Marketing has lost its power. And now it needs to take it back.
When we spoke to a lot of multinational companies that are world-renowned in the skill of mass marketing — think Unilever, Procter & Gamble kind of companies, we realized a couple of things.
Firstly, these companies were the rock stars of the advertising era. They built giant power brands. They flooded supermarket aisles and local stores with their products. They commanded a price premium usually far in excess of generic offerings that others had to offer. And they had the biggest power of all — the ability to create and make great advertising that resonated with their intended customers, especially in the era of television and mass marketing.
This power did not really diminish with the advent of the Internet. These guys learned to create display advertising and interruptions even in the age of the Internet. Even today, these are still some of the biggest players in the marketplace when it comes to the advertising world. What these companies do, sets global best practices for their categories. And many people look up to these companies as the paradigms of how marketing ought to be done.
The end of the good old days.
Something is changing and changing fast. Which is what the advent of the Internet has finally started doing to old media like television, at scale. Consumers today, especially young consumers — whichever alphabet soup you prefer — whether it is Gen Z, Gen Y, Millennials, are increasingly turning away from the television. It’s not that they’re not interested in the audiovisual medium or that they’re not entertained by it.
In fact, they are probably consuming more than previous generations. But they’re not doing it on the TV screen. They’re doing it on their phones on their laptops and iPads. And this is only going to increase. Television has far better audiovisual content. Because of platforms like Netflix and Amazon Prime, young people are binge-watching TV and movie content like never before. But none of these need advertising.
Advertising was always an interruption during your entertainment, which you put up with and were grudgingly happy to pay your attention to because it got you the content for free. That’s how television worked. Their business came from selling ads to customers. They were the medium for advertising to reach intended customers and the advertising money that the channels earned allowed them to create content.
Now that Netflix and its ilk are getting their revenue directly from the consumer in a subscription model, advertising is not as powerful anymore. It is increasingly going to diminish in power especially as these young gen consumers keep coming of age.
So, what is likely to happen in 5 years or 10 years is that in one fell swoop the power of the advertising industry is going to diminish dramatically. And this power shift now means that for consumers to be reached by marketers in the old paradigm, which is to interrupt someone, you’re going to increasingly shift your dollars into digital. To try and attempt to disrupt or interrupt the consumer online from whatever he or she is wanting to do, and show them your ad. If that paradigm works at all.
Monsters at the gate.
That also means that you’re going to increasingly have to pay the likes of Facebook and Google and even Amazon for that matter to reach your customers. These giants control nearly 90% of global digital advertising spending. They suck it up. They are the ones who control the consumer data.
This means that if you are a mass manufacturer and you want to reach your customer, you are going to have to pay Facebook or Google to reach them. And Facebook or Google will tell you that they reached them. And you’ll have to take their word for it. Because they don’t share the consumer data. You’ll have to trust them to do the right thing even though that process is repeatedly being broken.
Secondly, you have no idea about who your customers are anymore. For that, you have to go out and do more investigation on your own to figure out who your customers are, what they like, or what they prefer. Because these giants are going to collect that data either given unwarily by your customers or sneakily taken across platforms.
This is the arena in which many of these mass marketing brands find themselves in. So far, they had relied on the power of their product, their packaging, their distribution strengths, and their ability to communicate in mass media to get them through.
The task of understanding customers was relegated to the need for “insight” so that the other P’s of marketing could be addressed at best. However, with the ability to market one on one with each customer increasingly being dependent on the new tech giants, these erstwhile giants of the mass media era are now in quicksand. They find their power slowly ebbing away.
Adapt or die.
I heard in a conversation with a marketer recently that the new trend was that CRM was now shifting to the CMO. And I was wondering when did marketing give up on the need to understand and serve customers? I thought that was supposed to be Job No.1. So, they are now in this unenviable position from where they have maybe a 5-year window to extricate themselves from.
Why did this happen? Because a generation of marketers grew up in business schools and companies where they saw the glory of their job in the ads they made. In the kudos and the Cannes awards and winning the Superbowl or the IPL seasons that they started believing their job performance to be.
To survive, all these companies will have to invest in building capabilities to understand and serve their customers at individual levels. They will need to have digital storefronts, have conversations with their customers, and continuously engage with them. This thinking will disrupt marketing teams across clients and fundamentally restructure them for the future. But the first critical shift is to wean marketing away from the paradigm that just by making a product, having it on store shelves, and making and running ads, they can continue to exist. Marketing now should focus less on the promotion part of their activity and shift to building relationships with customers part of their activity. Because if they don’t, they will have to pay someone for that service. And I can see Google, Facebook, and Amazon rubbing their hands with glee.
If they don’t start taking this new job description of marketing seriously, they’re going to be in trouble. They’re going to be held to mercy by all these Internet giants. Giants that will control their own customers, on their own shelves. And like Amazon, if they decide to keep entering product categories by creating their own products, in every product category they will have a giant competitive advantage. They will own customer understanding, distribution strengths, and the ability to communicate. The only thing they need to figure out is how to get stuff manufactured. Which frankly, in the era of the global supply chain is a commodity that anyone can buy.