Fresh from the deeply technical O’Reilly Velocity conference, I decided to tackle digital transformation from the opposite end of the spectrum at last week’s Innovation Enterprise’s Digital Strategy Innovation conference in San Francisco. This digital marketing confab featured a remarkably diverse slate of digital cognoscenti from CNN (division of Time Warner), U-Haul, Phillips Auction House, American Eagle Outfitters, and more – only to be topped by the all-star attendee list, which included senior digital marketing executives from AT&T, 3M, Genentech (division of Roche), Avery Dennison, MassMutual and several others.
These digital marketers – both speakers and attendees – are largely still struggling to put the customer in the center of their efforts, now twenty years since they first moved onto the Web. As I had a front row seat for the first Web wave, at a hot Web shop in 1995, then at an ad agency and dot.com consulting firms, I went into the conference wondering why the 2014 digital marketing challenge was so difficult. After all, hadn’t everybody figured this stuff out when they moved to the Web the first time around? The answer: it’s not the changes to marketing or technology that have raised the bar on digital transformation. The dramatic change in customer behavior and buying preferences are driving this revolution.
Consumer-Driven Change Driving Digital
Digital transformation is redefining many of the fixtures of our day-to-day lives, from television to the art world. Today’s marketing professionals are all becoming digital marketers, as they struggle to deal with dramatic change more so in customer behavior and preferences than in technology. For companies targeting millennials, the depth of change is even more dramatic, as for many of these young people, their only computer is their phone.
Many of the speakers have been largely successful with various digital transformation initiatives, forming the autonomous, cross-organizational teams so important to disruptive innovation. The attendees, however, were typically struggling with those same issues, making the conference valuable and interesting across the board.
Yet, some speaker organizations like CNN battle with the move to digital, as John Hashimoto, Senior Director of Product Management explained. This television leader maintains separate cable and digital divisions, in spite of the fact that the cable division deals only with digital video, and the digital division streams the same video. Reworking the organization to focus on viewers (and thus, better serving advertisers) rather than on now-obsolete business divisions is still largely outside their grasp.
It’s no wonder, then, that CNN is also struggling with the difference between chaos and agility. Disruptive change to a traditionally run organization, with formal, waterfall-style project phasing for dealing with change, largely ends up in various states of chaos. In contrast, those organizations who had adopted Agile methodologies were better able to deal with change as a more or less routine part of doing business. In fact, the more organizations took the spirit of Agile and applied it broadly across their digital marketing and other customer-facing efforts, the better able they were to deal with change overall.
The Rise of Omnichannel Marketing
Marketing is moving from multichannel to omnichannel. At first glance I thought this shift was merely a buzzword update, but the transition between the two terms identifies a fundamental trend in today’s digital world. Multichannel marketing came to the fore at the rise of the Web, where retailers in particular had to add web-based e-commerce to in-store and catalog channels. Omnichannel, however, represents more than simply adding mobile and social media to the mix. It heralds an interconnectedness among touchpoints that from the perspective of the consumer, blurs the distinction among channels.
With multichannel retail, one customer might buy in a store while another would buy online, or perhaps one person would buy via one channel one day and another the next. But with omnichannel retail at American Eagle Outfitters for example, a customer might bring their phone into the store, scan a barcode and comparison shop in real-time. As Chief Digital Officer Joe Megibow explained, if they decide to order, it’s up to the retail associate to recognize the online order is being placed in the store, and to fulfill that order in person. Other examples abound, with more on the way.
An interesting result of the trend to omnichannel marketing is the disappearance of channel conflict: where sales through a newer marketing channel grow at the expense of sales through a more traditional channel. From the customer’s perspective, there is only a single, technology-enabled channel that brings together all touchpoints. While channel conflict is still one of marketers’ top concerns, it is little more than an illusion for companies who have achieved levels of success with their omnichannel digital transformation initiatives.
Increasing Digital Backlash
Disruption always introduces risk, and one of the risks various speakers discussed was the backlash to various aspects of digital transformation. For example, the wearables market, which today is largely focused on fitness applications, is experiencing a “shaming” backlash. Do you really want a wristband to shame you for eating that piece of pie, or for not taking the stairs? Many such devices end up in a drawer after a few weeks as a result.
Even Facebook is experiencing a backlash of sorts. According to Jonathan Carroll, VP of Creative at LiveFyre, Facebook’s organic reach (that is, the number of people who “like” a brand page) dropped from somewhere in the 40% range a few years ago to less than 2% today. Whether this trend is truly backlash or simply the public growing weary of the novelty of corporate Facebook pages is hard to say, but provides a splash of cold water on today’s overheated social media marketing strategies nevertheless.
Another interesting backlash-related phenomenon might be called the “Etsy” trend, after the handmade craft e-commerce site: as an increasing number of products people might purchase are digital in form, there is an increased demand for fully handmade items made out of natural materials. Even among today’s “digital native” millennials, the resurgence of vinyl records is another harbinger of this retro trend.
Digital Convergence — Finally
At the O’Reilly Velocity show, most exhibiting vendors were hawking performance management and web/mobile testing tools. The Digital Strategy Innovation show also featured vendor exhibitors, this time centering on marketing automation and marketing intelligence tools. However, many of the attendees as well as speakers were struggling with web performance and web/mobile testing issues – indicating that the Velocity exhibitors would likely have found a receptive audience at the marketers’ show.
Bucking the Etsy trend is 218-year-old Phillips. The burgeoning digital art business at this auction house is also a peculiar harbinger of digital convergence, according to Megan Newcome, Director of Digital Strategy, as they have uncovered a market for artwork in pure digital form: jpegs, animated gifs, and digital video for example. The purchaser might receive nothing but a USB flash drive containing the digital file, a certificate of authenticity, and a promise from the artist to limit the number of identical files they might sell. And while we may certainly ask the perennial “is it art?” question, the bottom line is that such art has found new buyers, a younger, “hoodie-clad” audience quite separate from the art world’s traditional old-money fans.
Perhaps the best customer-centric digital story came from Toni Jones, Director of Social Media at U-Haul International. The DIY moving company is encouraging customers to photograph themselves with their moving vans and upload the images to U-Haul via social media for placement on the sides of other vans. Customers – who are now fans of the company, of course – can locate the particular van with their photo on the U-Haul Web site, so they can take their photo with the van that displays their photo. If a traditional, no-frills company like U-Haul can create such an infinite loop of customer involvement and interest, there’s no reason why any company can’t rethink their digital strategy to achieve similar goals.