Integrated Marketing Needs Hubscitebm.business.illinois.edu/shaw/mba/IT Survey article...Figure 3A Vicious Circle Traps Digital Marketers Today McDonalds, for instance, recently announced

T H E F O R R E S T E R R E P O R TD E C E M B E R 2 0 0 1

Integrated Marketing Needs Hubs

©2001, Forrester Research, Inc. All rights reserved. Forrester, Forrester eResearch, Technographics, and TechRankings are trademarks ofForrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copyor slide of each figure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usageinformation, go to www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the time and aresubject to change.

D E C E M B E R 2 0 0 1

Integrated Marketing Needs Hubs

Multi-channel marketing calls for industry change.

Advertisers should jointly build marketing hubs and

push agency collaboration and flexibility. Integration of

internal marketing teams will cut costly inefficiencies.

I N T E RV I E W S• Digital marketing has many believers but little evidence.• Advertisers prefer one agency for ease but Net specialists

for expertise.

A N A LY S I S• Organizational confusion stifles multi-channel development.• Marketing hubs will combine central coordination with

specialist execution.• CPG and auto manufacturers will make the first hubs.

A C T I O N• Appoint a hub champion from the brand manager ranks.

W H AT I T M E A N S• The knock-on effects hit media next.

R E L AT E D M AT E R I A L

G R A P E V I N E

E N D N OT E S20

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By Rebecca Ulph

With Jaap Favier

Paul O’Connell

UK Research Centre

Forrester Research Ltd.

Charlotte House

9-14 Windmill Street

London W1T 2JG

UK

+44 20 7631 0202

Fax: +44 20 7631 5252

European Research Center

Forrester Research B.V.

Rijnsburgstraat 9-11

1059 AT Amsterdam

Netherlands

+31 20 305 43 00

Fax: +31 20 305 43 33

www.forrester.com

The Forrester Report

I N T E R V I E W S

Poor Knowledge Keeps Net Marketing At Bay

Advertisers keep revving up their digital marketing budget, although they

lack proof of its effectiveness. Firms struggle with integrating digital media

with traditional advertising in their own organizations and with balancing

the ease of integrated agencies with the quality of Net experts.

MULTI-CHANNEL MARKETING BECOMES ESSENTIALUK digital marketing -- online display, SMS, email and interactive TV ads -- keepsgrowing apace, despite a forecast 3% downturn in overall marketing spend in 2001.1

Forrester interviewed 35 advertisers and found that 90% had run multi-channelmarketing -- integrated campaigns across digital and other, traditional media. Theyspend 6% of their marketing budget on digital media today -- and they plan to raise this to 9% in 2004 (see Figure 1-1).

Digital Marketers Champion Campaign Integration Those responsible for multi-channel marketing believe in the success of their efforts --or, at least, in their future success. All see campaign integration across media as essential,especially as their digital budgets grow by an average of 50% over the next three years.

“Our core customers research online extensively, so we target them with data-drivencommunication. For our safety message, we used TV and above the line to conveythe emotional message and digital to deliver rational information. These campaignsmust work together and support each other.” (Auto manufacturer)

“We need a consistent message across all the media we use. As a retail brand, ourmarketing and advertising is very time-sensitive -- we change the message everyweek. We need as many media as possible reflecting that message to ensure that it gets through to the right audience in the right time frame.” (Travel retailer)

“The value online elements add to existing communication strategies determinesour digital budgets. We expect to double our digital marketing budget betweennow and 2004 -- but that will only happen if we can deliver integrated plans thatsupport offline messages.” (CPG manufacturer)

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DECEMBER 2001 ©2001 Forrester Research, Inc. Reproduction Prohibited

Integrated Marketing Needs HubsI N T E R V I E W S

Figure 1 Marketers Plan To Raise Digital Marketing Budgets

Firms Can’t Quantify ResultsWhile operators of multi-channel marketing champion its effectiveness, they lack the datato prove it. The absence of industry standard metrics and the bias towards single-action-based measures like cost per click give rise to frustration and dissatisfaction.

“You can’t trust what publishers say, and it takes forever for media partners to getnumbers to you. We did a Valentine’s Day partnership with an online media propertyand still haven’t heard back from them -- I can only assume that it’s because of badresults.” (Gift retailer)

“Measuring digital effectiveness is notoriously tough -- especially figuring outwhich marketing caused which activity. Even with all my online marketing, I stillcan never tell whether consumers actually went into a store and purchased afterthey received a call to action online.” (General retailer)

“Online tracking systems break down when the user sees a banner but doesn’t fill in a form there and then. I lose track if they take no immediate action, and if theygo to the site later, I don’t know that. We want payment by results -- publishersmust up their ante in tracking capabilities.” (Financial services company)

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©2001 Forrester Research, Inc. Reproduction Prohibited DECEMBER 2001


Source: Forrester Research, Inc.

“How is your marketing departmentorganized internally?”

1-2“What percentage of your marketingspend is on digital marketing today?In 2004?”

1-1

0% 5% 10% 15% 20% 25% 30% 35%

>20%

15%-20%

10%-15%

5%-10%

1%-5%

0%-1%

None

Won’t say

Base: 35 companies Base: 35 companies

eMarketingintegrated,

brandsseparated

26%

eMarketingseparate,

brandscombined

17%

eMarketingseparatebrands

separated11%

20012004

Percent of companies

eMarketingintegrated,

brandscombined

46%

ORGANIZATIONAL DISCONNECTS CONSTRAIN PROGRESSOf our interviewees, 46% have one marketing team handling all brands and channels,while 26% combine multi-media expertise but separate by brand or sales channel (seeFigure 1-2). Twenty-eight percent of the firms interviewed develop and run campaignsfor digital media in isolation, incurring excess cost and organizational problems.

“We don’t have a special online advertising division. Online remains an essentialmeans of communication but is not disproportionately important. We don’t have a special TV division so why have a separate online division?” (CPG company)

“We manage by product, without a central marketing division. I keep to my teamand don’t talk to the rest of the company much -- why should I? However, aftereach of us do our own thing, we sometimes find that we bought the same services --and wasted a lot of money.” (Computer company)

“We have a brand marketing department and a separate eCommerce department,with poor communication between the two. Overlap between roles and personalagenda issues get in the way, and everyone is rushed off their feet.” (Gift retailer)

Complex Agency Relationships Further Muddy The WatersNext to having multiple marketing departments, 74% of our respondents use a differentagency for digital work than for their other marketing needs (see Figure 2-1). Theseinterviewees resent the organizational burden that multiple agency relationships causebut give their digital agency an average score of 7.2 out of 10 (see Figure 2-2).

“I would like one agency to do it all, but my colleagues think we need specialists.So we use multiple agents -- this confuses us, and we step on each other’s toes allthe time!” (CPG company)

“Sure, I would like to go to one company -- not to one to do X and another to do Y and another to do my brand. But right now I need multiple agencies becausenone of them have basic knowledge across all options. In general, agencies need tomulti-skill more -- and improve their knowledge.” (Financial services company)

The 23% of interviewees without a specialist digital marketing agency scored digitalservices from their main agency lower -- an average of 6.2 out of 10, with 27% of theseexecutives rating the digital performance at 5 or lower.

“By having one agency, we get integrated promotions of online and traditional media.If you don’t use the agency that you already have an existing offline relationshipwith, you end up with incompatible ideas. Digital agents just try to sell the latestmedia technique that that agency has dreamed up.” (CPG company)

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Figure 2 Seventy-Four Percent Of Marketers Have Separate Digital Agencies

“Sometimes our full-service agency annoys the hell out of me. They can’t keep upwith us, especially for new digital opportunities like loyalty schemes or search-termadvertising like eSpotting. I tend to get cynical -- they push untested technologieslike WAP so they can learn about it at our expense.” (Gift retailer)

INTERVIEW CONCLUSIONSBased on our interviews, Forrester concludes that:

• Firms try to integrate growing digital marketing with traditional advertising.

• Internal organizational problems and lack of metrics aggravate inefficiencies.

• Advertisers resent having to trade off digital specialization and marketingintegration when choosing agencies.

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“Do you have different agencies for digital media and traditional media?”

2-1

Different agencies

74%

Same agency

23%

Digital work done in-house

3%

Base: 35 companies

“How would you rate your digital agency?”(1 [very bad] to 10 [excellent])

2-2

Base: 21 companies with digital-only agenciesBase: 10 companies with integrated agencies

Percent of companies

Score

Digital-only (agencies’ average score: 7.2)

Integrated (agencies’ average score: 6.2)

86 74 5 9 100%

5%

10%

15%

20%

25%

30%

35%

40%

A N A L Y S I S

Advertisers Need Hubs To Manage Campaigns

For effective multi-channel marketing, advertisers will reorganize

internally and push for synchronized supply. Marketing hubs, in which

umbrella agencies and marketers oversee multiple expert suppliers, will

arise as advertisers force agencies to streamline processes.

CURRENT PROCESSES CONSTRAIN MULTI-CHANNEL EFFECTIVENESSIf marketers think they’ve got problems managing multi-channel campaigns now, they ain’tseen nothing yet. Poor appreciation of the effectiveness of digital marketing will keeptoday’s trial-and-error spirit alive -- resulting in budget-holder doubt of the reasons formulti-channel marketing integration and continued failure to invest correctly (see Figure 3).But as the importance of multi-channel advertising grows, marketers can’t afford to stayin this vicious circle.

Integration Will Become Vital As Required Investments GrowAs digital media moves further into everyday lives, the integration of digital and offlinecampaigns will turn from a headache into a migraine. Without cohesion between digitaland offline messages, marketers will:

• Lose mainstream consumers. By 2005, 69% of the UK’s adult population willhave access to the Web through a PC, 71% will have access to interactive TV and79% will access the Net via their mobile phone. Of the adult population, 67% willuse more than one of these devices. Brands that differ in experience across devicesand across offline media stand little chance of making a sustainable impact.

• Miss expanding retail channels. Customers already want to interact with retailersand marketers via multiple channels. In the US, 30% of consumers used more thanone channel when they contacted a company’s customer services department mostrecently, according to Forrester’s Consumer Technographics® 2001 North AmericaBenchmark Study.2 Retailer JC Penney discovered that customers that use threechannels -- Web, stores and catalogues -- spend eight times more than Web-onlyshoppers.

• Waste offline spend. Following their consumers, advertisers plan to grow digitalmarketing as a percentage of all spend, even in today’s uneven economic climate.

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Integrated Marketing Needs HubsA N A L Y S I S

Figure 3 A Vicious Circle Traps Digital Marketers Today

McDonalds, for instance, recently announced its biggest online campaign everwith Lycos. These advertisers spend millions offline, but badly integrated Netmessages will mean these budgets go to waste as users get confused -- for example, by different money-off offers on the same product across different media.3

Proof Of Integration Success ExistsFirms can already use various metrics to show the effectiveness of integrated campaigns.Techniques to measure and optimize digital marketing like TruEffect from Matchlogic andPILOT from Paramark let marketers quantify the effect of digital campaigns on:

• Instant and deferred reaction. As well as tracking instant campaign reactions(with metrics such as “flytxt’s campaign for Channel 5 generated 40,000 competitionentrants -- 31% of the total entrants -- and 90% of whom responded to textquestions within 15 minutes”) today’s technology can observe delayed action.4

Technologies like DoubleClick’s DART can track whether consumers exposed to an online ad visit the site advertised even days after exposure.

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Inadequate measurement

of results

Experimentalattitude to

digital marketing

Lack of integrationwith other media

campaigns

Budget-holderscepticism about

effectiveness??

? ??

• Brand awareness. Studies by companies like Dynamic Logic already show theeffectiveness of online advertising in brand building. Research from the US IABshowed that a soft drink brand that used banners to support an offline seasonalcampaign boosted brand association with promotional phrases from 16% to 25%with skyscraper ads and to 29% using rectangular ads.5

• Sales. Evolving techniques like marketing mix modelling will enable the trackingof the sales impact of each channel’s ads (see the August 2, 2001 Forrester Brief “WhyBranding Isn’t Enough”).6 For example, a dHTML banner to support a Cusson’sImperial Leather poster and TV campaign generated a 3.4% click-through rate.Cussons deemed this a success, but, in future, the firm can enhance such metrics bymarketing mix modelling to proxy the impact each medium had on overall sales.

Effective Implementation Requires Organizational ChangeFirms will see little return from digital investments and measuring advances if they don’t ensure that all internal and external parties share the results (see Figure 4). Withorganizational integration, advertisers can achieve key scenario marketing success factors(see the June 2000 Forrester Report “Branding Divorces Advertising”).7

• Mix and match metrics. The setting and measuring of metrics for multi-channelcampaigns requires collaboration and pooling of results. Campaign leaders willdraw on traditional ad measurement, such as viewer or exposure numbers, plusadvanced digital metrics -- such as quality of attention and progress through theaction chain -- to determine results. With the help of tools like BARB and relevantdata from agencies like TBWA, marketers will set their goals and learn howdifferent media targets form one common aim.

• Real-time optimization. With shared media results, marketers can continuallyimprove a campaign’s effectiveness and improve the consumer dialogue. If Webmetrics show that a banner ad performs better on MTV.com than Sports.com, TVmedia buyers will use this information to shift TV ads from ITV Sport to MTV.Net marketers working with print colleagues to plan an email campaign will avoiddisappointing customers that respond to the email with a catalogue request.

• Agency cohesion and cooperation. Successful multi-channel marketing calls forclose cooperation on both the advertiser and agency sides. The decision speedrequired to streamline messages across media or to change placements based onresult metrics demands instant communication and proactive action. Today’sagencies complicate marketer’s lives -- integrated agencies hog the marketer’s data and relationship, and digital agencies work in proud isolation.

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Figure 4 Successful Multi-Channel Marketing Requires Collaboration

MARKETING HUBS WILL RELIEVE ADVERTISERS’ BURDENFurther industry consolidation, with major agencies swallowing digital specialists, wouldsolve the problem of poorly synchronized campaigns. But it would also introduce the“big-company” culture that chokes the advantages that specialists bring to the industryand would fail to supply the speed that marketers demand. Better communication throughmarketing hubs -- through which large and specialist agencies cooperate to servicemarketers’ needs across the spectrum of media -- rather than industry integration willcure industry ills.

Specialist Agencies Will PersistIndependent specialists remain essential because:

• They push technology boundaries. In the UK, independents like flytxt and12snap have dominated SMS marketing -- 2001’s buzz concept. These specialiststhrive on encouraging innovation and industry development, as they must live onoff-the-wall concepts either developed internally or requested by clients. Largeagencies, however, don’t want to risk their client relationships with cutting-edgetechniques and rely instead on their strengths in traditional, proven media.

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Consumer hearsradio ad for newcar on way to work

Receivesintroductoryemail

Receives SMSoffering freetest drive

Checks outbrand Web site at lunch

At home, sees TVad with inter-active element

Metrics required Collaboration requiredPromotion: The ACME Car Company

Awareness generatedAudience demographics

Traffic by timeDemographics of registrantsNumber of users who register

Respondents to iDTV adAwareness generated

Which radio/TV ad placementprompts the most Web site traffic?

Does email or SMS drive a highernumber of test drives?@

Which programme prompts thehighest awareness?

Which placement drives the most Web site traffic?

Respondents by timeRespondents by originalsign-up method (email/iDTV)

Sign-ups by timeDemographics of sign-ups Which radio/TV placements drive

the greatest email sign-up?

Does the SMS prompt Web site usage?

Do the radio/TV ads boost SMSresponses?

Does the interactive ad prompt SMSresponses?

Which ad placement drives themost email/SMS responses?

Does Web site usage increase SMS responses?

8 a.m.

9 p.m.

• They provide know-how and unbiased advice. Independent specialists likeCommunicopia focus on a niche area of service and acquire both deep and broadknowledge, which every marketer can use. By contrast, one-size-fits-all agenciesprovide broad-brush advice, which loses its effectiveness when digital budgetsgrow. Specialists run as the separate arms of large agencies run the risk of bias and a restriction of learning opportunities and serve only their parents’ clients.

• They encourage “pick ‘n’ mix” flexibility. Marketers may require digitalcreative services but they prefer to keep print creative in-house -- or employmultiple suppliers across the same discipline. Cadbury Schweppes may wish tochange its reliance on third parties as internal expertise grows or demand services on an intermittent, seasonable basis. The faster reaction times and flexible workingpractices of independents will ensure that everyone can choose the best person for each job.

Marketing Hubs Solve Industry WoesPairing the marketer’s needs for specialists with the integration required for cross-mediacampaigns leads to marketing hubs. Forrester defines a marketing hub as:

A Web-based marketplace facilitating open communication and collaboration todeliver best-of-breed marketing services across suppliers and channels.

Hubs provide a Web-supported interface for contact between agencies and marketers.

• Marketers request specialist or coordinated services. Marketers will submitpitch requests to the hub, moving away from word-of-mouth or ad hoc advice-basedagency selection. Marketers supply the hub with all relevant information on anongoing basis and work internally to ensure efficient communication. If differentdepartments of Procter & Gamble submit conflicting briefs to a hub, it will showup immediately and let the users avoid costly duplication or conflict.

• Agencies address their core competencies. Agencies will respond rapidly to pitchesvia the hub, giving an up-front full supply of information. Specialists address pitchesor pitch elements relevant to their talents, and large conglomerates like WPP maychoose to coordinate offerings from individual specialists. For example, Unilevercould appoint Omnicom the main or “pivotal” provider but insist that Omnicomuses the hub to find -- and coordinate -- best-of-breed iDTV and creative agencies.8

• Hubs facilitate information flows. During campaign execution, the hub ensuresthe free flow of business-critical information -- such as brand values, campaign detailsand media measurements -- across all connected and authorized parties. Marketerslike Nestlé and agencies like Publicis supply data to the hub, where it is stored andcollated for future reference and used to guide decisions.

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Figure 5 Marketing Hubs Improve Information Flow And Service Levels

Hubs Satisfy Both Marketer And Agency NeedsWith hubs, advertisers no longer need to trade off digital specialization and marketingintegration. Marketers can have one key point of contact -- their pivotal provider -- aswell as specialist levels of service. Agencies also benefit through access to a wider customerbase (see Figure 5). Hubs ensure that:

• Metrics knowledge increases exponentially. Current procedures force thehoarding of knowledge like campaign success factors. The free flow of data across hubs means that all parties have access to all pieces of the metrics puzzle,encouraging joint development and implementation of future techniques. Withimproved metrics, hubs enable companies to break out of the vicious circle byshowing sceptical marketers the benefits of integrated campaigns.

• Marketers eliminate costly bureaucracy. Freed from the shackles of multiplecomplex relationships, campaigns will become fast and flexible -- banners andemail need only hours to implement. By pitching needs across a hub, supplierscapable of rapid turnaround will seize marketing opportunities. Advertisers likeRyanair wanting a fast reaction to external events like a BA sale could request aninnovative digital campaign and receive responses from experts within hours.

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Company 1Marketer

Major agency acts as apivotal provider running

specialist relationships onbehalf of marketer

Specialists

= Specialists

Company 2 Marketer

Marketer uses hubs to selectbest-of-breed specialists

and chooses to runrelationships internally

Major agency

Hub

• Niche agencies cost-effectively increase market access. Two years ago,boutique Web marketers were all the rage; today’s trendy agencies are iDTVspecialists like Victoria Real. Big agencies fall over themselves to compete, buyingin expertise and spending over the odds on small startups -- pushing up fees. Hubsenable specialist agencies to maintain their independence yet still reach a wideaudience -- and stop the hemorrhaging of big-agency cash on the next big thing.

ADVERTISERS WILL DRIVE HUB IMPLEMENTATIONHubs won’t come cheap or easy -- the functionality required compares with that offeredby private hubs in other industries, with a price tag that starts at £5 million (see the July2001 Forrester Report “Spending Wisely On Private Hubs”).9 Effective implementationrelies on a three-stage evolution in the way that not only agencies work, but marketers,too. Working hubs demand internal synchronicity across media partners and externalcollaboration between marketers of different firms to achieve economies of scale.

Hub Development Requires Competitors To CooperateHubs won’t just pop up organically. Major CPG and auto manufacturers will bite the bulletto jointly develop industry marketing hubs. Why?

• Critical mass drives buy-in and standardization. Unilever, Procter & Gambleand Nestlé control more than £300 million of marketing budget in the UK -- 10% of the market.10 This budget will convince major agencies like CordiantCommunications Group to work with the hub and will rapidly drive uptake andstandardization with hub systems. Agencies reluctant to come on board due toincreased competition or refusal to streamline procedures put themselves out of the running -- which none can afford to do.

• Big spenders have most to gain. As common wisdom has it, half of marketingspend is wasted -- but no one knows which half. Improvements offered by hubsdrive multi-million-pound savings as marketers directly track and influence results --leading to the shifting of budgets to the most effective media and the rationalizationof expenditure. Finding the wasted 50% won’t happen anytime soon, but finding1% would save the UK marketing industry £30 million a year.

• They share the same pain. CPG firms, in their cut-throat competition for consumerpreference, develop online CPFR with retailers to respond faster during jointpromotional activity (see the December 2001 Forrester Report “CPG: Online CPFRPays”).11 Marketing hubs offer the same flexibility and responsiveness in advertising.Joint development of a marketing hub will shorten the development time frame ata lower technology spend per manufacturer.

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• Hubs are nothing new. CPG and car manufacturers already cooperate ineMarketplaces and collaborative design -- Unilever invested £15 million in thecreation of Transora; Toyota and Peugeot intend to reduce R&D costs by jointlydeveloping a new European model. These firms have already bought into the costsavings and process improvements that eMarketplaces can provide. Collaborationto drive marketing efficiencies is a natural extension.

Hubs Will Mature As Participants Change Their RoutineBy 2007, millions of advertising pounds will flow through marketing hubs. Developmentwill take place in three stages (see Figure 6):

• 2002 to 2003: Youth hubs emerge. Advertisers like Kellogg begin to movemarketing decisions to a hub, using integrators with strong delivery and analyticalskills such as CGE&Y and building on simple standards like XML (see the May 2001Forrester Report “Fixing UK eCIs’ Skills Deficit”).12 Large integrated agencies likeHavas deconstruct processes to enable seamless working with other providers -- andto ensure neutrality when working as a pivotal provider.

• 2004 to 2006: Student hubs evolve as users amend processes. Major agencieslike Omnicom start to emerge as key pivotal providers. Investment in collaborationtechnologies like eRoom enables real-time decision-making and analytics, reducingweeks of phone calls and meetings to the work of days.

• 2007 and beyond: Adult hubs infiltrate supply chains. Pivotal providers likeInterpublic allow smooth collaboration, moving seamlessly from under-performingspecialists to emerging stars. Laggard marketers see the results of integratedmarketing campaigns feed into retailers’ online CPFR systems and drive cost andtime savings and increased sales -- and move to join related hubs.

Simple Steps Create The First HubsTo develop hubs, groups of marketers will build simple Web interfaces and move marketingdecision processes online. Hub developers must follow these simple steps:

• Step one: Make intelligent competitor overtures. Many attempts at competitorcollaboration don’t make it past the drawing board. Before marketers from Ford sitdown with their General Motors counterparts, they must determine their monetarycommitments, make plans for relinquishing control and negotiate key objectives --all essential ingredients for a working consortium (see the August 2001 ForresterReport “The Industry Consortia Lifeline”).13

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Figure 6 The Life Stages Of A Marketing Hub14




• Few metrics and data points shared• Two or three groups of advertisers in key sectors -- CPG, autos -- collaborate on

infrastructure• Agencies and specialists slowly follow.

• Tiny fractions of budgets involved (<1%)

• Agencies try to be pivotal providers but retain bias to preferred owned specialists

Youth

Student

Adult

• One or two major agencies develop strong pivotal provider skills

• Marketers in other industries form hubs, learning from first movers

• First movers and pivotal providers facilitate real-time data sharing

• Real-time campaign optimization begins

• Pivotal providers move seamlessly from under- to over-delivering specialists

• Majority of marketing budgets flow through the hub

• Key advertisers in all industries participate

• Full knowledge flow

• Sophisticated metrics shared and jointly developed

2001 2005200420032002 2006 2007

Time

Youth

Student

Adult

Marketers

Marketers

Marketers

= Specialists

• Step two: Start with a simple infrastructure. A hub built on XML and HTTPstandards lets marketers start small and react quickly. Consortia should pick easy-to-use systems -- like WebEx -- to drive the mass of users needed for successfulcollaboration. Novice hub developers should look at SAP’s integrated tools alongwith eMarketplace software from CommerceOne for true connectivity (see theDecember 2000 Forrester Report “Network Supply Chains Emerge”).14

• Step three: Initiate agencies. Intelligent marketers sell hubs to agencies beyondthe arm-twisting rationale of “if you don’t participate we won’t employ you”. Buy-instrategies must emphasize the improved access of specialists to marketers, theincreased client satisfaction and the growing investment agencies can expect onceworking hubs produce data proving the success of new marketing methods.

Marketers Have To Put Their Own House In Order Only those firms that streamline both internal and external processes around hub systemswill feel the full benefits. As a priority, marketers must:

• Establish key controls. The marcoms department must control digital marketingalongside other forms and act as the final arbiter of budget tugs of war. Youth hubsneed three levels of control: overall budget holders that control the release of projects;gatekeepers assigned to ensure that no conflicting or incorrect information issubmitted; and a hub “champion”, a rising star whose job it is to evangelize theadvantages of the hub.

• Educate marketers. Using hubs requires extensive internal learning to get themost out of the process. The hub champions should additionally be tasked withsupplying case studies, running education sessions and encouraging a “top-down”acceptance of hub technologies. Getting marketing directors’ explicit buy-inshould be a priority -- their validation will bring the troops around.

• Revamp isolationist internal processes. Today’s management hierarchies anddepartment-based budgets encourage an “every man for himself” outlook. Ultimatebuy-in will come from the introduction of internal win-win scenarios. Firms likeUnilever should base reward structures on entire campaign performance and usethe different media metrics to put collaboration-based goals into each marketer’sperformance targets.

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A C T I O NIntroducing hubs into everyday working practices takes time. To ensure the process goesas smoothly as possible, marketers must take four initial steps:

Appoint your hub champion -- but only after close grilling.To build the hub and centre it in every campaign needs a champion with three keyskills. First, the candidate must have the political savvy to boil down consortiaobjectives to everyday project targets. Second, the person needs an in-depthunderstanding of the marketing process -- one that is recognized by the peersthat he or she needs to convince to use the hub. Third, the candidate mustmotivate a team to bridge the cultures of IT, marketing and operations. Don’tlook for this person in IT: focus on brand managers with a history of pushingboundaries and pulling it off.

Set tight deadlines.With around 40% of marketing budgets spent in the last quarter of the year,Christmas 2002 marks the first big challenge for the new processes. To enableintegration into Christmas campaigns, hubs need to be operational by the end of Q3 2002. Realistic? Only for fast-moving advertisers with amenable agenciesand the discipline to keep vendors to tight deadlines. Risky? Yes. To limitexposure, the champion should make a shadow plan, including basic tools likeExcel spreadsheets, that can stand in if a hub module doesn’t hit the deadline.

Design campaigns for change.Campaign optimization only works if marketers are prepared -- and allowed --to rapidly dump campaigns that don’t work and have viable alternatives ready.Brand companies must send their marketing directors to time-management andcollaborative-planning training to breed a culture of reactivity and adaptability.To give them the tools to match the skills, the IT department must set up adatabase with the out-takes and spare footage from every campaign.

Hothouse internal data analysis gurus.Use third-party data analysts like Metrica to authenticate and cross-tabulatedata. But develop confidential, in-house expertise in analysis and application ofthe data to specific products and cohorts. Firms must start with the immediaterecruitment of young econometricians and then train the number crunchers inmarketing know-how for the next quarter -- creating campaign-data mavensready to maximize ad-spend returns by the time the hub launches.

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Integrated Marketing Needs HubsA C T I O N

W H A T I T M E A N S

Media will have its own Big Bang.In a world where long-term, short-term, and on-the-fly campaigns coexist,flexibility will be king. Not only will marketers analyze and react to campaignmetrics on a daily basis, the media have to get flexible, too -- TV stations willallow the reselling and auctioning of ad slots, and newspapers will hold full pagesfor pivotal providers to use for whichever campaign most needs the space that day.Media buyers will sit behind their own switchboards and multiple hub monitors --just like stock brokers -- but 24x7 to also cover late-night-TV advertising slots.

Security apps vendors find a new market.Big marketing spenders, hyper-concerned about security around new productlaunches, will insist on topnotch data security and even on private rooms withinhubs for ultrasecret pitches. Security vendors like i2 and SAP will get a boostfrom hub development, handling planning data from multiple participants andallowing users to shield data from other participants. They’ll deploy their newskills in eMarketplaces to secure financial industry and government participants.

Reactive retailers reap the benefits.Retailers able to respond to the new reams of data fed through manufacturers’CPFR systems will reap the commercial benefits. Stores will train ReactionManagers -- staff that check a “Daily Marketing Data” brief posted every day andrearrange displays to tap into the latest consumer reactions. They will recognizethat an SMS coupon campaign for beer will also sell more crisps; and anticipatea lunchtime rush for the new snack noodles advertised in a 9 a.m. email.

Collaboration breeds strange bedfellows.The most innovative marketers are found across, not within, industry verticals.Procter & Gamble, Ford and McDonalds may decide their obvious peers don’tmove fast enough -- and collaborate themselves on a multi-industry hub. Issuesof security matter less in an environment where your partners don’t compete --so daily working relationships ease. Gradually, competitors will beg to join. Fine --they can pitch in by financing the security infrastructure.

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Integrated Marketing Needs HubsW H A T I T M E A N S

R E L A T E D M A T E R I A L

Methodology

Forrester interviewed 35 marketing directors and marketing managers. We also spoke with16 technology and marketing agencies.

Agencies Interviewed For This Report

Related Research

December 2001 Forrester Report “CPG: Online CPFR Pays” August 2, 2001 Forrester Brief “Why Branding Isn’t Enough”July 2001 Forrester Report “Spending Wisely On Private Hubs”March 2001 Forrester Report “Streamlining Multi-Channel Banking”June 2000 Forrester Report “Branding Divorces Advertising”July 1999 Forrester Report “Marketing Services Road Map”

4i www.4i.co.ukDFGWwww.dfgw.co.ukDNA (UK)www.dna.co.ukDoubleClickwww.doubleclick.come-marketingwww.e-marketing.comehsrealtimewww.ehsrealtime.comFeather Brooksbank www.featherbrooksbank.co.ukManning Gottlieb Media www.manninggottliebmedia.com

Ogilvy Interactive www.ogilvy.co.ukOutrider North Americawww.outrider.comPixelpark (UK)www.pixelpark.co.ukQuantum New Media Services www.quantum-media.co.ukStarcom Worldwidewww.starcomworldwide.comThe Hub Communications Groupwww.thehub.co.ukZentropy Partnerswww.zentropypartners.comZinc www.zinc.co.uk

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Integrated Marketing Needs HubsR E L A T E D M A T E R I A L

G R A P E V I N E

Technology revitalizes the lunchtime meeting.In writing this report, we spoke with 35 marketers and 16 agencies. The marketers saythey don’t get enough information from the agencies; the agencies say the marketers don’tknow enough about new types of marketing. Hubs assuage this knowledge gap on acompany-wide level, but there’s a more fundamental disconnect here -- getting people toactually talk with each other both internally and externally. As hubs take the troublesomeaspects of relationship management away, marketers and agencies will have time toconcentrate on more pleasant methods -- good for Soho restaurants, if no one else.

……

Fantasy advertising -- cheap but effective.Did you hear that the Beckhams were about to be the new faces of Marks and Spencer?Or that Fabian Barthez was to spoof his lamentable performance during a recentManchester United versus Arsenal match in an ad for Tesco? Funnily enough, neitherrumour had any truth to it -- but both got the retailers involved significant publicity at a much cheaper rate than signing the stars would have done. In today’s cash-strappedtimes, expect more PR-grabbing fantasy tales -- at least, until someone sues.

……

Quick, everyone hide -- here comes the client . . .During one interview with a major UK agency, Forrester asked how different agenciesworking together for the same client managed their working relationships. The answer?“We’re fighting off the common enemy -- the client! They want the earth and they wantit now -- they don’t listen and won’t pay the real costs for what they want”. No wondermarketers feel alienated -- their agencies appear to regard them as an evil hybrid of Dr. Noand Darth Vader. Marketing would be so much easier without the clients . . .

……

There’s always Coca-Cola.Coca-Cola’s announcement that it will put a century’s worth of ad campaigns on thecompany intranet illustrates that the company is moving -- whether they know it or not --to a more collaborative world. At an estimated cost of £3 million, it’s a long way from thetrue knowledge-sharing capabilities of a hub -- but it will enhance marketers’ informationsources and encourage Coca-Cola’s use of Web-based technology. From such tiny seedsdo giants grow.

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Integrated Marketing Needs HubsG R A P E V I N E

E N D N O T E S1 Source: Zenith Media.

2 Customers blur the lines between channels. They are willing to purchase out-of-stock goods usinga kiosk at an offline store, fill out an electronic registration card for a physical product, and researchservices online.

3 In October 2000, dot-coms made up 45% of the £120 million UK online advertising market. InOctober 2001, it was 25%.

4 Source: flytxt.

5 Source: “Online Builds Brands” published by the US IAB in July 2001, available at www.iab.net.

6 Consumer goods marketers no longer only measure branding metrics but also determine ad impacton sales using a statistical technique called market mix modelling. The IAB should work withpioneers of this technique like Kraft or General Mills to conduct a market mix model analysisfocused on the Internet’s sales impact.

7 Magazine pages and TV units limit the content of offline ads. A networked world allows marketersto draw users into a dialogue where length is limited only by user interest. As a result, marketersmust evolve from designing ads around unique selling propositions to understanding consumerpurchase decision scenarios.

8 As the use of multiple eBusiness help firms mushrooms, companies find it impossible to manageproviders. Coordinated multi-provider offerings called services networks will emerge to reduce thiscomplexity.

9 Firms will turn to private hubs to improve collaboration with suppliers, but building a private hubwill cost buyers between $6.8 million and $52.9 million. To get the most from their private hubinvestments, companies must match their characteristics to anticipated benefits.

10 Source: Marketing.

11 CPG firms will have a hard time convincing retailers to go along with online CPFR. But onlineCPFR not only improves retail stock-in-store, it also provides additional information likecomparative market figures from ACNielsen to retailers via portals like Oracle’s 9i Portal solution.

12 No UK service provider delivers stellar strategy, marketing, design and technology offerings.Integrators must reassess their portfolios -- adopting pivotal-provider or specialist roles to ensurelong-term revenues.

13 Consortia strive for an impossible dream: a profitable, industry-controlled business enabling fullsupply chain optimization. They must start with more modest ambitions to solve near-termbusiness problems.

14 Companies need a mechanism to benefit from all the information flowing between partners in an eBusiness environment. Network supply chains (NSCs) will act as the prime facilitator in thisonline collaborative environment. With NSCs in place, companies will decrease the chances ofpotential liability claims and improve inter-company collaboration.

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Integrated Marketing Needs HubsE N D N O T E S

Integrated Marketing Needs Hubscitebm.business.illinois.edu/shaw/mba/IT Survey article...Figure 3A Vicious Circle Traps Digital Marketers Today McDonalds, for instance, recently announced

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