What's Gonna Move the Markets?
The Internet has gone from the ultimate silver bullet to the ultimate disappointment on the expectation-reality spectrum. The pendulum now is swinging toward an uncertain center in which the Internet is generally regarded as a tool that no one is sure what to do with.
Five macro trends will drive marketing and information technology spending in the near future. These concerns are keeping client CEOs awake at night and client strategy teams spinning like dervishes. Attention will focus on solving these problems or implementing programs that achieve these objectives.
Monetization. Everyone had a land rush mentality. Every company you can imagine built a Web site. In fact, the average firm has nine sites built at an average cost of $700,000. Finding a way to generate cash or impute revenues from Internet investments will be the primary focus of everyone in this space.
After significant investment in people, platforms and software, very few are making money. Fewer have figured out a way to either calculate return on investment and/or the contribution of Web sites and Web-based marketing to overall traffic, volume or profits. Some firms have boldly announced that ROI does not matter. Assiduously avoid their stock.
Many top clients have decreed, "Not another dime will be invested until we understand what we've got and how it's going to pay out." Yet according to a recent study of 120 firms in the United Kingdom by Akamai, one-third have not even attempted to measure the payout. Half of the remaining firms could not give a clear definition of how they would calculate ROI for Web investments or compare them with offline spending for either marketing or IT.
Given the significant upfront investment required, do not expect much forward movement until firms understand ROI, either strictly in terms of the Web or in terms of how Web sites, sponsorships, banners and e-mail campaigns influence overall sales. Smart agencies will help clients make business cases and find work-arounds for the broken promises made by hardware and software salesmen.
Aggregation. Success on the Internet is a direct function of usability. If you present easy-to-understand, clear pathways for use, you win. If not, you lose. The next logical step in making the Internet easier to use is to aggregate data and functionality to better serve online customers. The problem is that the key areas under discussion clearly help marketers while their value and utility for consumers remain in doubt.
• Universal passwords. Microsoft, AOL Time Warner and a Sun-led group are working on universal sign-on and verification schemes. These tools would store all pertinent customer information like user IDs, passwords and credit card numbers so that shopping, sign-ups or registration could be done with a single click. The downside is that less-than-benign mega-corporations then have access to millions of consumer records that could be married to purchase histories and records of online activity.
• One-view financial services. Long the dream of financial firms, this idea rests on screen-scrapping technology, pioneered by Yodlee, that displays every record held by an individual on a single screen at the same time. Assuming you could get beyond the attending depression, the host site/screen would then be in the best position to counsel, up sell, cross-sell or profile you. The benefit to financial service markets is self-evident. I cannot determine what it does for me.
• Software standardization. E-commerce sites are consolidating functionality and the software that runs it. Many have adapted the Amazon-style center-tab navigation scheme. There are three or four viable shopping carts out there with no reason to invent another one. By year's end, two or three dynamic content management packages that are easy for retailers and their customers to use will emerge at the top of the heap. Given a broad array of pricing, loyalty and merchandizing challenges, look for sites to act much more like one another. This will increase conversion and maximize the effect of Internet-centric and multichannel shoppers, who are clearly the most desirable target customers.
Privacy. A considerable concern before Sept. 11, consumers will be very sensitive to what data are collected and how the information is used. Ironically, I expect a schizophrenic debate with Americans willing to reveal more to prevent terrorism but willing to reveal less to prevent effective marketing or customer service. Legislation has been introduced to address spam and Internet data collection. But even if these particular bills do not get enacted, privacy will be an issue that must be clearly addressed.
Integration. The desire to achieve efficiency, reduce cycle times and manage costs is driving clients to see integration on several levels. Many are groping to understand how the Web fits into their marketing tool kit. Some are experimenting with models to integrate imagery, offers, customer policies, channels and pricing. Others are testing ways to parse media spending in search of the elusive synergies technologists promised.
Most clients are insisting that their agencies work more closely and better together. Many, having slashed their own teams, require general, direct, interactive, promotion and public relations agencies to organize themselves and present integrated creative and media solutions as time-sensitive campaigns. Nobody wants to hand out a brief and get back five separate campaigns for the same product or service. The notion of shaping the charge and presenting a single brand voice has been generally accepted, even if internal politics, global distribution patterns and local nuances frequently get in the way.
Agencies should be seen as agents of change in this regard, talking to the ambition if not the immediate reality. Agencies should also use their resources in many geographies to increase cycle times, reduce costs and increase margins.
The leading 250 global clients are seeking ways to reduce and consolidate the number of agencies they use while also finding ways to present consistent brand and product imaging worldwide. Part of this effort will be a drive to integrate data streams, a concerted view of customers and use data mining techniques to plot forward strategy and tactics.
Migration. There is a 10-1 cost differential between serving customers by phone versus online. New technology and intra-industry developments spurred by the anthrax scare will prompt a big push to persuade all of us to accept and pay our bills online. Look for anyone who can to migrate customer service, order confirmation and tracking, replenishment ordering and frequently asked questions to the Web. Major airlines already use price incentives to promote online self-service. This trend should increase its momentum. It is also a fair bet that as wireless penetrates younger demographics there will be migration to SMS messaging for a variety of promotional uses, though it is doubtful that point-to-point messaging will catch on.
These five trends will either catalyze or stymie client activity. They represent openings for agencies to influence client thinking and behavior.