What you missed at the management conference: the digital economy in 90 minutes
A few weeks ago Chicago Booth held its 61st annual Management Conference. One of the sessions at that conference was a panel discussion (I moderated) about marketing in the digital economy. We had outstanding panelists participate – Ryan Shamir from Kraft Foods, Jason Keith from Digitas, and Ron Gibori and Girish Pai from Idea Booth. We also had an outstanding audience that raised many important issues and questions about digital versus offline media; the role of social media in business-to-business and mature product contexts; how IT and marketing groups were coping with issues such as big data and new software used to monitor online activity; the role of analytics, and the need for marketers to be comfortable with statistics and concepts from computer science; lessons from the digital age for those using traditional media; differences across countries in the role of digital media. etc.
In this post, I will talk about some of these issues.
The topic of the discussion was very broad, and no 90-minute discussion could have done justice to the topic. The digital economy, broadly construed, can mean a lot of things. At a macro level it encompasses issues faced by governments such as movement of digital goods and services across borders, and issues of piracy and hacking at the highest levels, even by governments. Within a country, there are issues of privacy, taxes that consumers have to pay when making purchases online, and piracy that governments need to deal with. In many countries, the digital economy has resulted in a significant reduction in waste due to the availability of up-to-date information (e.g., fishermen in Kerala, India who use cellphones to receive real-time market prices and determine which market along the shoreline they should head to). The digital economy has even improved health outcomes (e.g., Operation ASHA, an NGO based in India which aims to eradicate tuberculosis, can better ensure compliance on the part of patients undergoing treatment by using fingerprint-based systems to record and monitor the consumption of medicines).
The digital economy has created new business models, new products, new promotional tools, and new pricing approaches. For example, cloud and related cloud-based services such as Dropbox are proliferating. New types of products that are entirely digital in nature such as movies streamed on Netflix are widely available and accessible. New promotional tools such as banner ads, search and search ads, social media are ubiquitous. New types of pricing, such as for Office 365, are increasingly popular. We even have new virtual currencies such as Bitcoin!
Of more immediate concern to marketers is the traditional ecosystem comprised of the consumer, the company, the channel, and the communication media. This ecosystem has been transformed, and some would say upended, by the digital age. In the past, if you were selling ice cream or detergent, you did some “pull” advertising on TV or in print media, dropped some coupons in the daily paper, and got the supermarkets to stock your product. Then you waited for your monthly syndicated sales report, which would help you decide what needed to be done next.
Today, it is a completely different world – an ice cream brand can team up with a cellphone provider on a hot day to send a consumer an ad or a coupon while he or she is walking past a store. If I sell detergents, I can tweet during a Superbowl blackout about how my detergent cannot solve the blackout, but that it can take the stains out.
As marketers, we now have a different media landscape with search, social media, etc. We have a different collaborator landscape – the mobile service provider and an ice cream brand. Most important, however, is that my ability to measure the consequences of my actions has improved. If I am Kleenex and I find more cold related searches from some part of the country, I can dial up my marketing in those areas and then assess what happens next. The nature of the media, combined with the ability to measure the effects of marketing actions, has also resulted in a renewed interest in the concept of “test and learn.” Such experiments were often expensive when dealing with traditional media like television advertising. With digital media, however, carefully executed and controlled experiments can be a valuable source of information.
We discussed several other topics as well. We conversed on the need for top management that is willing to invest in infrastructure and that encourages constant monitoring of what is happening offline and online. Related to this, a firm needs to be prepared to make decisions at short notice so that it can organize a rapid response to unfolding events and not get bogged down in bureaucracy. We also discussed the need to ensure that these rapid responses tie in with the overall marketing strategy, message, and positioning of the brand (for example Tide’s debut on the race track and support for victims of natural disasters). This requires management to have an intimate knowledge of what the brand stands for and to ensure that all activities “stay on message.” Finally, we discussed the importance of associating brands with a key story or message, and to then engage current users to amplify that message to future, potential users.
All in all, the audience and the panel discussed a variety of issues that marketers are likely to be wrestling with in the weeks, months, and quarters to come.