The Future of Marketing
It’s been nearly half a century since Philip Kotler first published his Principles of Marketing, which has defined the practice of millions of professionals worldwide ever since. It’s no stretch to say that before Kotler, there was no true marketing profession.
What made Kotler different than what came before is that he took insights from other fields, such as economics, social science and analytics and applied them to the marketing arena. Although that may seem basic now, it was groundbreaking then.
Today technology is transforming marketing once again. Although up to this point, most of the impact has been tactical, over the next decade or so there will be a major strategic transformation. This, of course, will be a much harder task because we will not only have to change what we do, but how we think. Here’s a short guide to the change:
From Messages to Experiences
In the 20th century, promotion dominated the field of marketing. While evaluating opportunities was important, advertising, especially on TV, was what drove budgets and, as a result, strategic thinking. Not surprisingly, coming up with the right message and broadcasting to the right people at the right time was of paramount importance.
Today, however, digital technology has enabled us to retarget consumers when they respond to a message and that has changed marketing forever. In effect, we must make the shift from grabbing attention to holding attention.
That means that brands will have to learn to be more like publishers and develop content skills. It also means that marketers will have to create a genuine value exchange rather than just coming up with catchy ad slogans and price promotions. Like it or not, we’ve entered a post-promotional paradigm.
From Rational Benefits to The Passion Economy
In the past, we focused on rational benefits to entice consumers to support our brands. Show that you are better in a clear, rational way and, so the thinking went, you could build a loyal following.
However, we’re not rational, calculating machines, but emotional driven creatures who are subject to an whole array of cognitive biases and new research has changed the psychology of marketing. For example, research shows that while a price promotion may spurs sales, it lessens enjoyment and can hurt the brand long-term.
In effect, it’s become clear that we are not operating in a rational economy, but a passion economy, where a sense of purpose determines how people will act and brand associations, rather than brand attributes, determine marketing success. So, we’ll have to learn to focus on share of synapse as well as share of market.
From Strategic Planning to Adaptive Strategy
Marketing strategy has always been numbers driven. We survey a small selection of the population and then scale up those samples to make decisions. Unfortunately, our numbers are always wrong. They are backward looking, fraught with error and based on confidence intervals that virtual guarantee that they’ll be wildly off one time in twenty.
However, big data is enabling an entirely different approach. Rather than wait for the results of controlled studies and then analyze them to glean insights, we can collect massive amounts of data in real time. Instead of fooling ourselves into thinking we have it right, we can become less wrong over time.
What we need then is a more Bayesian approach to strategy that takes uncertainty into account, allows us to manage complex interactions that we have so far ignored but always knew existed and enable us to prepare multiple approaches rather than building a consensus around the lowest common denominator.
From Hunches to Simulations
Big ideas have always been prized by marketers. The problem is that once you have a big meeting amongst a bunch of big egos, each of which has his own big idea, the ideas tend to get progressively smaller until ultimately the next marketing plan ends up being a tweaked version of the last one.
The reason this has always been the case is that big ideas are risky. Sure, by coming up with a new way of thinking you could end up a hero, but you could also end up fired. Marketers, much like everybody else, are motivated less by the sublime and more by the mundane aspects of life, like paying the mortgage, braces for the kids and so on.
Now machine learning technology is enabling a new approach in the form of marketing simulations. Rather than argue the merits of a new approach in stale conference rooms, we can test them in simulated environments built from real world data. As the Web of Things becomes more pervasive, this will allow us to truly co-create with our consumers.
In effect, by increasing our failures in the virtual world, we can improve our performance in the real one.
From Brands to Platforms
For most of the 20th century, businesses focused on developing proprietary value chains. As they became more successful and added scale, their competitive advantage would grow in terms of quality, efficiency and brand equity. Brands were, in effect, just another asset to be accounted for and then leveraged.
Digital technology is forcing marketers to rethink their historical approach to marketing. We are no longer operating in a scale economy, but in a semantic economy where the connectivity drives value and brands are becoming open platforms and ecosystems rather than assets to be closed off and protected.
This has already become clear in technology products, where API’s and SDK’s have become standard, but as the world of bits invades the world of atoms, all marketers will need to connect in order to survive.
So, while Kotler reconciled marketing with the standards of business, over the next decade we will have to reconcile marketing with the standards of technology and, as Martin Heidegger once argued, technology isn’t important because of what it builds, but because of what it uncovers.