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Jim Yu

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The Sudden Rise of the Digital CMO

Posted: 06/04/2013 5:30 pm

In the world of corporate marketing the most talked about article in recent weeks has been "The Rise of the Digital CMO" in the Harvard Business Review blog site, by Jake Sorofman, a research director at Gartner.

The piece is designed to be provocative -- and it does just that from its very first sentence: "Fact: When it comes to marketing spending, analog still outstrips digital by a factor of three to one." There's no disputing hard numbers, but you can argue their context. The reality is that, seven and eight figure marketing budgets aren't the appropriate measurement when thinking about digital marketing. Billboards and airplane advertorials may still have their place in the marketing mix, but the innovative approaches employed by both the most progressive enterprises, large and small, prove that measuring a solid earned media strategy is not done exclusively through the traditional marketing budget.

Thus, when Gartner predicts that by 2017 the CMO's technology budget will exceed that of the CIO, and that 25 percent of enterprises will have hired a "Digital CMO," a Chief Digital Officer, by then, Gartner is, in fact, extolling the virtues of earned media.

That doesn't quite jive with Sorofman's argument. It's the same with Sorofman saying that CDO's create digital experiences around the mutual reinforcement of social, mobile, and cloud information... even as he's telling us we're not there yet.

In fact, we are there. CDO's are increasingly appearing on company management pages of leading enterprises, and they are popping up in the press because of the importance of earned media. Organizations are looking at all the marketing tactics that drive revenue, and finding that earned media drives tremendous return.

So what is earned media? It is social media, blogs, public relations, and organic search. And it has become increasingly the largest and most important marketing tactic. It's measurement tools include tweets, likes, shares, pins, +1s, views, comments, dialog, and engagement -- and, in turn, the metrics that point to how this fuels business. Earned media is not the Mad Men era of paid media, made up of print, television, banners, sponsorships, and pay per click marketing. Today it consists of an executive tweeting an infographic to his or her one hundred thousand followers, not broadcasting a radio advertisement to thousands of strangers.

In our last blog, "Pinterest and Quora for Business? Ignore at Your Peril," we discussed how Pinterest and Quora are rapidly growing. Enterprises have jumped on the Pinterest for Business 'PforB' bandwagon and it's tools designed to help brands engage users. Already, 60 of the top 100 brands now have an active Pinterest page, and, on Quora, 84 of the top 100 brands have at least one discussion thread dedicated to them. The large business adoption of these two earned media platforms shows that businesses are actively valuing platforms that empower users to share brand content.

How big is digital marketing, and specifically earned media? And, which channel drives the most revenue? Out of every tactic in the earned media mix, organic search is the largest channel. Most cutting edge organizations are actively measuring their digital marketing returns, and validating these findings. For example, everybody knows 3M for Post-it notes and Scotch tape, but those consumer products represent just a fraction of this giant company. 3M is in fact a diversified conglomerate made up of more than 35 business units. Beginning in 2013, 3M manages these business units under five business groups -- consumer, electronics & energy, health care, industrial, and safety & graphics.

As you might imagine, all of these diverse technologies and products pose a challenge to potential customers who have an idea of what they want but cannot explain it in the precise technology terminology -- a problem only exacerbated by traditional analog marketing. For example, a query about 'industrial strength glue' results in hundreds of products -- a result more likely to scare off, rather than invite in, the potential customer.

For that reason, 3M has bolstered its search marketing program with collaborative filtering technology to look at the source of the query and then optimize product recommendations in real time. Thus, if you are an aircraft company asking about industrial glue, then you are not going to get answers about glue for PVC pipe, printed circuit boards or furniture manufacture, but only glues related to aircraft manufacturing.

Says Raj Rao, 3M's VP of Global eTransformation, "When the user lands on our pages, we use a big data platform and heuristics to get a better understanding of what the initial query meant.. Where possible, we optimize our product recommendations around the IP address of the visitor." You can't do that with traditional analog marketing.

But just because digital search marketing adds new capabilities to traditional marketing, does it
also add enough value to make a measurable difference to Sorofman's claims? Ask Rao. 3M's online surveys and Web metrics reports found that organic search traffic now accounts for the majority of visitor traffic to its over 4,000 web properties in over 175 countries, and that "the net present value of search is $1.6 billion if we assume that the Web only influences 30 percent of our customer purchase decisions." He suspects that percentage is much higher. Further, he adds, once search brings the potential customer to the products he wants, 3M can then bring to bear other digital marketing tools -- such as discounts, special offers, even training -- to not only close the deal but bring that customer back for future purchases.

These numbers convince us that while Jake Sorofman is right about the adoption path that digital marketing will take in the corporate world, he needs to take a second look at both paid and earned media adoption. And that rather than assuming, as Sorofman suggests, that they've got all of the time in the world to deal with the digital revolution in marketing, traditional marketing execs -- and their CEOs -- are already running out of time. This revolution has already happened.

 
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