digital Marketing...... 19

External Providers...... 22

Reaching Out...... 24 sidebar: The Rise of Business Intelligence...... 25 sidebar: Questions for Reflection...... 27

Conclusion...... 28 Foreword

Executives face a bewildering array of digital marketing technologies. No longer dominated by print, marketing today requires integrated website, mobile and social media strategies alongside well- conceived and executed data privacy and security strategies. Further needs, often buzzwords, include omni-channel, data mining and analytics, web and mobile apps. It’s a lot to digest. But at the same time, the collective capabilities of these technologies to grow and optimize sales and marketing are too profound to be ignored.

A vanguard of transformative companies is already leading the way. These companies are using a vast array of tools and strategies to achieve compelling results. Benefits include greater marketing efficiency and effectiveness stemming from a single view of the customer combined with targeted, personalized, well-timed messaging. Transformative companies are, in fact, going still further, achieving closer alignment between marketing and groups such as logistics, supply chain, new product development and finance. All of which leads to improved consumer experiences and an optimization of corporate performance.

Amid so much opportunity, challenges remain. For one, although many companies believe they are on the path to optimized digital marketing, in many cases their efforts are siloed. E-commerce and the website often fail to coordinate with mobile or in-store marketing efforts. Or different groups define, collect and interpret data differently, leading not only to inefficiency but also to false conclusions.

Another key challenge is finding the right resources. Truly digital business requires close collaboration with the IT department. But for many companies, IT is already operating at full capacity. Or alternatively, the existing management structure provides insufficient incentives for marketing and IT to enter into a full partnership. As a result, leading companies are seeking more sophisticated services from their external advertising agencies and technology providers.

The above barely scratches the surface of all the opportunities, learning and evolution taking place. The fact is, this isn’t only about digital marketing, it’s about developing a marketing, IT and broader business platform that is more attuned to the digital era. Those that get this right for their customers will have a substantial advantage over their competition. The questions become: where is your company on its digital marketing journey, and where does it hope to go?

2 | the race is on Key Findings

Two out of three executives, 65%, say their companies need to do more to harness digital technology to improve marketing effectiveness.

Forty-three percent of executives believe their IT departments are so busy they are unable to help with digital marketing technology needs.

Forty-two percent of executives believe their current approach to digital marketing is too fragmented—rising to 47% among companies with greater than $17 billion in sales.

Silos contribute to the challenge: digital marketing is often organized as a separate function (37%), while e-commerce often operates as a separate business unit (39%).

Three out of five executives, 61%, say their companies must meanwhile do more in terms of harnessing marketing data to improve effectiveness in complementary areas such as product development and logistics.

Half of executives, 50%, report that in one or more instances, their digital marketing has failed to integrate with essential back-end processes.

One out of five executives, 20%, describe their digital marketing approach as “transformative.” These are leaders that have already embraced a broad array of digital strategies: social, mobile, web and analytic tools and technologies transforming not only sales and marketing but also the overall business.

Relative to Europe (14%), executives from the U.S. are nearly twice as likely to describe their digital marketing efforts as transformative (25%).

The key questions for non-transformative companies: how far ahead are the leaders, what can be learned from their examples and then, finally, how fast do others need to move to avoid leaving money on the table or otherwise losing competitive advantage? Key goals for both transformative and “other” companies include: • Achieving closer alignment between marketing and IT • Harnessing “big data” to improve marketing • Leveraging digital to grow existing or reach new markets • Building a “single view” of each customer across all channels

Related challenges and opportunities include: • Optimizing the consumer experience • Optimizing mix of traditional versus digital media spend • Developing an integrated media strategy (including print, TV, mobile, web, social media, press) • Improving the accuracy of sales allocations (what spending delivers what benefit?)

Copyright © 2014 Forbes Insights | 3 Transformative companies are well ahead of others in nearly all facets of digital marketing. But their lead is particularly acute in areas such as: • Integrating digital and POS marketing • Analyzing campaign effectiveness • Noticing and responding to the actions of competitors • Integrating mobile, Internet and social media with broader marketing strategies • H arnessing big data to improve not only marketing but also product development, logistics and other operational areas

Executives, both transformative and otherwise, share a handful of new, digital marketing-related challenges, including: • Identifying best-in-class digital marketing technologies and vendors • Finding advertising agencies adept at integrating digital/traditional • Integrating advanced marketing technologies with existing IT • Working with IT to determine specifications

Executives from companies both transformative and otherwise are generally satisfied with the performance of their investments in digital marketing.

Over the next year, 78% of executives believe their spending on digital marketing will either increase (62%) or increase significantly (15%), with such overall figures consistent for both transformative companies and others.

Fifty-nine percent indicate that their companies are amenable to adopting a greater degree of technology outsourcing— specifically, a model where a third-party, full-service technology provider is able to assist with a greater degree of both front-end marketing and back-end operational processes.

Fifty-eight percent say they are open to working with consultants who can help manage both front- and back-end digital marketing processes.

As for marketing agencies and related firms, 46% of executives say their companies are seeking partners that can assist with increasingly sophisticated data and IT strategies.

Nearly three out of five executives, 58%, say their current external digital marketing relationships are “in play.”

4 | the race is on Methodology

The insights and commentary found in this report are derived from both a survey and personal interviews. Partnering with Wipro, a consulting, technology and outsourcing organization with an established digital marketing group, Forbes Insights conducted a survey of large, global consumer goods companies in April/May 2014. Completed by 125 executives, its key demographics include:

• Executive title: CMO (3%), Director (68%), “other” C-level executive (3%), SVP/VP (18%)

• Company size (revenues): $1 billion to $3.9 billion (22%), $4 billion to $9.9 billion (18%), $10 billion to $16.9 billion (15%), $17 billion and over (29%)

• Industry: Consumer electronics (24%), over-the-counter pharmaceuticals (20%), food (17%), beverage (7%), home and personal care (4%), apparel and footwear (8%)

• Location of headquarters: U.S. (65%), Europe (29%), Asia/Pacific (3%) acknowledgments

Discussions were held with nine senior executives, most of whom requested anonymity. Three executives spoke on the record, including:

Michael Aidan, Head of Digital & VP Digital Brand Platforms, Groupe Danone S.A. Jens Jermiin, Head of Digital, Carlsberg Group Steve Mattey, Managing Partner, VCCP me

Forbes Insights and Wipro extend their gratitude to our survey respondents and interviewees.

Understanding the opportunity

Digital marketing is often described as a fast-evolving set of practices relying on digital data analysis and delivery to provide relevant information and offers to shoppers and consumers across all channels. But what does that mean in practice? Consider the following examples:

• Bottled water “Roller Babies,” a YouTube video • Paper products A major U.S. consumer goods maker is developed in 2009 for Evian, part of Groupe Danone collaborating with at least one major U.S. retailer—the S.A., quickly became one of the most viewed advertise- latter moving quickly to join the cutting edge of digital ments in the history of the Internet. Since then, Evian marketing. According to an executive for the consumer has expanded the campaign’s appeal by creating applica- goods maker, “[the retailer] has a loyalty card program tions that allow consumers to do everything from adding enabling it to gather tremendous amounts of information their own faces to the video to customizing T-shirts or about each customer: what products they buy, at what placing orders. Counting user-created content as well prices, in combination with what other products.” as Evian’s own follow-ons such as its “The Making Of” video and “Baby and Me,” the brand has generated hun- In addition, says the executive, the retailer “is developing dreds of millions of views. tools, such as mobile apps, that can, for example, read a customer’s digital shopping list and then put a coupon for As Michael Aidan, head of digital and VP digital brand a discount on our paper towels or napkins right in their platforms for the whole of the Paris-based $28 billion hands.” Targeted promotions such as these “are in their food and beverage group, explains, “We are at a cross- early stages” for the company. But thus far, “they’re prov- roads between technology and creativity: technology ing very effective.” Overall, says the executive, “there’s no makes anything possible and measureable.” Meanwhile, doubt, we’re shifting considerably more of our market- “the proliferation of content makes it necessary to engage ing budget towards digital channels such as mobile, social consumers emotionally.” Brands and their companies that media and loyalty cards.” make this connection, says Aidan, will be the ones “that can break through.” Are you falling behind?

• B e e r Jens Jermiin heads the digital team at Carlsberg Successes such as the above show what can be achieved Group, the $12 billion, Copenhagen-based beverage in today’s digital environment. But they should also be a maker. Like Groupe Danone, Carlsberg is updating its warning: if your company isn’t taking similar steps, most marketing approach to the digital age. “In the past, we likely, you’re falling behind. And in fact, the survey reveals were in siloes—there was very little connection between that 65% of executives say their companies need to do the digital marketing and the traditional marketing,” more to harness digital technology to improve market- says Jermiin. Today, however, “we’re more integrated ing effectiveness. Closely related, 61% say their companies with the brand teams and are working more closely need to do more in terms of harnessing marketing data together with integrated brand plans.” For example, any to improve effectiveness in complementary areas such as Carlsberg print ad appearing today “also leads to our product development and logistics. In short, executives website or to an application download or to our social realize: they need to do more. media page: we are trying to construct dynamic storytelling where there are no dead ends in the consumer But there are additional challenges. Forty-two percent of connections.” Digital tools “improve our ability to tar- executives believe their current approach to digital mar- get our audience and to engage with them.” And the keting is too fragmented—rising to 47% among companies result, says Jermiin, “is that consumers are developing with greater than $17 billion in sales. (The larger the organi- a deeper connection—a deeper conversation—with our zation, the more products and divisions, the greater the likelihood brands. It’s a very effective approach to marketing.” there will be fragmentation.)

6 | the race is on Silos contribute to the challenge. The survey shows that digital initiatives,” says Mattey. “That can lead to lots of digital marketing is often organized as a separate function problems,” such as an email offer that surprises the rest of (37%) or that e-commerce operates as a separate business the organization, perhaps undercutting a retail promotion unit (39%). And 50% of companies report that in one or or leading to a stockout when demand for an unexpect- more instances, their digital marketing has failed to inte- edly promoted item suddenly spikes. For a digital initiative grate with essential back-end processes. to have optimum impact, “you need close coordination across the company,” says Mattey (Fig. 1). Steve Mattey, managing partner at VCCP me, a London- based digital advertising and marketing consultancy, says But there is also some good news. Specifically, over the that all three circumstances can be an indication of sub- next year, 78% of executives say their spending on digital optimal organization and performance. “Companies make marketing will increase significantly. a mistake when they don’t take steps to integrate their

% 78 of executives say their spending on digital marketing will increase significantly.

Figure 1 There’s work to be done

Need to do more to harness digital technology to:

% 28% 29 Agree

Disagree % % 7% 65 % 61 10 Neutral

Improve marketing effectiveness Improve operational effectiveness (new product development, logistics, etc.)

Impediments include:

23% 19% 37% 37% 39% 50%

40% 42% 14%

Digital marketing today operates E-commerce today is One or more instances where as a separate function a separate business unit digital marketing failed to integrate with back-end processes Note: May not add to 100% due to rounding.

A MAJORITY ARE ACTIVE—BUT ONLY ONE IN FIVE ARE TRANSFORMATIVE

Most companies are exploring digital marketing. But about communications and marketing, this is about busi- only one in five are pursuing these opportunities across ness transformation. If we can harness the data at the the whole of their enterprise. Groupe Danone S.A. oper- disposal of this company, we can achieve breakthroughs ates four major divisions known for their strong global in performance.” and regional brands. According to Michael Aidan, “What we’re pursuing isn’t so much digital marketing, but rather, And while sales and marketing enhancements represent it’s marketing in a digital era.” “a huge slice of the opportunity,” Mattey insists that “the full vision is much broader and requires initiatives with IT, The distinction is important, says Aidan, because if com- finance, logistics, new product development—it’s really panies are going to realize the full benefit from today’s everything.” technologies, “ways of working must evolve—substan- tially.” And change is needed not only in marketing Are you transformative? but also in areas such as sales, logistics and new product Executives recognize there is much work to be done. development (NPD). Companies need to find ways Nonetheless, 20% of companies describe themselves as “that all functions can collaborate closely together, hand transformative. These are the leaders, companies that in hand, to better understand and address consumer have already embraced a broad array of digital strategies: behaviors and needs.” social, mobile, web and analytic tools and technologies What’s needed, says Aidan, “is to break up silos.” transforming not only sales and marketing but also the Corporate footprints need to align to the point where overall business. And from here, they are looking to inte- “everyone realizes that in the center, there is the same con- grate lessons learned still deeper into the business. Such sumer, which in this era is also called data.” And though companies, such as Danone, Carlsberg and our unnamed Danone itself “is not there yet,” the company has a clear consumer products maker and retailer deserve emulation, idea of where it needs to go and is making progress. As as they are the vanguard. for Aidan, “my challenge is to help our divisions, func- As for the remaining 80%, a group referred to as “non- tions and regions figure out what they need to do in order transformative,” a nominal 50% describe themselves as to take advantage of all of the remarkable technology and “active” in digital marketing. These have significant expe- [related] opportunities that can be achieved.” rience with digital marketing. The difference is, these VCCP me’s Mattey expresses full agreement: “Companies companies recognize they are not yet as advanced as the have been talking about the value of data for some time transformative companies. However, they are on a similar now—I’ve been working in this area for 30 years.” But path with a similar goal—transforming not only market- what’s different today “is that the C-suite at leading com- ing and sales but also the overall business. panies are now waking up to the fact that this is not just

8 | the race is on Others within this non-transformative group are in var- and learning—but have yet to fully adopt and standard- ious stages of adoption, ranging from incremental to ize. Another 5% say they are cautious, examining such cautious or uncertain. The incremental group, 22% of the issues but not yet identifying any significant opportunities. sample, say they are adding digital strategies and tools to Finally, 2% are uncertain and have yet to take any steps their existing marketing and sales frameworks—testing whatsoever.

Figure 2 Which of the following best describes your company’s current posture as it relates to digital marketing?

5% 2% 20%

22%

50%

Transformative: We have already embraced a broad array of digital strategies, social, mobile, 20% web and analytic tools and technologies, transforming not only sales and marketing but also the overall business—and are looking to integrate these learnings deeper into the business.

Active: We are embracing a broad array of digital sales and marketing strategies, with the goal of 50% transforming not only marketing and sales but also the overall business.

Incremental: We are adding digital strategies and tools to our existing marketing and sales frameworks— 22% testing and learning—but have yet to fully adopt and standardize.

Cautious: We are looking at digital marketing strategies but have not yet identified any truly 5% significant opportunities.

Uncertain: We have not yet examined any digital strategies or technologies. 2%

One factor driving the willingness to change is size, as Location also plays a role, as companies headquartered those with revenues of $17 billion or more are more than in the U.S. are significantly more likely—and companies twice as likely to describe themselves as transformative headquartered in Europe are significantly less likely—to (42%). Meanwhile, among companies of less than $10 describe themselves as transformative. (See sidebar, page billion, only 11% describe themselves as transformative 11.) As for industry, the most noteworthy variance is that (far below average), and 11% say they have not yet even 27% of food and beverage companies describe themselves examined any digital strategies or technologies (far above as transformative (versus 20% overall). average). One likely explanation, says Mattey, “is that these large companies not only have lots of data, they also have Active companies also warrant a closer look. While not the most to gain from economies of scale— tiny improve- yet transformed, transformation is the stated goal of such ments in targeting their advertising or response time can companies. And again, size plays a role: while 50% in the yield big results.” Otherwise, these very large companies overall survey describe themselves as active, the figure would likely not be willing to take on something so chal- climbs to 63% among companies with sales from $10 bil- lenging as the transformation of the marketing and IT lion to $16.9 billion. And as might have been expected, operations of a very large enterprise. the figure actually climbs even higher, to 71%, among one group—those with sales from $4 billion to $7.9 bil- But this may also highlight an opportunity for smaller lion. This could be an example of smaller size being an companies, says Mattey. Their smaller overall footprints, advantage in terms of agility and the ability to build on the comprising far less in the way of legacy practices and successes of the first-moving transformative companies. infrastructure, are likely more agile. This should pres- ent less in the way of a challenge in change management. Industry is also a factor. Though falling to 40% among In addition, with so many large companies now leading pharmaceutical companies, the active classification again the way, the technologies and practices of potential part- climbs to 63% for consumer electronics. In this instance, ners—including everyone from marketing agencies to IT the relative willingness “to move” is likely driven by com- providers—should be more “transformation-ready.” In petitive circumstances. But whatever the industry, says other words, much of the heavy lifting in terms of strate- Carlsberg’s Jermiin, “the question is, why wait for others?” gies and tools has already been done, making it that much easier to find capable providers.

Figure 3 Who is transformative; Who is active?

80%

70% 71% % 60 % % $4–$7.9 63 63 billion 50% Consumer $10-16.9 electronics billion 50% 40% Overall % (mean) % 42 % 40 30 $17 billion Pharma- and up ceuticals % % Europe- 20 27 % based 25 HQ Under $10 Food and % billion beverage US-based 20 10% HQ % Overall 14 % (mean) 10

ACTIVE TRANSFORMATIVE

10 | the race is on Is E urope Ahead or beh ind?

Certainly, Europe has its share of transformative and Interviews for the report finally clear up matters. As active companies, as evidenced by Danone and Carls- the U.S. consumer goods executive explains, “We have berg. But statistically speaking, it appears that Euro- global operations, and there is definitely a higher de- pean companies are lagging those from the U.S. gree of difficulty getting this done in Europe.” The -ex

ecutive points to two key reasons. One, “there are sig-

The first two sets of statistics to consider may at first nificant cultural differences—it may be only slightly so, seem conflicting or inconclusive. First, 70% of U.S. but Europeans value their privacy more highly [than companies say they believe their companies need to U.S. residents].” Two, “in accord, Europe has tighter do more to harness digital technology, a figure that data protection and privacy laws.” falls to 56% for those from Europe. So European companies either see less of an opportunity or perceive Confirms VCCP me’s Mattey, “Here in Europe, the less of a gap in capability. data laws say your company has to have a customer’s

permission to track their data, and that includes their

Second, 64% of U.S. companies believe they need to mobile, in-store, website and other interactions.” This do more in terms of harnessing marketing data to im- doesn’t prevent digital marketing in the European prove effectiveness in complementary areas such as sphere, “but enticing customers to opt in heightens the product development and logistics. Here, the figure level of challenge. You have to convince them, sharing falls to 56% among European companies. So either your information is in your own best interest.” more Europeans feel they’re already doing a compe- tent job, or fewer see the opportunity.

Matters begin to clear when viewing the numbers of transformative companies. Twenty-five percent of U.S. companies say that when it comes to digital marketing, their organizations are already transformative. The figure, meanwhile, falls to 14% among

European companies.

To improve digital marketing effectiveness, companies are seeking closer alignment between marketing and IT

Amid so much technology-driven opportunity and challenge, sadly, 43% of executives agree with the statement that their IT departments are “already so busy, they are unable to help with digital marketing technology needs.” Perhaps in accord, improving alignment between marketing and IT is the number one most frequently cited digital marketing goal.

BUILDING ALIGNMENT Advanced opportunities

Every executive interviewed for this report, in one way or All of which helps to explain why there are significant another, stresses the importance of tight linkage with IT. differences in prioritization depending on stage of devel- As an executive from a U.S. retailer explains, “For many opment. For transformative companies, harnessing big data years, we had a loyalty card program, but to the [anguish] to improve marketing effectiveness is the most frequently of many of us, we didn’t do much with it. Even though cited objective, followed by a four-way tie between align- we knew what groups like Tesco in the UK were doing ing marketing and IT, leveraging digital to grow existing with this stuff, we basically used it as nothing more than or reach new markets, building a single “view” of custom- a discount tool. We were taking almost no steps to really ers, and improving collaboration with retail partners. analyze the data.” Indeed, like the above retailer, transformative organiza- But then [just a few years ago], “we found some open- tions have probably already taken care of many of their source tools that turned out to be really powerful, and we basic challenges and so are moving forward toward more pitched to senior management—look at how incredibly advanced opportunities. In fact, no matter which specific powerful these tools could be.” Once they obtained the initiative is considered, it is pursued in significantly greater go-ahead, “we found that to link shopper data with web numbers by transformative companies than by the other and mobile promotions, mobile apps, in-store couponing companies in the survey (Fig. 4). and numerous other opportunities, we needed a lot more help from IT.” Today, says the executive, the company is fully committed to digital transformation. And as a result, “now there’s a healthy cross-pollination of marketing- focused IT staff, and IT-focused marketing staff.”

% 43 of executives agree with the statement that their IT departments are “already so busy, they are unable to help with digital marketing technology needs.”

12 | the race is on Figure 4 HOW IMPORTANT ARE THE FOLLOWING INITIATIVES?

Other-than Rank Transformative RANK Transformative*

Aligning marketing and IT 76% 1 81% 2 Harnessing big data to improve marketing 70% 2 92% 1 Leveraging digital to grow existing or reach new mkts 69% 3 81% 2 Building single “view” of customer** 61% 81% 2 Improving collaboration with retail partners 60% 81% 2 Leveraging cost/sales benefits from digital channels 62% 65% Harnessing big data for back-end benefits 56% 85%

*Others = all who are not transformative. **A single view indicates: Integrating point marketing solutions to generate cohesive customer insights and improve customer experience.

Note that the gaps between non-transformative and trans- However, the figure climbs to 50% among transformative formative companies are even greater when viewing “very companies. Put another way: transformative companies important” (a 5 on a 5-point scale) only. For example, only are over two and a half times more likely to view big data 19% of non-transformative companies say harnessing big as very important. data to improve marketing effectiveness is very important.

Figure 5 HOW IMPORTANT ARE THE FOLLOWING INITIATIVES?

Other-than Rank Transformative RANK VERY Important only Transformative*

Aligning marketing and IT 20% 1 38% 2 Harnessing big data to improve marketing 19% 2 50% 1 Leveraging digital to grow existing or reach new mkts 18% 3 38% 2 Building single “view” of customer** 13% 35% 4 Improving collaboration with retail partners 18% 31% Leveraging cost/sales benefits from digital channels 17% 23% Harnessing big data for back-end benefits 16% 46%

*Others = all who are not transformative. **A single view indicates: Integrating point marketing solutions to generate cohesive customer insights and improve customer experience.

Although their clearest priority is optimizing the customer experience, marketers face a wide array of strategic and operational challenges

Relative to others in the survey, transformative companies are again significantly more likely to cite a wide range of key strategies and challenges as priorities. What this highlights is that any related performance gap between the transformative and non-transformative groups could actually be growing.

Seventy-eight percent of other companies—versus 92% Digital—it’s all about content of transformative companies—view optimizing the consumer experience as a key priority. Again, digital tools can Executives are also seeking better optimization between contribute significantly to this objective. their traditional and digital media spending. As Danone’s Aidan explains, when the Roller Babies campaign went For example, as Carlsberg’s Jermiin explains, “product viral “we realized the incredible shift toward the impor- quality and appeal is and always will be an important part tance of content. We could never afford to reach such an of the experience.” But today, says Jermiin, “we are seek- audience with a traditional media buy.” ing much closer engagement with our customers.” Here, digital tools such as mobile apps, social media pages and Carlsberg’s Jermiin agrees: “There is paid media, owned Twitter feeds “can help us enter into a two-way conversa- media and what we all want, earned media. With earned tion with our customers.” For instance, the company has media—social media—you need to have an entertaining, journalists on staff who “monitor and respond and interact meaningful and emotional story, but where the payoff goes with our customers in real time.” So today, says Jermiin, to the heart of the consumer.” Aptly executed, this leads “our brand can talk, offering a creative and engaging point to consumers sharing and discussing the video with their of view that improves the experience.” friends. A good example is Carlsberg’s recent reality-based “poker” video, in which actual “friends” are called in the Technology is also improving the customer experience for middle and asked to come immediately, with cash, to pay a large U.S. foods company. As a senior digital market- off a supposed gambling debt. As they fulfill the request, ing executive explains, “When you are selling through a curtain falls and a cheering crowd toasts the deed, say- retailers, it’s not just the appeal of your product to end- ing, “Standing up for a friend—that deserves a Carlsberg.” consumers—it’s all the ways you interact with the seller.” As Jermiin explains, the content [and] storytelling must be That means “pricing, replenishment, advertising and pro- good, “or customers won’t share it.” motions—the experience is the full relationship.” Other priorities include developing an integrated media Here, the company is using “all the data we can get our strategy that includes print, TV, mobile, web, social media hands on—from the retailers themselves or from other and press coverage. A key challenge here, says VCCP me’s sources—to inform and optimize the relationship.” And Mattey, is “learning to tell consistent messages while at the through data mining, the foods company aims to become same time doing a better job of targeting those messages to a trusted advisor to its retailers. For example, “if the store specific audiences.” Getting it done, he insists, “requires shares its data, we might be able to advise that they’re los- closer collaboration between marketing and IT.” ing sales because maybe they don’t have the right product spacing or selection. You know, sometimes not carrying a single product can cost 10% of [total store] sales as customers are forced to leave the store. It may be hard to believe, but the data tells the story—and it can be that simple.” (See Q&A, page 16.)

14 | the race is on Figure 6 What are your digital marketing and related priorities?

OTHER* Strategies Transformative

Optimizing the consumer experience

78% 92% Optimizing mix of traditional vs. digital media spend

76% 85% Developing an integrated media strategy (including print, TV, mobile, web, social media, press)

63% 88% Improving accuracy of allocation (what spending for what benefit?) 62% 88% Reducing overall marketing spending

46% 73% Optimizing the mix of spending on internal resources vs. external

36% 62%

*Others = all who are not transformative.

Measurment/Integration OTHER * Transformative

Analyzing campaign effectiveness

79% 96% Integrating digital and print/POS marketing efforts

73% 88% Integrate social media with broader marketing strategies

69% 88% Integrate web presence with broader marketing strategiescompetitors 66% 85% Integrate mobile with broader marketing strategies

64% 85% Manage individual customer relationships across channels

61% 77% Measure/respond to growing sophistication/success of competitors

54% 92%

*Others = all who are not transformative.

What is your role?

Simply put, my job is to gather and examine customer ways to improve the retailer’s performance as a re- data in search of opportunities to improve custo- sult—as well as our own. mer experiences and at the same time, optimize Now some of these retailers have shopper cards—and retail sales. those tend to be the best sources of information. But How do you define digital marketing? others, the data isn’t so clear. So there, we take the best and richest data we can get and learn from it To me, there’s just marketing. But today, we have a what we can. whole slew of added information—data—and with that, greater sophistication and capabilities. So you In what ways can you improve the retailers’ perfor- can mine those insights to make your marketing that mance? much more effective. Well, if we can improve our own sales, that’s gener- How much can a digital approach add to the bottom ally good for the retailer. But there’s more to it than line? that. Often we can find opportunities that enhance our sales but at the same time improve performance That’s hard to say. But what we can say, safely, is in other categories. We can look at individual shop- that in many instances, the insights we develop ping carts and deduce what products go together. can improve the effectiveness of a given strategy So we can advise a retailer on where to place these many times over. In some cases there’s incremental products and can suggest cross-promotional or pric- improvement; in other cases, it’s nothing short of a ing strategies. breakthrough. One thing I should point out is the importance of Could you give an example of a breakthrough? building trust. There’s sometimes this suspicion that I don’t believe we’re ready to share anything like that any suggestions we make are for our own benefit.S o today. But I can describe what I do and then perhaps we go out of our way to make sure anything we sug- leave it to your imagination. One of the things I do, gest is to our mutual benefit. Our view is that even from a merchandising perspective, is make sure we if it might be better for us, we would never advise supply retailers with the right products. What we anything that could be bad for the retailer. We say, learn can influence spacing, pricing, couponing, se- “No short-term decisions, but instead, always look at lection, partnerships with related categories. Given the long-term relationship.” our volumes, even an incremental improvement in What is next for you? any or all of those areas can translate into a very significant uplift. We want to become seamless. We want our retailers to be able to recognize our mutual customers when- Where do you get your data? ever they come to any store. We want mobile, web- Most of our retailers are willing to share to at least site, print and POS coupons and offers to be right on some extent. We certainly encourage them to do so, target. And because we work through retailers, that’s and when they do, we try to provide explicit value even more of a challenge than it sounds. But we’re in the form of adjustments we make or suggest and making progress, and that’s one of our objectives. insights we share. And generally, we’re able to find

16 | the race is on THE TRANFORMATIVE LEAD:

Transformative companies are well ahead of others across a range of objectives

Transformative organizations are much more likely than The set of perceived advantages—this confidence— others to rate themselves as above average or cutting edge extends across every capability examined, including across a range of critical activities. For example, the ability analyzing campaign effectiveness, measuring and respond- to integrate digital marketing efforts with POS results—in ing to the increasing marketing sophistication of as close to real time as possible—is of great value to many competitors and developing a single view of customers organizations. Here, 54% of transformative companies (identifying individual customers across an array of describe their capabilities as above average—with a nomi- channels). nal 8% of these indicating their abilities are cutting edge. By comparison, only 30% of other companies believe they The largest gap of all relates to social media. Here, in an are above average in this regard—and only a nominal 2% area the survey shows to be a critical priority, transfor- of these say they are cutting edge. mative companies are nearly twice as likely as others to describe their capabilities as above average (Fig. 7).

Figure 7 How capably are you addressing the following Challenges?

OTHER* Transformative Percentages are those indicating their capabilities are “above average” or “cutting edge” Analyzing campaign effectiveness 39% 46% Responding to competitors

33% 46% Integrating digital and POS marketing

30% 54% (8% cutting edge) Developing a single view of customers

30% 38%

Integrating with broader marketing strategies: Integrate mobile with broader marketing strategies

42% 58% (8% cutting edge) Measure/respond to growing sophistication/success of competitors

37% 62% (4% cutting edge) Manage individual customer relationships across channels

30% 50% (12% cutting edge)

Harnessing big data to improve: Manage individual customer relationships across channels

34% 50% (15% cutting edge) Integrate mobile with broader marketing strategies

34% 58% (12% cutting edge)

*Others = all who are not transformative.

Copyright © 2014 Forbes Insights | 17 There are also differences in perception as to the degree of transformative companies are also significantly more likely challenge inherent across a range of issues. than others to see challenges in working with IT to determine specifications. In both cases, this is likely driven In two instances, transformative companies are signif- by the greater sophistication of the technology compo- icantly less likely to view key issues as challenging than nents needed to enable more-advanced digital marketing do other organizations. This includes operational areas strategies. such as identifying individual customers across multiple channels and identifying best-in-class digital marketing Transformative companies are also much more likely than technologies and vendors. others to find challenge in identifying advertising agencies that can consistently and effectively integrate traditional However, transformative companies are much more likely marketing tools (print, television, radio) with digital mar- than others to see challenges in three key areas. First, 73% keting strategies. Again, this is likely indicative of their of transformative companies find integrating advanced heightened requirements—which not all agencies as of marketing technologies with existing IT to be challeng- today may be equipped to address (Fig. 8). ing, compared with only 53% of others. Closely related,

Figure 8 How challenging are the following issues?

OTHER*

Transformative

Identifying best-in-class digital marketing technologies and vendors 60% 54%

Identifying individual customers across channels (omni-channel) 57% 50%

Integrating advanced marketing technologies with existing IT 53% 73%

Working with IT to determine specifications 45% 58%

Attributing sales to the appropriate channel 43% 42%

Finding advertising agencies adept at integrating digital/traditional 40% 54%

*Others = all who are not transformative.

18 | the race is on INVESTING IN DIGITAL MARKETING: Companies have already made significant investments in an array of digital marketing and related capabilities—and will be making more over the next one to three years

The top four overall most frequently cited sets of past • Investment to increase investment include social media marketing (70%), shop- Over the next year, 78% of executives believe their spend- per and consumer insights (51%), and mobile and customer ing on digital marketing will either increase (62%) or experience (tied at 47%). increase significantly (15%). Such overall figures are consistent not only with transformative companies but also • Social media: a priority for all across virtually all company sizes and industries and Social media marketing is the most frequently cited invest- locations. ment among both transformative and non-transformative companies. From there, however, differences emerge. In It is only when the focus is on those who indicate their particular, both in the past and in the future, transforma- spending will increase significantly that major differences tive companies favor analytics/mathematical modeling far arise. Again, transformative companies lead the pack. But more so than do other companies (Figs. 9 and 10). in this instance they are followed by consumer electronics, food and beverage companies and those with sales of $17 • Good results so far—but room for improvement billion and beyond (Fig. 12). Both transformative and other than transformative companies are generally satisfied with the performance of • Analytics are becoming a key focus such investments (Fig. 11). Still, if those who are neu- As for where such investment is likely to focus, over the tral or dissatisfied in their assessment matter, the research next three years, social media marketing is again the shows that for both groups, there is room for substantial most frequently cited, but analytics/mathematical model- improvement. ing ascends to second position, with customer experience again ranking third. For example, 62% of other than transformative companies say they are satisfied (57%) or very satisfied (5%) with the results from their investment in social media. Still, 35% describe their results as neutral, while 3% are not satisfied. Similar results are evident in areas ranging from big data/ datasets to analytics.

PAST FUTURE

Other* Rank Transformative RANK Other* RANK TRANSFORMATIVE RANK

Social media marketing 64% 1 92% 1 57% 1 77% 1 Shopper and consumer insights 48% 2 62% 3 32% 46% Customer experience 45% 3 54% 38% 3 62% 3 Mobile 43% 4 62% 3 35% 54% Databases/big data/datasets 40% 58% 34% 46% E-commerce 40% 35% 28% 42% Business intelligence 39% 46% 36% 42% Analytics/mathematical modeling 37% 65% 2 42% 2 65% 2 Marketing automation/CRM 35% 46% 31% 31% Video/web video 25% 58% 20% 23% Multichannel 24% 54% 20% 34% Testing and optimization 23% 15% 22% 23% Digital asset management (DAM) 16% 19% 13% 23%

*Others = all who are not transformative.

Figure 10 What are your past and future investment priorities?

PAST Other-than Transformative* Transformative

1 Social media 1 Social media

2 Shopper and consumer insights 2 Analytics

3 Customer experience 3 Shopper and consumer insights

4 Mobile 3 Customer experience

future

1 Social Media 1 Social media 2 Analytics 2 Analytics

3 Customer experience 3 Multichannel

4 Business intelligence 3 Mobile

*Others = all who are not transformative.

20 | the race is on Figure 11 Satisfaction with the performance of past investments varies dramatically.*

OTHER**

Transformative

Customer experience 76% 79%

E-commerce 73% 78%

Shopper and consumer insights 69% 56%

Social media marketing 62% 71%

Business intelligence 59% 75%

Multichannel 53% 50%

Mobile 51% 44%

Marketing automation/CRM 51% 58%

Databases/big data/datasets 50% 67%

Testing and optimization 48% 100%

Video/web video 44% 60%

Analytics 43% 53%

Digital asset management (DAM) 31% 80%

*Percentages show numbers of executives choosing a 4 or 5 on a scale from 1-5 where 1=not at all satisfied and 5=very satisfied. **Others = all who are not transformative.

INcRease signifiCantly INcRease TOTAL

Food and beverage 20% 67% 87% $17 billion and up 19% 64% 83% Transformative 23% 58% 81% Consumer electronics 20% 60% 80% Non-transformative 13% 63% 76% Western Europe-based respondents 18% 53% 71% U.S.-based respondents 22% 40% 62%

EXTERNAL PROVIDERS:

Companies are looking to expand their use of external resources/providers for digital marketing and its associated integration with existing marketing processes

Companies have a great deal to do. But again, 43% say processes. [Note that throughout our analysis of rela- that their IT departments are already so busy that they tionships with external providers, there is virtually no cannot assist with digital marketing technology needs. variation among the various demographics—including Necessarily, companies are going to be relying more the findings for transformative companies.] on external providers of digital and related marketing services. • External for creative, but then these same external agencies take the lead on integrating with existing The models in place today range from lightly to more internal marketing processes Twenty-seven percent heavily outsourced: of companies, again roughly equivalent between overall and transformative companies, say they prefer full-ser- • External for creative; integration is handled inter- vice digital agencies able to integrate external digital nally Today, 39% say they tend to work with digital marketing with internal marketing processes and back- agencies for creative development but then rely on their end operational processes. own IT department to integrate digital marketing processes and leverage insights with back-end operational

22 | the race is on • Outsourced to agencies Seventeen percent say they processes. And 58% say they are open to working with use marketing agencies that can provide front-to-back consultants who can help manage both front- and back- digital marketing capabilities. end digital marketing processes.

• Outsource to agencies—and others Finally, 10% say As for marketing agencies and related firms, 46% of exec- they hire third-party technology providers in addition utives say their companies are seeking partners that can to current ad agencies and software providers to enable assist with increasingly sophisticated data and IT strategies. front-to-back solutions. Meanwhile, asked to describe which orientation best Looking ahead, 59% indicate that their companies are describes their current status, the majority of digital mar- amenable to adopting a greater degree of outsourcing— keting relationships are “in play.” specifically, a model where a third-party, full-service technology provider is able to assist with a greater degree of both front-end marketing and back-end operational

Figure 13 What is the state of your digital marketing relationships?

OTHER*

Transformative

“In play” 59% 57%

Open to switching partners 45% 38%

Satisfied with current providers 38% 42%

Actively seeking to expand our use of external providers 14% 19%

*Others = all who are not transformative.

Figure 14 What is the state of your digital marketing relationships?

Outsourced Outsourced to Overall Differences by “model” to agency* Technology cos.*

Satisfied with current providers 38% 33% 31% Actively seeking to expand use of external providers 15% 9% 15% Open to switching providers 44% 56% 54%

*External for creative, but then these same external agencies take the lead on integrating with existing internal marketing processes.

**We tend to rely on full-service, third-party technology providers—beyond our current ad agencies or software providers—who execute both front-end marketing and back-end operational processes.

Companies need to do more to foster collaboration across the enterprise

Truly transformative companies recognize the need to So a key question to ask is to what degree does this already involve the whole of the enterprise. Meanwhile, even existing operating data overlap with the needs of mar- active companies cite involving groups well beyond marketing? And to what extent might a marketing-focused keting as a key goal. Unquestionably, the end-game is approach help meet the needs of operating managers? collaboration across the whole of the enterprise. One word of caution comes from a U.S. paper products This view is well supported by the finding that 43% of executive. “If your data collection has been in silos, then executives say their CEO takes ownership of digital mar- more than likely you’ve got garbage. People doing ‘their keting across the enterprise. Moreover, this finding is own thing,’ conducting their own analysis on behalf of remarkably consistent across all segments examined— their own function—they’ll get skewed results.” So to although it spikes to 57% among food and beverage “take things to the next level,” says the executive, “you’ve executives. To have so much CEO involvement at these got to establish a master data file, so that everyone is work- companies is a key indicator of how much they value the ing with the same, reliable, clear data.” importance of digital marketing.

Interviewees, meanwhile, say they recognize they need to do more to involve groups such as logistics and new product development in their digital marketing initiatives. A wide range of groups can benefit from sophisticated strategies.

But as VCCP me’s Mattey explains, without sound leadership, this can lead to underinvestment: “There is data in marketing that can benefit logistics or finance or NPD— and vice versa.” Groups like logistics and manufacturing may have long been collecting, analyzing and acting on POS data to optimize production, fulfillment and related processes. However, the work has been done in silos, with the value of sharing not always readily apparent to all.

24 | the race is on The r ise o f “ Business I ntelligence”

What these challenges mean, says Mattey, is that “you need someone to step up and take leadership.” And that’s most often the CEO, CMO “or maybe the CIO and preferably all three.” And once the initiatives are under way,

“whoever is leading needs to work closely with everyone concerned to keep everyone engaged.”

One possible approach is the development of a business intelligence (BI) department. Here, says Mattey, companies are creating a data-focused function with a senior member reporting to the board or one rung below. “We’ve seen this so far at two major companies,” says Mattey. “These BI groups are drawing from all over the organization, taking a person from the finance team or the marketing team, the production and logistics team, with the goal of pulling together all of the pools of information.” This is a highly efficient approach, enabling these companies to refine data collection methods, establish customer master files and conduct more sophisticated analysis.

All of this, says Mattey, “will lead not only to more targeted and effective marketing, but also operational improvements throughout the company.”

Ownership ManagemEnt No Role

CEO 43%* 29% 19% CMO 43%** 38% 13% Brand Managers 38%*** 43% 14% CTO 25% 56% 14% CFO 18% 44% 34% Regional Managers 16% 54% 21% COO 20% 42% 26%

*57% among food and beverage firms; **69% at transformative companies; ***53% at companies $17b and up.

Figure 16 How active are the following groups in terms of participating in digital marketing stRategies?

O verall Transformative

Sales 75% 85% New product development

70% 81% Customer service 66% 85% IT

63% 69% Admin/finance/HR

43% 51% Logistics 38% 42 % Supply chain

34% 42% Manufacturing

28% 38%

26 | the race is on QUESTIONS F OR REFLECTION

Are you taking full advantage of today’s opportunities in digital marketing? How do you know?

How effective is the collaboration between your IT and marketing teams? Does your marketing team have adequate access to IT resources? Does your IT team have appropriate knowledge of today’s marketing technologies?

Is your spending between traditional advertising (paid media) and content-driven appeals (earned media) optimized? Are you cultivating opportunities to “go viral”?

Are you using social media to optimum advantage? Are you scouring the digital world for comments, both positive and critical, about your organization and its products and services? Are you responding rapidly? Appropriately?

What steps are you taking to recognize customers across channels—to achieve a “single view” of each customer?

Are your web and mobile e-commerce capabilities integrated with your overall marketing strategies?

Are you doing enough with big data? How do you know?

Do your logistics, new product development or supply-chain teams have data that would be relevant to marketing—and vice versa? To what extent do your digital assets and capabilities reside in silos? What are you doing to coordinate data collection, sharing and analysis?

Do you have sufficient knowledge in-house to take advantage of today’s digital marketing opportunities? To what extent should you be partnering with outside providers?

Given the demands of a digital business era, to what degree are you reevaluating the whole of your IT platform? Should you be doing more to migrate towards the cloud? Should you be outsourcing more of your operations? Are you passive, active or transformative?

Digital marketing means different things to different people. Narrowly defined, digital marketing occurs any time a company uses an electronic tool to market to any customer. This could include a business sending an email, posting on a social media site or developing a web or mobile application.

But leaders are taking this definition much further. To them, digital marketing means gathering, reviewing and responding to customer information as often and as thoroughly and effectively as they can without violating privacy rules or personal comfort levels.

Where possible, in order to develop a more complete data picture, leaders are reaching out to groups beyond marketing to engage everything from IT and logistics to finance, new product development and supply chain. From there, data mining enables these companies to more closely determine the true drivers and influencers of sales effectiveness and overall performance—and take steps to optimize key moving parts.

All of this points to the need for ever-greater levels of technical sophistication. Certainly, the marketing department needs more from its IT team, but in many cases, the IT function lacks the needed resources. As a result, the future is one where companies will turn increasingly to outside providers to provide everything from focused, niche services to comprehensive technological backbones.

All seem to be investing more in digital marketing and related technologies. But today’s leaders are transformative. Their approach is all-encompassing, engaging the whole of the enterprise. Their lead, already significant, will likely become formidable should others fail to act. And indeed, active companies say they are on the move, fully recognizing that their end-game requires full-on enterprise transformation. Others are falling behind rapidly, more than likely losing enormous value in the process.

Moving ahead is not without its challenges. But sitting on the sidelines is no longer an option, as business today and increasingly tomorrow is digital. Marketing—and the rest of the enterprise— must evolve. About Wipro Ltd.

Wipro Ltd. (NYSE:WIT) is a leading Information Technology, Consulting and Business Process Services company that delivers solutions to enable its clients do business better. Wipro delivers winning business outcomes through its deep industry experience and a 360 degree view of “Business through Technology” - helping clients create successful and adaptive businesses. A company recognized globally for its comprehensive portfolio of services, a practitioner’s approach to delivering innovation, and an organization wide commitment to sustainability, Wipro has a workforce of over 140,000, serving clients in 175+ cities across 6 continents. For more information, please visit www.wipro.com

About Wipro Consumer Goods

Wipro’s dedicated consumer goods practice has over 3,000 consultants and deep expertise with global companies in the areas of digital transformation, consumer and retail insights, integrated trade and marketing, and value chain optimization. Wipro serves the unique needs of consumer goods companies in the agribusiness, apparel and footwear, food and beverage, home and personal care, and tobacco segments. Our comprehensive set of solutions and services are focused on the dynamic needs of global consumer goods organizations at every stage in the value chain from “Farm to Fork”, “Barley to Beer”, “Crop to Consumer”, “Fiber to Fashion”, and “Chemicals to Cosmetics”. Wipro’s Consumer Goods practice helps its global client partners do business better by creating market differentiation, reaching emerging global markets and connecting with the always-changing and growing power of today’s shopper and consumer.

About WCIR

Wipro set up the Council for Industry Research, comprising domain and technology experts from the organization, to address the needs of customers. It specifically surveys innovative strategies that will help customers gain competitive advantage in the market. The Council, in collaboration with leading academic institutions and industry bodies, studies market trends that will help provide organizations a better insight into their IT and business strategies. For more information on the Council, visit www.wipro.com/insights/ or email us at [email protected] ABOUT FORBES INSIGHTS

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