A Strategic Path To The Digital Consumer

Today, the distinctions between advertising and marketing have blurred. As communications increasingly become digital, every contact with a consumer is an opportunity to simultaneously impact your brand while also driving action. New forms of communication must therefore combine the ROI-characteristics of direct marketing with the brand characteristics of traditional advertising, according to Online Media contributors Saul Berman and William Battino. With digital consumers increasingly in control of their media experience and advertisers shifting their expenditure to more interactive, measurable formats, companies must move beyond traditional advertising to combine the granularity of targeting and measurement with cross-platform integration. To adapt and succeed -- especially in the current economic environment -- content owners, media distributors and agencies need to build a new set of capabilities now: cross-platform innovation, greater insights, open collaboration and digital processes. The Changing Scene Digital formats -- such as social media, online video, mobile communications, gaming, and advanced TV - enable companies simultaneously to meet transactional and brand-building objectives. Four primary trends blur the boundaries between brand advertising and direct marketing. • First, consumer adoption of new formats. Consumer behavior has changed forever. Consumers are much more digital-savvy now; and crucially, they're willing to provide personal information in return for perceived value and are much more ready for permission based advertising. Companies that excel in this form of advertising will almost certainly capture new revenue. • Second, a shift in advertising expenditure. Spending is moving from traditional advertising to measurable, interactive marketing. Combined with the spending contraction in the current recession, this kind of marketing requires smarter adverting, and doing more with less. Digital online formats will permit advertisers to measure and analyze cam-paign results more effectively in order to prove the value of their expenditure. • Third, the digital migration of platforms. Traditional boundaries are fading, creating opportunities for innovative business models for content platforms. Thus advertisers that previously focused on delivering either ROI-driven marketing or brand-oriented advertising can cater to both sets of objectives. The result is what we call "brands-actional" advertising. • Fourth, the emergence of new capabilities. Game-changing moves by both new entrants and existing players are spurring new types of innovation, challenging existing business models, and accelerating the pace of change. Some new components (such as ad options and vertical advertising networks), widely accepted, have become "business as usual." In response, media and entertainment (M&E) companies have to move beyond traditional advertising to consumer centricity. Becoming consumer-centric requires a combination of granularity - the ability to target desired consumers while measuring results -- with cross-platform integration -- the ability to reach a consumer seamlessly across individual platforms. Yet content owners, media distributors, and agencies have responded insufficiently to these changes, in part because of significant industry hurdles. Those hurdles include : investment fears for risk of cannibalization of traditional revenue streams; limited cross-industry standards regarding formats, processes, and most importantly measures; a "data glut" across the industry that fails to provide real insights; and operating silos that inhibit cross platform campaigns. Enabling Consumer-Centric Marketing No matter where M&E companies first focus as they move toward consumer-centric marketing, they must start testing new models that can combine both granularity with cross-platform reach. Regardless of the chosen path to reach consumer-centricity, becoming competitive and overcoming substantial hurdles will require a fundamental change in capabilities. New capabilities across four areas hold paramount importance as traditional advertising yields to consumer-centricity: creative, insights, collaboration, and workflow. • Creative means moving from media-centric development to cross-platform innovation. This requires experimentation across platforms and consumer participation in the crea-tive process. The consumer, especially the younger consumer, is no longer just the "audience." He or she is simultaneously reader, editor, and marketer. • Insights means moving from disparate data to greater insights. The future requires in-sights to be seamless and more granular, using tools such as integrated dashboards to enable decision-making. For example, significant new insights will come from set-top boxes that will enable and transform interactive targeting in areas like cable, telecommunications, and satellite. • Collaboration means moving from proprietary models to open collaboration. A new set of partnerships - such as peer collaboration between cable companies or content collaboration with ad networks - is needed across the evolving ecosystem to exploit opportunities, enable scale benefits, and deliver efficiencies. • Workflow means moving from manual and analog to automated and digital processes. New tools and applications can deliver end-to-end processes, from automated micro-versioning to digital inventory optimization. As the industry heads toward consumer centricity, participants are indeed taking diver-gent evolutionary paths based on their legacy stronghold positions. The speed with which a company reaches consumer-centricity will depend on its starting point, business mix, and propensity to innovate. Most companies are likely to start either by deepening their ROI capabilities or driving cross-platform integration -- rather than on both. But even companies picking a more deliberate, gradual strategy need to explore new models along both dimensions now to sustain and protect their revenue in the future.