Digital

Darwinism
Inthenewmarketingandmediaecosystem,
somewillfail,somewillthrive,andallwillhavetoevolve.
byChristopherVollmer
Partner
Booz&Company
2DigitalDarwinism
Assomeonewhohasdedicated50percentofhiscompanysmarketingbudgettodigitalmedia
comparedwithanaverageamongnationaladvertisersof5to10percentMendenhalliskeenly
awarethatdigitalplatformsandcapabilitiesaretransformingthewaysinwhichconsumersexpe-
rienceadvertising.Whatsmore,theyaredramaticallyreshapingtherelationshipsamongmarket-
ers,advertisingagencies,andmediacompanies.
Thisshift,whichhasbecomeincreasinglyapparentinthelastfewyears,hasbeenconfrmedby
Marketing&MediaEcosystem2010,alandmarkcross-industrystudythatBooz&Companyre-
centlycompletedinpartnershipwiththeAssociationofNationalAdvertisers(ANA),theInteractive
AdvertisingBureau(IAB),andtheAmericanAssociationofAdvertisingAgencies(AAAA).Aneco-
systemisanappropriatemetaphorfortodaysmarketingenvironment.Itisadynamic,complex,
andinterconnectedcommunityinwhichmarketers,advertisingagencies,andmediacompanies
dependononeanother,toacertainextent,tosurviveandthrive.Butitisalsoabrutal,competitive
arena,whereakindofdigitalDarwinism,orsurvivalofthefttest,holdssway,rapidlydistinguish-
ing winners from losers. Companies that possess certain preferred traits in their organizational
DNA or that have superior skills of self-adaptation are positioned to fourish in this ecosystem.
Thosewithouteitherfacealmostcertainextinction.
Themarketingandmediaecosystemhasarrivedatanevolutionarythreshold.Oldstructures
andwaysofworkingpersistbutarefundamentallychallengedbynewer,moredynamic,morein-
novativealternatives.Numerousdevelopmentshavebroughttheindustrytothistransitionpoint.
Consumershavemorecontrolandchoice.Theirmediausagehasfragmented.Manymoreadver-
tisingplatformsexist.Andmarketersareinsistingongreaterprecisionintargetingandaccounting
fortheiradspend.
The recent economic turmoil only accelerates this evolutionary transition. Companies across
theecosystemhavetoacquireordevelopthreedominanttraitstosurvive:relevance,interactivity,
andaccountability.
In 2007,
Hewlett-PackardCompany(HP)sponsoredanonlinecontest
todesigntheskinofHPsnewspecial-editionentertainment
laptop.Thecompanypromotedthecontestselectivelyin13countriesviathetelevision,
Web,andmobilechannelsofitsmediapartner,MTVNetworks.Butwordspreadvirally,
and more than 8,500 entries poured in from 112 countries in just over a month.The
contestsitegotmorethan5millionhits,promptingHPtore-forecastsalestofvetimes
its original estimate. And it wasall because we opened the doors and allowed our
customerstodesignourproducts,saysMikeMendenhall,HPschiefmarketingofcer.
DigitalDarwinism3
Mammals among Dinosaurs
HPsMendenhallsumsupthenatureofthisnewenvironmentbest.AttheANAsannualconfer-
enceinOctober2008,hedeclared,Web2.0,whichenablesmultiparty,multimedia,simultaneous,
digital conversations, has completely upended the traditional relationship between companies
and consumers. The power of a single individual to shape perceptions on a massive scale is a
dramaticandfundamentalshift.Itisnolongerjustaboutwherebusinessesputtheiradspend.A
comprehensivedigitalmediastrategyacrossalloperationsofacompanyisrequired.Asmarket-
ers,weneedtoaskourselves, Howcanwedriveefciencyandstakeholderengagementinthis
interactiveenvironmentwhilestillmanagingthereputationalrisktoourbrands?
HPhasnavigatedthischallengingenvironmentwell,ifadvertisingawardsandsalesresultsare
anymea sure.ItssuccessfulTVandWebcampaign,developedwithadagencyGoodby,Silverstein
& Partners, features such cultural icons as self-styled CEO of hip-hop Jay-Z, tennis champion
SerenaWilliams, and Olympic snowboarder ShaunWhite showing of the contents of their per-
sonalcomputers.Withitslaunch,HPstoppedengagingDellInc.inapricewaritcouldneverwin
andchangedthetermsofthePCmarketingdebate:Yourpersonalcomputerisnotabargain,its
yourautobiography,anditmattersthatitsanHP.Withinmonthsofthemulti-platformcampaigns
launch in 2006, the company ofcially passed Dell in global sales and market share, and it has
remainedinthenumberoneposition.
To maintain momentum and tap into the prodigious energy and input of its 18- to 35-year-
oldtargetconsumers,HPhassinceworkedcloselywithMTVNetworksonseveralmarketingand
brand entertainment initiatives. But HPs experimentation is not limited to its marketing. Gary
Elliott,HPsvicepresidentofcorporateandbrandmarketing,saidduringapaneldiscussionatthe
2008ANAconferencethatHPisalsotryingoutnewmodelsforitsrelationshipswithagenciesand
mediapartners,includingpilotsthatbypassagenciesandworkdirectlywithmediacompanies.
MendenhallnotedthatdigitalformatsandplatformsareredefningnotonlyHPsrelationships
withitsexternalmarketingpartners,butalsoitsinternalorganizationandcapabilities.HPisbuild-
ing its own networks and forums such as IdeaLab, aWeb site that ofers visitors demos, down-
loads,descriptions,andvideosofHPsemerginginnovations,soconsumerscantest-drivethem
andhelpthecompanyrefnethem.Asmarketers,wehaveanopportunityandaresponsibilityto
drivechangewithinourcompanies,becauseallpublictouchpointsincreasinglydigitalnow
impact our brand and our revenue, Mendenhall says. Brands arent defned by campaigns any-
more,butbytheconsumerecosystemswenurturetosupportthem.
As digital platforms and capabilities redefne what it takes to succeed in advertising, certain
characteristics, consequences, and casualties are already apparent.The impact and potential of
those platforms and capabilities are now evident in every aspect of the marketing process and
brandexperience,redefningtheverynatureofcom mercialmessagesandaudiences.
Butitisnotnecessarilyclearwhatmarketers,agencies,andmediacompaniesneedtodoabout
it.HencetheMarketing&MediaEcosystem2010study,whichhasyieldedvaluableinsightson
As marketers, we
have an oppor-
tunity and a respon-
sibility to drive
change within our
companies, because
all public touch
pointsincreas-
ingly digitalnow
impact our brand
and our revenue.
Brands arent de-
fned by campaigns
any more, but by
the consumer eco-
systems we nurture
to support them.
Mike Mendenhall
Chief Marketing Ofcer, HP
4DigitalDarwinism
thegapsandgoldminesintodayslandscape.Morethan450professionalsintherelevantfelds
respondedtothesurveysquestionsaboutthetrendsthatwouldreshapetheindustryby2010;
morethan75seniorexecutives,includingCMOsandCEOsfrommanyleadingmarketers,agen-
cies, and media companies, granted in-depth interviews. Taken as a whole, their observations
bringintofocusthepriorities,capabilities,andpartnershipsthatwilltransformthevaluechainof
thethreeparties.
Adaptation and Collaboration
Theriseofdigitaladvertisinghastriggeredmanyofthemutationswearenowwitnessing.Already,
theshiftinadvertisingdollarstoonlinemediaispronounced.Whereasnewspaperstook127years
toreachUS$20billioninadrevenuesintheU.S.,andcabletelevisiontook25years,onlinemedia
havegarneredthatamountinjust13years.Infact,atroughly$21billionin2007,onlineadvertis-
ingspendingnowexceedsspendingonoutdoormediaandtheYellowPagesanditisapproach-
ingthelevelspentonradioandcabletelevision.
Itisclearthatmostmarketershavemovedbeyondtheirearlyviewofonlineandotherdigital
media asexperimental when allocating ad dollars. In fact, 88 percent of marketers expect to
spendmoreondigitalads,and82percentbelieveinsightsintoconsumersdigitalbehaviorand
relatedtargetingtoolswillonlybecomemoreimportant.
Marketersarenotaloneinrecognizingthisdigitaltidalwave.Nearlythree-quartersofmedia
companyrespondentssaidtheyexpecttheirexistingadvertiserstoshiftmoremoneyonline.And
71percentofagencyrespondentssaidtheyexpectonlineadspendingtoexperiencesignifcant
sharegrowthinthenexttwotothreeyears.Many,infact,acknowledgedthatdigitaladplatforms
better address marketers desire for accountability, and a majority said they believe traditional
mediaarenolongerthemostefectivewaytobuildbrandequity.
Marketersunderstandtheurgentneedtoadaptquickly;roughly90percentofthemrecognize
that the speed of marketing execution itself has accelerated because of digital advances.Their
focusisincreasinglyoncreatingcampaignsthatareintegratedandthatincludedigitalmedia
which,inturn,requiresmoreactivecollaborationacrossmultipleagenciesandmediacompanies.
Thesecircumstancesarecompellingagenciestochange,too.Theyarebeingaskedtopartnerwith
otherserviceprovidersasneverbefore.Andtheythemselvesareinitiatingnewpartnershipstoac-
cessdeeperdataandanalyticcapabilitiesandexpandintohigh-growthplatformssuchasmobile
andsocialnetworking.
Mostplayers,however,arestillstrugglingtoharnessthepowerofdigitalmediaandbuildnew
capabilities.Amajoreducationgap,especiallywithmarketers,stillneedstobebridged.Thirteen
yearsintotheonlineera,onlyaboutone-quarterofmarketersregardthemselvesasdigitallysav-
vy,andhalfclaimtheylackthesupportatseniorlevelstosubstantiallyincreasethemarketingdol-
larsallocatedtodigitalmedia.Mediacompaniesvieweducatingtherestoftheecosystemasan
Thirteen years into
the online era, only
about one-quarter
of marketers regard
themselves as digi-
tally sav vy, and
half claim they lack
the support at
senior levels to sub-
stantially increase
the marketing
dol lars allocated
to digital media.
DigitalDarwinism5
areaofopportunity,with70percentinvestingtoexpandtheirtrainingandeducationcapabilities,
targetingbothmarketersandagencies.(See Exhibit 1)
In this emerging ecosystem, digital media companies have some important inherent advan-
tages.Theirpointsofcontactandtheirdataontargetconsumersswampthoseoftheirtraditional
mediacounterparts.YahooInc.,forexample,has811touchpointswithanaverageconsumereach
month, including searches, pages viewed, and videos watched. The Walt Disney Company, by
contrast,has64,andtheNew York Timesjust45,ac-
cordingtotheTimesitself.Othermajordigitalmedia
players, such as Google, Microsoft, AOL, MySpace,
and Facebook, sit atop similar treasure troves.With
their richer view of consumer preferences, these
digital media companies can slice and dice their
audiences, better matching ads to consumer seg-
ments,therebyincreasingmarketersefciencyand
efectiveness.Addingtotheseadaptiveadvantages,
digitalplatformsenablemediacompaniestomutate
beyond being mere aggregators of eyeballs: They
nowofermarketersandagenciesbroaderservices
such as performance marketing, e-mail marketing,
andleadgeneration.Digitalmediacompaniesarein
turnmorphingintoaggregatorsofdemand.
What were describing here is more than just
a change in the marketing mix or media buy. The
marketing function, equipped to broadcast brand
messages to consumers, has now become a cen-
ter for dialogue, geared to gleaning what consumers want, and when and where they want it.
Advertisinghasevolvedfromaninterruptiongrabbingattentionforaproductorbrandinto
an experience, an application, a service that the consumer actually wants. This new marketing
modeldoesntshout;itlistensandlearns.Andrelevance,interactivity,andaccountabilityareits
essentialingredients.

Redrawing the Boundaries of the Ecosystem

Itisdauntingtoliveinthisecosystemasrolesandresponsibilitiesbecomemoredemandingand
complex.Boundariesbetweendiferenttypesoforganizationsaregrowingblurry,andeverybitof
establishedtraditionisnowfairgamefortransformation.(See Exhibit 2, page 6)
Marketers, for example, are openly agitating for new models of interaction with agencies and
mediapartners.HPsElliotsaysthattraditionalecosystemrelationshipslacktherequiredspeed-to-
Marketers Agencies Media Companies
Exhibit1:Concerns Related to Managing Digital Marketing
Despitethemovementtoincreasedparticipationindigitalmarketing,marketers,
agencies,andmediacompaniesalikearestillstrugglingwiththecomplexitiesofthe
newecosystem.
Source:Marketing&MediaEcosystem2010surveyandBooz&Companyanalysis
Lacksufcient
experience
withdigital/
onlinemedia
59%
81%
73%
47%
67%
50%
Donothave
adequatesenior
levelsupport
fordigital
Challengedto
attractenough
digitaltalent
Viewdigital
astooresource
intensiverelative
torevenues
Needto
upgradetheir
supplychain
capabilities
Viewlabor
spenton
integrated
campaignsasnot
commensurate
withrevenues
6DigitalDarwinism
market,andthecompanyisintentonforgingtighterrelationshipswithitsagenciesandmediasup-
pliersbyworkingonsomeinitiativeswithjustonekeypartner.HPsdynamicpartnershipwithMTVis
anexample,andHPisnotalone.Amajorityofmarketersbelievethesekindsofcloser,deeper,more
collaborativepartnershipswithmediacompanieswillbecomemoreimportanttotheirbusinesssuc-
cess.Somemarketersarealsomovingtoin-sourcemoreadvertisingcapabilities:Forty-twopercent
ofnationaladvertisershavesetupin-houseadagencies,accordingtoarecentANAsurvey.
Mediacompanies,inturn,aretakingonresponsibilitiesthatwereoncetheexclusivepreserve
ofadvertisingagencies,inabidtosecureamorestrategicrelationshipwithmarketers.Ninety-one
percentofthemediacompanieswesurveyedarecurrentlyprovidingsomekindofconsultative
service to marketers, including campaign development, customer content creation, and cross-
platform execution. Although nearly two-thirds of media companies concede that the develop-
ment of such services will cause friction with agencies, more than half still expect to do more
businessdirectlywithmarketersinthefuture.
These developments are cause for some consternation on Madison Avenue. Even agency in-
sidersarequestioningtheviabilityofthetraditionalagencybusinessmodel.Only42percentof
agency respondents said they believe
that full-service agencies deliver all the
services that marketers want. Three-
quarters of agency respondents said
theyhaveseenpricecompetitionwors-
en and believe it will intensify through
2010.Andnearly60percentbelievein-
novativedigitalagenciessuchasAKQA
Inc. and others are poised to take on
broader roles and responsibilities as
lead agencies, perhaps even evolving
intofull-serviceshops.
To compete, agencies need to re-
structure their organizations to reduce
or eliminate costs, a particular chal-
lenge when marketers are demanding
both more custom-tailored solutions
and more innovation. In response to
this imperative, nearly two-thirds are upgrading their technology systems, and almost half plan
to fundamentally restructure their business. Beyond defensive maneuvering, the most forward-
thinkingadvertisingagenciesaremakingtheirownincursionsintonewareasofthevaluechain.
Seventy percent are taking on roles traditionally played by media companies, creating branded
entertainmentandothermediaassetsformarketers.Equallyimportant,manyagenciesareseek-
Marketers Agencies Media Companies
Exhibit2:A More Demanding and Complex Ecosystem
Amorediverse,heterogeneousecosystemincreasescomplexityandrequiresnewcapabilitiesand
newwaysofworking.
Source:Marketing&MediaEcosystem2010surveyandBooz&Companyanalysis
Developingideas
thatcross
mediaplatforms,
includingdigital
89%
81%
82%
62%
52%
82%
66%
Collaborating
withmultiple
marketing
service
providers
Newpartnerships
requiredto
accessnew
datasources
Workingwith
moreagencies
thanbefore
Fullservices
agenciesdonot
oferallthe
servicesmarketers
want
Restructuring
adsalesteams
New
partnerships
requiredacross
thevalue
chain
DigitalDarwinism7
ing to expand into other high-value oferings, especially in technology, consulting, and media
services.Andtwo-thirdsarehopefulthatfuturebusinessmodelswillpermitgreatermonetization,
perhaps via licensing fees, of the intellectual property that agencies create for their clientsin-
cludingnewproductlinesorbrands,originaldigitalmedia,orproprietarysoftwareapplications
developedforacampaign.
Survival of the Fittest
Thefvebehaviorsthatallplayersmarketers,agencies,andmediacompaniesmustdisplayto
performatahighlevelinthisecosystemarenowevident.Theyrevolvearoundgettingcloserto
consumers, engendering conversations, mastering the context of marketing messages, making
betteruseofconsumerdataandinsight,andbuildingnewandmorecollaborativerelationships
acrossthevaluechain.
Turn consumers into prosumers. Recognizing the power consumers hold, marketers have
gonetogreatlengthstounderstandandconnectwiththem.Fouroutoffvemarketerswesur-
veyed believe consumer insights are more important than they were fve years ago and will be
even more important in the years ahead. Roughly half of the ad agencies are deepening their
commitmenttodeliveringproprietaryinsightsintoconsumerbehavior.Andanoverwhelming87
percentofmediacompaniesbelievethatprovidinguniqueconsumerinsightscreatescompetitive
advantage,distinguishingtheirmediapropertiesfromtheglutofotheroptionsforadvertisers.
One new aspect of this connection is the growth of conversations among consumers about
brands.Bybothpromptingandmonitoringthesedialogues,marketersareidentifyinganddraft-
ingbrandadvocates:peoplewhoenthusiasticallyrecommendproductsandservicestoothers.
Morethanhalfofourmarketersurveyparticipantsagreedthatadvocacyisamoreimportantmar-
ketingobjectivethanawareness.DaveMorgan,founderandchairmanofTacodaInc.,theworlds
largestadvertisingnetworkthatspecializesintargetingconsumersbasedontheirbehavior(ac-
quired by AOL in 2007), stresses this point.Marketing will be about leveraging and activating
consumergroups,hesays,turningconsumersintoprosumers.Brandevangelists,equippedwith
therighttoolsandmotivationtoextolbrandstofamily,friends,andcasualacquaintances,canbe
coreelementsinacampaign,andleadingmarketerslikeNikeInc.andProcter&Gamble(P&G)are
fullyfocusedonconvertingtheseconsumeradvocates.
Toactivateaconsumer,youmustunderstandtheconsumer.Tounderstandaconsumer,you
must listen and observe.When you listen and observe, you drive insights.Traditional marketers
have extensive experience in observing consumers in conventional settings. P&G understands,
forexample,howconsumersinteractwithitsproductsattheretailshelf.Johnson&Johnsonhas
thesamereadonpatientsinthedoctorsofce.Butmarketersarestillstrugglingtoidentifythe
equivalentmoment of truth on the Internet. Does a parent searching for diaper rash remedies
Only 42 percent of
agency respondents
believe that full-
service agencies
deliver all the services
marketers want.
8DigitalDarwinism
startwithaGooglesearchoravisittoadiscussionboard,orinsteadgorighttowww.babycenter.
com or www.pampers.com? Companies throughout the marketing and media ecosystem con-
tinuetoscanthehorizonfortheinsightthatwillallowthemtobettertarget,cultivate,anticipate,
andcatertotheconsumer.
Build bilateral brand experiences.Brandstodaymustgobeyondsimplybroadcastingtheirmes-
sage;theymustbeckontheconsumerintoaconversation.Whenconsumersusedigitalmediato
87 percent of media
companies believe
that providing
unique consumer
insights creates
competitive advan-
tage, distinguishing
their media proper-
ties from the glut
of other options for
advertisers.
Audiencestodayrelishtheon-demandlifestyle
afordedbydigitaltechnology,whichmakesthose
audiencesmorefragmented,distracted,andmer-
curialthanever.ManyofMTVsyoungviewersare
onlinewhiletheyarewatchingTV,andtheyare
pronetoskipthroughadswiththeaidoftheir
digitalvideorecorders(DVRs).Weknowthis,and
ouradvertisersknowittoo,whichiswhyMTV
Networks(MTVN)hasmadebrandedentertain-
mentandbrandintegrationamajorpartofthe
companysbusinessmodel.
AtMTVN,weareworkingdiferentlywith
advertisersbydevelopingunconventionalyet
relevantopportunitiestoconnectthemwithour
brandsand,therefore,connectthemtoour
viewers.Wearecollaboratingmorewithmarketers
andtheiragenciestocreatecontentpartnerships.
(ThisiswhatMadisonAvenuecallsbranded
entertainment.)
Itusedtobethatprofessionalmediacompa-
nieslikeMTVNcreatedcontent,whichadvertis-
ersborrowedtohelpselltheirproduct.They
droppedtheirmarketingmessageintoacom-
mercialpodorranitinadisplayadalongsidea
relevantarticle.
Nowourmarketerswanttobepartofthe
content.TheywanttotradeofthehaloofMTVNs
brandsthecoolfactor.TheywantMTVNto
drivetrafctoandregistrationsontheirWeb
sites.Theywantourconsumerinsightsonthe
brandpreferencesandinterestsofkidsandyoung
adults,whicharebasedonmorethan500studies
everyyearofMTVsconsumers.Mostsignifcantly,
thesemarketerswantrelevance,credibility,and
engagementthatgoeswellbeyondwhattradi-
tionaladvertisingcandeliver.Theydontwanta
commercial;theywanttheirbrandintegratedinto
anauthenticentertainmentexperience.
Inthefallof2008,welaunchedanoriginal
seriesonourcollege-orientedchannel,mtvU,and
itsWebsite,inpartnershipwithHewlett-Packard
Company(HP),thatisemblematicofthisnew
trend.Thisfve-toseven-minuterealityshow,
calledEngineRoom,features16youngdigital
artistsfromaroundtheworlddividedintofour
regionalteams,eachcompetingforUS$400,000
andthechancetoprogramthegiantMTVscreen
inTimesSquareforonenight.Theseriesisunder-
writtenbyHP,andthePCs,workstations,monitors,
andprintersfeaturedontheshowareallmade
byHP.
Engine Roomfollowsanothersuccessfulpart-
nershipbetweenHPandmtvUonashowcalled
Meet or Delete,inwhichcontestantsdecidewhom
todateonthebasisofthecontentsoftheirHP
computers(acyber-versionofourpopularshow
HowMediaBrandsBecomeMarketersPartners
by Carolyn Everson
DigitalDarwinism9
search,shop,blog,socialize,orseekentertainment,theiractionscreateopportunitiesformarketers
notonlytogaininsightbutalsotogatherideastoimprovetheirbrands,marketingmessages,andmedia
mixchoices.
In fact, the majority of leading marketers are using two-way media such as blogs, word-of-
mouth programs, and social networks to connect with consumers while employing predictive
modelingtoolstodetermineandcontinuouslyupdatetheirmediamix.Moreover,marketersare
shiftingtheirspendingtothechannels,bothdigitalandnondigital,thatoferthemtheopportu-
Room Raiders).Ourjointforaysintobranded
entertainmenthavecertainlyhelpedHPdemon-
stratehowradicallythemarketingvaluechainhas
evolved.Fiveyearsago,HPfrstlookedtoenhance
itsmarketingintegrationasoneofthesponsorsof
thefagshipMTVevent,theVideoMusicAwards.
Nowwearerunningtrulyglobalbrandedenter-
tainmentinitiativestogetherthathavehelped
HPbecometheworldsleadingPCseller.Major
marketerssuchasFord,GeneralElectric,Unilever,
andPepsiCohavepursuedsimilarinitiativeswith
MTVNinthelastyear.
Thisconvergenceofprogrammingandad-
vertisingispartofthenaturalevolutionofthe
marketingandmediaecosystem,andwehaveto
adapttothrivebutwealsohavetobemindful
oftherisks.Wecannotdoanythingthatwillcom-
promisethequalityofourcontentandbrands.
MTVNsmostcriticalassetsareitscreativeintegrity
anditsrelationshipswithfans.Wehavetoprotect
both,alwaysmakingsurethatwereentertaining
ouraudiences,notpitchingtothem.
Thesemarketingpartnershipsrequireavery
diferentapproachtoadvertisingsales.Wereno
longerjustproducinggreatcontentandthenlook-
ingforsponsors.Werecollapsingthatprocess,in
manycases,andworkingdirectlywithadvertisers
todevelopprogrammingthatmeetstheirneeds,
aswellastheinterestsofouraudiences.
Thisapproachrequiresgreaterintegrationnot
onlywithclientsbutwithinMTVN.Werebringing
togethersales,integratedmarketing,research,
andprogrammingresourcestocementamuch
moreextensiverelationshipwithourmarketing
partners.Towardthatend,werecentlyex panded
theroleandresponsibilitiesofourin-housestrate-
gicallianceteam,whichwevenamedGenerator.
Generatoractsasacentral,holisticpointofcon-
tactforkeyclientsseekingdeeperpartnerships
acrossourportfolio.Throughoutourorganization
andwithGeneratorinparticular,weareapproach-
ingourmarketersinamoreconsultativefashion,
pushingourteamstodefnealltheinteresting
waysourmediabrandsandotherassetscanhelp
drivetheclientsbusiness.
Thisisaconvergentsalesapproachdesigned
tomeettheneedsofaconvergentmarketplace.
AnditisjustthebeginningofwhatMTVNetworks
candowhenitleveragesitsbrands,programming,
creativity,talentrelationships,anddistributionas
acompletemarketingpartner,andnotjustasa
mediavendor.
Carolyn Everson (carolyn.everson@mtvstaf.com) is
executive vice president and chief operating ofcer for
advertising sales at MTV Networks, which creates
programming and content across all media platforms.
10DigitalDarwinism
nitytoengageinadialoguewithconsumers.(See Exhibit 3)
Nikehaslongbeenapioneerininnovativestrategiesforinteractingwithitsconsumers.Take
Nike+,ajointinitiativewithAppleInc.anddigitalagencyR/GA,whichallowsrunnerstomonitor
their workouts via a sensor in their Nike footwear that sends live data on heart rate and calo-
riesburnedtotheiriPod.Runnerscanposttheirworkoutresultsonlineandparticipateinacom-
munity of both serious runners and novices at www.nikeplus.com. Recently Nike used theWeb
platformtoengage800,000runnersinthelargestraceinthehistoryoftheplanet,accordingto
JoaquinHidalgo,NikebrandCMO.TheNike+HumanRaceonAugust31,2008,featured10Kraces
in25citiesaroundtheworld.
AsthephysicaleventliterallymovedacrosstheglobefromSingaporetoTokyotoLosAngeles
toBogotatoSaoPaulotoParistoMunichtoSeouldigitalmediaenthusiaststrackeditsprogress
liveonline.Itwasaconsumerexperiencewecouldntgetanywhereelse,notedHidalgoduringa
recentspeech.Ourrevenueclimbedasrunningbecameourfastest-growingcategory.And,more
importantly,itshowedusallhowwecouldcombineconsumersphysicalanddigitalexperiences
tocreatepowerfulnewconnectionswithourconsumer.
Place context on par with content.Thedistributionofmarketingmessagestheirtiming,con-
text,andrelevanceisbecomingasimportantastheircreativeexecutionintodaysecosystem.
Youhaveonlytowitnessthemeteoricriseofsearch-basedadstounderstandthatclevercreative
contenttakesabackseattocleverplacement,atleastinonlineadvertising.
Consequently,marketersaresteadilyraisingtheprofleofmediastrategyandplanningwithin
theirorganizations.Theyareestablishingseniormediapositionsandshiftingtheirrecruitingstrat-
egiesinordertobuildcapabilitiesincommunicationplanningthecurrenttermofartforthe
function charged with allocating a companys entire marketing spend across both paid media
andbelow-the-lineprograms.Approximatelyone-ffthofthemarketersinourstudyhavealready
invested in internal communication planning functions. And the majority of marketers expect
theirmediaagenciesthosethatplanandexecutetheirmediabuystobecomeevermoreim-
portantpartners.
Associated with this heightened focus on the media mix is the demand for greater fexibility
andspeed.Infact,mostmarketersarealreadybuyingandadjustingmediaonaweeklyoreven
dailybasisasneeded.Morethanhalfofthemarketersinoursurveysaidtheyexpectthemedia
buyingprocesstolookmorelikethestockexchangeinfveyears;mediawillbeboughtandsold
onareal-time,transparent,andcontinuousbasis.Good-bye,upfront.Hello,24/7marketplace.
Marketers that have not shifted greater focus to media planning will have to play catch-up.
Theyneedtoincorporatemediaearlierinthemarketingstrategyprocessthantheydonowand
keepitfullyintegratedascampaignsandinitiativesunfold.Moreover,theyneedtoinstitutionalize
vehiclesformediaexperimentationandinnovation.Currently,fewerthanoneinfourmarketers
hasacentralizedfundformediaexperimentation.
More than half of
marketers said they
expect the media
buying process to
look more like the
stock exchange in
fve years; media
will be bought and
sold on a real-time,
transparent, and
continuous basis.
DigitalDarwinism11
Master the new calculus of communication.Iftheresasinglepointonwhichmarketers,agen-
cies,andmediacompaniescanagree,itstheneedforclearerandmoreconsistentmeasuresof
advertising efectiveness across traditional and digital media channels. Indeed, the lack of reli-
able and standard metrics is the principal impediment to the entire ecosystems transition to a
newmarketingandmediamodel.Morestandardmetricswouldgivemarketersandtheirpartners
permissiontomovebeyondexperimentalspendingandtowardlastinginnovationandchange.
Moreover,theywouldenableentirelynewROIandcompensationmodels.
Its one thing to collect digital information; its quite another to draw intelligence from it.
Leadingmarketersarebuildingpartnershipswithdigitalagencies,traditionalmediaagencies,and
mediacompaniestotrackadplacement,versioning,andefectiveness.Andmarketers,agencies,
andmediacompaniesalikearehiringquantjocks.Nearlya
quarter of marketers surveyed are adding positions in mar-
ketingandmediaanalysisandfshingfromanewtalentpool
of digitally savvy mathematicians, engineers, and computer
scientists.
But they are unlikely to succeed unless they can learn to
collaborate on a recognized set of metrics. Carolyn Everson,
chief operating ofcer for ad sales at MTV Networks, notes,
Newdigitalplatformsgenerateatonofdata,butwehavent
yet cracked the code in developing universal measures of
success across both traditional and new media. For market-
erstoplan,measure,andoptimizeaudiences,metricsrequire
standardization. For example: How will we track audiences
acrossmultipleplatforms?Whatisthevalueofcross-platform
reachandengagement?Weareconstantlyworkingwithcli-
entstoaddressthesequestions.
The principal hurdle in the development of a universal
standard appears to be lack of cooperation. Six out of 10
agenciesinourstudyreportedthatmarketersunwillingness
toshareobjectivesortargetsinhibitstheirabilitytomeasure
efectiveness,andnearlyhalfindicatedthatmarketersareus-
ingoldmethodsofmeasuringsuccessthatdonotincludedigitalmedia.Three-quartersofmedia
companieswanttobetterunderstandwhatmarketerswanttomeasure;therelevanceofmetrics
canvarybyindustryandsometimesevenbybrand.
Althoughgreaterstandardizationwillcomewithtime,marketingandmediaecosystemplayers
willretainmuchmetricheterogeneityfortheforeseeablefuture.Iftheywantscorecards,theywill
have to create their own. MTV, for example, developed a proprietary planning tool calledT-ROI,
which helps marketers assess the total return on their investment in MTVs media properties.
Digital media
Mobile media
Public Relations
Events
DirectMail
Television
Print
Outofhome*
Radio Percentageofrespondents
T
w
o
-
w
a
y

M
e
d
i
a
O
n
e
-
w
a
y

M
e
d
i
a
Decrease Spending Increase Spending
Exhibit3:Marketers Interest in Two-way Media
Thechannelsthatwillgarnerthemostnewaddollarsby2010willbe
digitalmedia(with88percentofmarketersplanningtoincreasetheir
spending),mobilemedia(52percent),publicrelations(41percent),
andevents(35percent).
*Themarketingindustrystermforadvertisinginpublicplaces:billboards,kiosks,transit
stations,andsoon.
Source:Marketing&MediaEcosystem2010surbveyandBooz&Companyanalysis
100% 50% 0 50% 100%
12DigitalDarwinism
Leadingmarketersarealreadylookingbeyondsuchpopularallocationtoolsashistoricalspend-
ing adjustments and marketing mix modeling and are incorporating new tools, such as target-
ingbasedonconsumerbehavior,databasemarketing,Webanalytics,andpredictivemodeling,in
planningtheirmediaactivities.Thesearethecompaniesthatstandthebestchanceoftorturing
thedatauntilitconfesses,asPaulPrice,globalpresidentofadagencyRappCollins,putsit.
Collaboration is king.The marketeragencymedia chain used to be simple and straightfor-
ward.Now,thatlinearmodelhasmorphedintoaspiderwebofoverlappingconnectionsandin-
terdependencies.Inamorecomplexmarketingecosystem,wheremarketerswantbest-of-breed
ideasandexecution,everyoneneedstodeveloppartneringskillstogetthingsdoneandaccess
newsourcesofdata.
Marketers are partnering directly with media companies, specialty agencies are multiplying,
CourtingandCountingConsumers
by Ajaz Ahmed
Digitalplatformstransformthetraditionalmar-
ketingandmediaecosystemintoanintimate,
immersive,accountableenvironment,inwhich
consumerscaninteractwithbrandsateverylevel
ofthepurchasefunnel.Thisenvironmentengages
consumersbyprovidingrelevant,interesting
valueintheformofanidea,aproduct,aservice,
anexperience,oranapplication,ratherthanjusta
marketingsloganorjingle.Itbeneftsmarketersby
furnishingadirect,uninterruptedviewofthecon-
sumerandameasurable,efcientreadonthere-
turnmarketersaregeneratingoneachinvestment.
Thisaccountabilityandintimacyareparticu-
larlyimportantnow,whenaclutteredandhighly
fragmentedadvertisingmarkethasmadebuying
fameprohibitivelyexpensive.Atthesametime,
traditionaladvertisinghaslostitsstorytelling
charmandevolvedinsteadintopredictable,often
bland,andlargelyinvisiblemix-and-matchexecu-
tionsthatarenotmemorableorinspiring.
Itsnotreallysurprisingthatoldformsofadver-
tisingshouldfailtotranslatewellinanewdigital
world.Traditionalbrandcampaignsweredevel-
opedforbroadcasttelevisionproducers.Todays
campaigns,however,needtoconnectdirectly
withWeb-enabledconsumers.Thoseconsumers
arenotcaptiveviewers.Theyarediscerningcritics
whousetheInternettopickthroughandmake
theirownsenseofmassesofinformation.Market-
ersthatarenotpreparedtoengageinsubstantive,
deep,genuineconversationswiththeseconsum-
erswillbemarginalized.Ontheotherhand,those
marketerswhofndarrestingwaystomaketheir
brandsconnectwithconsumersstandtoproft.
Forexample,inpreparationforthelaunchof
XboxsHalo3,MicrosoftCorporationwaslook-
ingtotapintothedevotionofitsglobalfanbase
andstimulateearlyinterestinthislatestrelease.
Workingwiththegamedevelopers,AKQAcre-
atedaWebsitewitha360-degreevirtualtour
thatimmersedfansinthelatestincarnationof
theHaloworldandgavethemallthedetailthey
couldwantonthedenizensofthisfuturisticrealm.
AKQAalsocreatedanalternativerealitygame
DigitalDarwinism13
large agencies are diversifying their portfolios, and media companies are expanding the depth
andbreadthoftheirservices.Thiserosionofboundarieshashardlybeenfreefromtension,butit
hascompelledcompaniestomoveinimportantnewdirections.Asanexample,WPPGroupPLC,
parentcompanyofnumerousmarketingandadvertisingagencies,isjointlyfundingresearchon
theefcacyofonlinemarketingwithGoogleacompanythatWPPCEOMartinSorrellfamous-
ly characterized as afrenemy.WPP rival Publicis Groupe SA has also entered into partnerships
withGoogleaswellasMicrosoft,Yahoo,andAOLtosupportitsopensourceadnetwork,dubbed
VivaKi.PublicisandGooglearealsoworkingtogetheronvariousmobileadvertisinginitiatives.
Marketers, ad agencies, and media companies need to partner in conceiving, executing, and
monitoring winning marketing strategies. Various models will emerge that are tailored to the
uniquedynamicsofthecompanyconsumerrelationship,butthedominantmodelislikelytobe
ledbymarketers.
calledIris,whichdrewinfanswithcluesdelivered
innewspapercirculars,byconspiracystreetteams,
andviacodedcellphoneringtonestohelpthem
discovertheoriginoftheHalouniverse.Betting
ongamersavidinterestinthedetailsofthechar-
actersbackstories,andontheirloveofquests,
paidof.Morethan300,000consumersdown-
loadedtheringtones,andpreordersexceeded
1millionunits,helpingtomakeHalo3themost
successfulentertainmentgamereleaseofitstime.
Modernmarketingisnotprimarilyabouttech-
nology;itisaboutideasandexperiencesthatget
peopletalking,providerealentertainmentvalue,
orrenderausefulservicetotheconsumer.Indeed,
thesemarketingideasandexperiencesneedtobe
craftedwiththesamedisciplineastheunderlying
productsothatthetwobecomeindistinguish-
able.Toachievethatgoal,agenciesmustbring
togethernewcapabilitiesincontentcreationand
distribution,interfacedesign,e-commerce,and
newproductdevelopment.
Take,forexample,NikeInc.sPlaymaker,anappli-
cationthatallowsamateurorsemiprofessionalsoc-
certeamstoeasilyorganizematchesonline.Inthis
case,marketingtakestheformofatoolthathelps
managersandplayerssolveaneverydayproblem.
Bylaunchingit,Nikeissharingitspassionforsports
andencouragingmorepeopletoparticipate.
Toefectivelyengageconsumersinthenew
digitalspace,marketersneedtodefnemoreclear-
lythevaluesthatunderlieeachoftheirbrands,
andtoinstillthosevaluesthroughoutthemarket-
ingprogram,sinceeveryinteractionwithacus-
tomerwillefectivelybecomepartofthebrand.In
assessingdigitalopportunities,executivesmust
startaskingtheoverarchingquestion:Whatnew
capabilitiesandserviceswillenhancethevalueof
ourbrandedproducttoourcustomers?Thean-
swertothatquestionistheultimatelessonofthe
digitalworld.Itsnotwhatsoundsgoodorlooks
coolthatultimatelymattersitswhatworks.
Ajaz Ahmed (Ajaz.Ahmed@akqa.com) is chairman of AKQA,
the worlds largest independent digital agency.
The savviest com-
panies will develop
an internal inte-
grator position
(which could reside
in communication
planning) and will
appoint senior
media leadership.
14DigitalDarwinism
BeckySaeger,chiefmarketingofcerofCharlesSchwab&Company,assertedatarecentANA
paneldiscussionoftheMarketing&MediaEcosystem2010studythattheclientmustplaythe
role of quarterbackwhether we want to or not, because the fragmentation is so intense. Co-
panelistSteveSullivan,seniorvicepresidentofcommunicationsatLibertyMutualGroup,agreed:
Todaysmarketingplansaremuchmorelikeamosaicofthousandsoflittlepieces.Andyouvegot
tofgureoutwhichonesgowhereandwhatthepatternsare,andthengluethemalltogether.
Already, leading marketers are investing in capabilities that bridge the gaps between media,
creative,andbrandstrategy.Thesavviestcompanieswilldevelopaninternalintegratorposition
(whichcouldresideincommunicationplanning)andwillappointseniormedialeadership.
Other marketers will rely on their advertising agencies to play this integrator role, at least in
selectedcircumstances.Forarecentdeodorantproductlaunch,forexample,UnileverPLChired
one agency to serve as theconductor, integrating all the other agencies and elements of the
campaign.Thisconductoragencywasresponsibleforthebudget,thetimeline,andtheoverall
executionoftheentireprogram.KevinGeorge,vicepresidentandgeneralmanagerofthecompa-
nyscombinedantiperspirant,deodorant,andhaircarebusiness,acknowledgesthatitwasinitially
politicallychallengingforourotheragencies,butitgaveourbrandteamsonepointofcontact,
whichsavedagreatdealoftime,strain,andcomplexityonourend.Thisisnottherightapproach
allthetime,butwegainedalotoflearningaboutadiferentwayofworking.
DellandWPPpursuedadiferentroute.Frustratedwiththesheercomplexityandlossofef-
ciencyassociatedwithcoordinatingtheefortsofsome800providersofmarketingservices,Dell
putitsentireaccountupforreview.Itendedupawardingabudgetof$4.5billionoverthreeyears
toabrand-newbespokeagency,Enfatico,thatwascreated,stafed,andfullycustomizedtoDells
needsbyWPP.ThisagencyisdevotedtoDellandDellonlyforthetermofthecontract.
Media companies are also stepping up and taking on greater responsibilities in integrating
various campaigns. Media companies sit atop a mountain of valuable data on consumers; they
havedirectvisibilityintowhatconsumerswantanddo,sothereisasubstantialopportunityfor
themtoprovideinsightsandconsultativeservicestomarketersandagencies.Intheprocess,they
can beneft their own ad sales eforts. In fact, three-quarters of media companies recognize the
importance of providing insight into consumer behavior to marketers and believe they should
have a role in doing soa view, incidentally, not shared by the majority of ad agencies, which
believethatthisresponsibilityliesprimarilywiththem.
Navigating the New Ecosystem
Its not just digital media companies that are in the vanguard of such innovation.The Meredith
Corporation,apublisherofwomensmagazines,hasinthepastcoupleofyearsacquiredfvedigi-
talagenciesspecializingincustomerrelationshipmanagement,word-of-mouthmarketing,cus-
tomhealthcare,andonlinemarketing.NowMeredithcannotonlyoferadvertiserssuchasKraft
The greatest oppor-
tunities for sur viv-
ing in this new
ecosystemand,
in the end, securing
a leading position
all relate to making
the system itself less
complex.
DigitalDarwinism15
Foods Inc. the opportunity to reach women through Better Homes & Gardens and Ladies Home
Journal;itcanprovideclientslikeKraftwithavarietyofdigitalsolutionsandrelatedagencyser-
vices as well. The benefts to Meredith are twofold. The company can broaden and deepen its
relationships with key advertisers, and it can expand into revenue streams that go well beyond
printadvertisingsales.
Inthenearfuture,marketerswillneedtodevelopanunderstandingofwhichcapabilitiesthey
shouldkeepin-house(e.g.,thosethatcanachievescaleacrosstheportfolioandthatcreateessential
advantage)andwhichshouldbeoutsourcedtoexternalmarketing,media,andtechnologypartners.
Agenciesandmediacompanies,inturn,needtoopentheirmindstoalternativewaysofworking
withmarketersandoneanother,waysthataremorestrategic,solutions-focused,andstreamlined.
The greatest opportunities for surviving in this new ecosystemand, in the end, securing a
leadingpositionallrelatetomakingthesystemitselflesscomplex.Ownershipandresponsibil-
ityneedtobeclarifed;themarketingprocessitselfmustbemademorefexible,fast,scalable,and
precise.Toaccomplishthatend,marketers,agencies,andmediacompaniesneedtobringdigital
platformsoutofthebackroom.Itisincreasinglyevidentthatdigitalacumenisnolongeraniche
capability;itispartofthecentralandrequisiteskillsetforallmarketers,agencies,andmediacom-
panies.Noriselectronicmediaanancillaryrevenuestream;itcanandwillbethecorecomponent
ofmanycampaigns.
Winningmarketers,therefore,haveshiftedtheircreativeandmediastrategiesandalignedtheir
organizationsandculturetofullycapitalizeontheonlineopportunity.Industry-wide,companies
aremakingdigitalmediaabiggerpriorityintheirbrandstrategies.Massadvertisingwillcontinue
toperformaroleindrivingawareness,butmarketerswillprioritizechannelsthatdeliveraccount-
ability,relevance,andinteractivity.
Aswelookoutonthemarketingandmediaecosystemandwitnessitsevolution,wewillcon-
tinuetoseecompetitorsemerginginnewformsandtraditionalplayerstakingonrolesformerly
outsidetheirpurviewwhenitcomestoconnectingwithconsumers.Thelinearvaluechainthat
used to characterize marketing has been replaced with a vast, interconnected community of
brands,consumers,andmedia.Justasnoonespeciesisassuredsuccess,noonespeciesisnec-
essarily destined to fail. Survival hinges on the ability to adapt. Those companies that convert
through conversation, that collaborate in executing and measuring what matters, and that em-
phasizethemediumasmuchasthemessagecarryadecidedadvantage.
Christopher Vollmer(christopher.vollmer@booz.com)isapartnerwithBooz&CompanyinNewYork.
Heleadsthefrmsglobalmediaandentertainmentpractice,focusingonstrategydevelopmentand
implementationforclientsinthoseindustriesaswellasinconsumergoods.Heistheauthor
ofAlways On: Advertising, Marketing, and Media in an Era of Consumer Control(McGraw-Hill,2008).
MarketingMediaEcosystem2010identifesthepriorities,capabilities,andpartnerships
requiredacrossthemarketing-agency-mediavaluechaintooptimizenowandpreparefor
thefuture.TheMarketingMediaEcosystem2010isthefrstcross-industrypartnershipofits
kind.MME2010isajointstudybetweentheAmericanAssociationofAdvertisingAgencies
(AAAA),AssociationofNationalAdvertisers(ANA),InteractiveAdvertisingBureau(IAB),and
Booz&Company.
About the AAAA
TheAmericanAssociationofAdvertisingAgenciesisthenationaltradeassociationofthe
advertisingagencybusiness.The1,196memberagencyofcesitservesintheUnitedStates
employ65,000people,oferawiderangeofmarketingcommunicationsservices,and
place80percentofallnationaladvertising.Themanagement-orientedassociationhelps
itsmembersbuildtheirbusinesses,andactsastheindustrysspokesmanwithgovernment,
media,andthepublicsector.FormoreinformationvisitourWebsiteatwww.aaaa.org.
About the ANA
TheAssociationofNationalAdvertisersleadsthemarketingcommunitybyprovidingits
membersinsights,collaborationandadvocacy.ANAsmembershipincludes360companies
with9000brandsthatcollectivelyspendover$100billioninmarketingcommunications
andadvertising.TheANAstrivestocommunicatemarketingbestpractices,leadindustry
initiatives,infuenceindustrypractices,manageindustryafairsandadvance,promoteand
protectalladvertisersandmarketers.Formoreinformation,visitwww.ana.net.
About the IAB
Foundedin1996,theInteractiveAdvertisingBureau(www.iab.net)representsover300leading
interactivecompaniesthatactivelyengageinandsupportthesaleofinteractiveadvertising.
IABmembersareresponsibleforsellingover86%ofonlineadvertisingintheUnitedStates.
Onbehalfofitsmembers,theIABisdedicatedtothecontinuinggrowthoftheinteractive
advertisingmarketplace,ofinteractivesshareoftotalmarketingspend,andofitsmembers
shareoftotalmarketingspend.TheIABevaluatesandrecommendsstandardsandpractices,
feldsinteractiveefectivenessresearch,andeducatestheadvertisingindustryaboutinter-
activeadvertising.FormoreinformationabouttheIABvisitwww.iab.net.
About Booz & Company
Booz&Companyisaleadingglobalconsultingfrm,helping theworldstopbusinesses,
governments,andorganizations.Withmorethan3,300peoplein58ofcesaroundtheworld,
webringforesightandknowledge,deepfunctionalexpertise,andapracticalapproachto
buildingcapabilitiesanddeliveringrealimpact.We workcloselywithourclientsto createand
deliveressentialadvantage.Visitwww.booz.comtolearnmoreaboutBooz&Company.
2009Booz&CompanyInc.,ANA,AAAAs,IAB.Thisarticleisadaptedfrom
DigitalDarwinism,strategy+businessSummer2009,http://www.strategy-business.com.
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