Caveat: my nickname at home is Admiral Obvious, which alerts me to that you know what I’m writing about, because you are living it. Allow me here to just give today’s state of affairs what at Grey we called EmFaaahsis (emphasis).
Marketing has always been about selling stuff. The word marketing entered the lexicon in the 1500s, therefore is a 500 year old word and concept. Marketing was born back then when merchandise of the settlement was placed in a central place called the market. Naturally the practice of getting people to go there and buy your goods was called marketing.
Before this time of digital connectivity, and the customer in charge, marketing was about the brand shooting messages at its target customers so that when confronted with the marketplace moment they would buy.
When I was CMO at Time Magazine, I hired the Wunderman Agency to work with us on our direct marketing. I’ll never forget Lester Wunderman explaining 20th Century marketing very simply to me.
Lester said: “The brand finds out how to reach you with their ads, and then, when you are in the supermarket aisle, the idea is having an ad good enough, memorable enough to move your hand 12 inches from the competing brand you have been buying, down the shelf to OUR brand, so you become our customer.”
He went on to explain that direct marketing was growing beyond direct mail into the media. We got DRTV to work. It’s interesting to me that what Lester and others started back in the 1960’s would become Performance Marketing as we know it today.
The 20th Century Model, call it, began with defining targets and then using offline advertising – TV, radio, print and sales promotion primarily – to create awareness and appeal aiming at a transaction at the point of purchase.
This is not where we are today. We are transitioning to Relationshipping which is about engaging and fostering loyal customers across unified touchpoints. Why?
Over 6 billion people on earth have smartphones creating what Google has called micro-moment connectivity. Neil Hoyne, head of analytics at Google, author of Connected, cites the statistic that here in the US, 67% of all purchases begin with typing a search word in the search bar. I advise my clients, when evaluating the state of their marketing efforts, to begin with search. Without fail we discover that search deployment needs an overhaul. This is crucial because……
What we have now is Customer Centricity. Not Brand centricity.
Our age of digital customer centricity has produced the hybrid model, with its growth propelled by the COVID pandemic. Example, my supermarket, which is a 5 minute drive from home, allows me the three choices in the hybrid model: 1. Like always, go, shop, and bring it home, or 2. Shop online and go pick it up, and then if no time 3. Shop online and have it delivered.
Is it any surprise then that Performance Marketing spending now exceeds Brand Marketing spending? Customer engagement spending is still shifting from the traditional media to digital and connected media. It is also impressive to me that Retail Media is the fastest growing channel these days.
When I write about strategy in the next article, you’ll see that it begins with Performance Marketing calling for Brand Marketing to support it. Most consumers these days can connect to the brand, and they expect as much brand personalization as possible.
To conclude it is important for the C Suite to understand how this digital age change is changing Wall Street, and that it is essential to evaluate all the touchpoint spends using the final metric of CLV (Customer Lifetime Value). Why?
In my book Relationshipping I explain how Theta Equity Partners has developed CBCV, Customer Based Corporate Valuation, being engaged by Wall Street to predict corporate valuation.
It has always made sense that a growing customer base and growing purchases increases corporate value. But in our digital age customer metrics do this better than the 20th Century offline data practices of using discounted cash flow from the last quarter to forecast corporate value. It is becoming more and more important for C Suites to stop pumping the quarter with promotions that bring low value customers in, boost that quarter and the stock price temporarily, but deflate the next quarter because these low quality customers leave.
Without attention to building the customer base strategically – grounded in the strategic metric of Customer Lifetime Value (CLV) – corporate value is going to stall or even decline.Relationshipping builds value.
George Wiedemann was founder and CEO of Grey Direct for 21 consecutive years of worldwide growth; CEO of pioneer Silicon Valley email platform Responsys; and CEO of The DRUM Agency. He is founder and CEO of Relationshipping Consulting, focusing on bringing efficiencies to large-scale enterprises through deep budgetary analysis and process alignment. George is also a frequent contributor to TheCustomer.