Consumers are becoming more empowered and are, therefore, changing their buying habits. Analysts contend that manufacturers and retailers need to pay attention to how consumer behavior is changing if they want to stay in the game. Peter Dahlström and David Edelman, analysts from McKinsey & Company, assert, “Building on the vast increase in consumer power brought on by the digital age, marketing is headed toward being on demand — not just always ‘on,’ but also always relevant, responsive to the consumer’s desire for marketing that cuts through the noise with pinpoint delivery.” [“The coming era of ‘on-demand’ marketing,” McKinsey Quarterly, April 2013] Greg Satell agrees that the on-demand world makes the digital path to purchase more important and deserving of more attention by manufacturers and retailers. “E-commerce has … flattened the path to purchase,” he writes, “making it easier to buy on a whim. That favors the fast and frugal system … over the slow and lazy system.” [“The New Psychology of Marketing,” The Creativity Post, 4 March 2013] Jacques Bughin, another McKinsey analyst, teamed with David Edelman to envision how the On-Demand Era would change marketing over the next decade. They claim, “In 2020, there will be no more spam. Email in-boxes clogged with irrelevant offers or TV ads about something you don’t care about will be historical relics.” [“Advertising in 2020: The demand for marketing on-demand,” The Wharton Future of Advertising Program, March 2013] I daresay that most people would dismiss that prediction as optimistic; but, the authors explain their reasoning:
“To consumers, marketing will no longer be an intrusion but rather will offer personal, on-demand services. Wherever customers are in the physical or virtual world, at whatever stage of their decision journey, they will expect to find, choose, and interact with relevant content and experiences. Digital media drove a shift in marketers’ budgets to ‘always-on’ digital media, such as search, display, and social. The marketing on-demand world of 2020 will evolve to be ‘always relevant.’ For brands and their agencies, that will require a much more sophisticated and targeted approach to address the ubiquity of touch points so that they can be there at a consumer’s moment of need — no matter where or when it is. And, they will invest in massive analytical capabilities to support the brand’s stewardship of their customers’ information.”
Interestingly, Satell also believes that brands will play a larger role in the on-demand future. “Brands will become more powerful in the digital age,” he writes, “not less. Purchases will be more emotive and less rational. To compete, marketers will have to become experts on not only HTML5 and the mobile web, but also on the archetypal software of the human mind.” Asking marketers to become experts on the human mind might be a stretch — even scientists who study the brain are wrestling with that challenge. But cognitive computing systems will help marketers discover insights about consumer behavior. Alex Clifford spoke to a few experts and asked them for their thoughts concerning how on-demand marketing would change the retail landscape over the next decade. [“Content Marketing in 2023: Expert Advice on the Trends that Will Matter,” Content Marketing Institute, 12 May 2013] The experts told him that content marketing would receive much larger budgets in the years ahead and that the content created would be media rich. “As time goes on,” Clifford writes, “content marketers are going to make content richer and richer. More pictures. More video. We’re going to put more value into every article.” On the technology side, Clifford predicts, “In a decade’s time, marketing automation will be much more widespread and widely understood. So there’ll be lots more opportunities for consultants who can install marketing automation systems.” David Raab told Clifford, “As marketing automation becomes more widely understood, it will be purchased by less sophisticated companies.” In another article, Satell argues that digital technologies have changed the marketing landscape forever. [“Why Marketing Has Changed… Forever,” Digital Tonto, 13 February 2013] He writes:
“The marketing world, in large part, can be split into two camps. Traditionalists, most notably Bob Hoffman at The Ad Contrarian, believe that nothing has really changed except the tools. After all, while there has been a revolution in technology, basic human nature remains the same. Digital advocates, on the other hand, are sure that the realm of communication has changed so completely that the old rules have lost relevance. They believe that the traditionalists are just fooling themselves, grasping at any straw in order to avoid changing their old, tired ways. Having spent time in both camps, I have sympathy for both points of view. I’m equally frustrated with those who try to fit new media into old models and those who think that every shiny object represents a new paradigm. Nevertheless, it’s clear that something fundamental has changed and it starts with one of marketing’s most basic assumptions.”
The “basic assumption” to which Satell refers is that the path to purchase resembles a funnel. In the digital age, the funnel is more like a sieve. A consumer can easily enter and leave the path to purchase at any time. And increasingly consumers make contact with a number of touch points before they make a purchasing decision. This new digital path to purchase model is so different, Satell argues, that it requires different strategies to be effective and successful. Kyle Cattell adds, “With the availability of the internet stretching to other regions of the world we are becoming more connected than ever before. In addition, newer forms of technology like video chatting and upgraded social media sites, are allowing people from around the world to communicate with each other, for free in some cases. With the availability of all these resources, businesses can now target a global audience, an audience that past business owners dreamed about back in 80s, but now it’s here, and for everyone. Not only that, businesses can track you’re online searches and interests to specifically target the type of buyers they want. A little creepy but it works.” [“Digital Marketing is the Future,” Soshable, 1 July 2013] How well does it work? Shane Coker reports that a McKinsey study concludes it works really well. [“The top 5 consumer-driven trends in retail,” Bazaarvoice, 26 February 2013] He writes:
“For the first time ever, technology exists that can collect and analyze the massive amounts of data that consumers are generating with every click, tap, and even physical movement in stores. Retailers that can successfully capitalize on that data will have the ability to target and personalize their marketing campaigns based on granular data about customer preferences, behaviors, lifestyles, and real-time locations. Retailers using big data to its full potential can increase their operating margins by more than 60%.”
Dahlström and David Edelman indicate that, as digital technologies improve and proliferate, “consumer demands will rise in four areas.” Those areas are:
1. Now: Consumers will want to interact anywhere at any time.
2. Can I: They will want to do truly new things as disparate kinds of information (from financial accounts to data on physical activity) are deployed more effectively in ways that create value for them.
3. For me: They will expect all data stored about them to be targeted precisely to their needs or used to personalize what they experience.
4. Simply: They will expect all interactions to be easy.
For a more detailed description of each of these four areas, click on the link to their article. The article also contains an infographic showing what they believe the new consumer journey to purchase may look like. The one thing many analysts point out is that, as targeted marketing becomes the norm, marketers will have to fill personalized ads with informative and creative content if they are going to stand out and achieve a good return on investment. “Advertising will evolve in many ways that no one can predict,” write Edelman and Bughin. “But the trend towards ‘on-demand’ marketing is already clear and is placing new demands on marketers’ leadership and skills. Marketers cannot afford to wait until 2020 to be ready.” They’re right. Digitalization and mobile technologies have placed the consumer in the driver’s seat and have changed the face of marketing forever.