The English term "innovation for innovation's sake" refers to the adoption of something new without reason. It is not uncommon for digitalization itself to become an end in itself, even in companies where top-down management promotes digitalization. Many executives who carry the flag of digital promotion do not define their objectives and strategies because they themselves are not experts in the field. As a result, the objectives remain unclear, and the entire process from strategy to execution is thrown to specialized departments that do not have sufficient influence or coordination within the company.
In marketing, the term "digital" is no longer confined to digital media such as POE (paid, owned, earned), but is deeply involved in the entire marketing process, from research to purchase. This is far too large an area for a small department to cover, and without focused priorities, no amount of investment will yield results. Fortunately, however, many of the challenges marketing organizations face and the changes in the environment to which they must adapt are common. Shouldn't executives abandon the excuse that they are "not digital experts" and first make a policy decision on what the marketing organization should be now and in the future?
Even though the importance of digital media is increasing, the amount of investment by consumer goods manufacturers is limited to about 10% of their marketing budgets at best, and so-called "digital measures" do not have a significant impact on mass brand marketing. In addition, there are now many human resources and vendors who can implement digital measures without delay, and it is difficult to imagine that the establishment of such a system will lead to a major competitive advantage. The role that digital specialists and specialized departments should play should not be limited to the marketing use of digital media, but should be one that improves the performance of the entire marketing organization.
Current Priority Issue: Insight Discovery System
Marketing is essentially responsible for creating a system that eliminates the need for selling and creates continuous demand for brands. To achieve this, it is necessary to match the needs of consumers with the benefits offered by the brand, and it is essential to understand what consumers really want, in other words, to uncover "insights. Insight discovery, which is the starting point for all marketing initiatives, is the most important job of a marketer. However, this process requires a constant shift in thinking and the perseverance to continually question the essentials, which most marketers do not have the time or inclination to do. They are too busy reporting to their superiors and coordinating with other departments to spend much time actually doing marketing work. In addition, marketers in charge of established brands are faced with a variety of constraints, such as the history of the brand and its existing brand image, to push their work forward. It could be said that one of the priority issues for any marketing organization to resolve is the situation in which marketers, driven by habitual work and stuck in fixed concepts of a brand, are unable to uncover sufficient insights.
Traditionally, insight has been gathered through roundtable discussions, group interviews, and other methods of directly listening to the voices of consumers. However, this method limits the information obtained to the opinions of a small number of people, and the content of the comments is influenced by the atmosphere of the event and the opinions of others. In addition, it is undeniable that introverted people are not likely to visit such places in the first place. With the spread of online surveys, it has become possible to collect the opinions of various consumers at low cost. However, with the existence of incentives such as points, and online surveys that only require one-way responses, it is impossible to expect not only the accuracy of the responses but also the depth of thought required to approach the insights. Currently, MROC (Market Research Online Community), which enables continuous dialogue with an unspecified number of users online, is being used. MROC is a method of gaining insights by listening to and observing consumers). This issue can be resolved through MROC, a method of gaining insights by listening to and observing the voices of consumers.
Future Priority: The Coming of Addressable TV
In the U.S., half of cable and satellite TV subscribers, or about 50 million households, already support "addressable TV," the delivery of real-time, household-specific TV commercials. Matching of TVs and smartphones is also progressing, and cross-channel targeting is becoming possible to deliver advertisements to a single user on multiple devices. Within a few years, targeted TV commercials will begin to be distributed in Japan, and the Olympics should be the catalyst for the development of hardware and data infrastructure, including the replacement of TV sets and the subscription to new telecommunication services. The impact of addressable TV on the advertising market will be immeasurable in Japan, where the influence of television is overwhelmingly stronger than in other countries and is expected to remain so after 2020.
Addressable TV will enable advertisers to deliver messages that are optimized for each target audience. In addition, by reducing the delivery of advertisements to consumers who do not find the product or service useful, advertisers can improve cost-effectiveness and curb brand damage. Because the benefits to advertisers are so great, the initially small inventory of addressable TV will eventually expand to all TV commercial slots, and the same detailed targeting and rigorous effectiveness measurement that are now required for digital advertising will become commonplace in TV commercials. The advent of addressable TV, in which digital methods will pop up in the world of TV, can be said to be the end of mass marketing, and should completely change the way we think about conventional advertising and marketing. How should marketing organizations respond to such a not-so-distant future?
Investing in Data as a Competitive Advantage
A variety of audience data is applied to addressable TV ad delivery. Basic demographic data such as age, gender, family structure, and place of residence can still be provided by third parties and are accessible to any company. However, data resources that allow for unique targeting can be a future competitive advantage. It is also important to pre-categorize target demographics with high ad response rates and accumulate knowledge on effective targeting in advance. Companies need to consider their current digital initiatives and data investments in light of future competitive advantages and the potential for integration with television.
Data-driven workflows
In addition to addressability (targeting based on audience data), digital advertising has the characteristic of being interactive, which means that the response of the audience is aggregated in real time. Interactive ads can determine whether or not to continue during the delivery period based on viewer response. The volatility of the response rate is high, and focusing advertising expenditures on only the most effective ads quickly and effectively from among the variations of ad creatives and delivery conditions will lead to improved marketing effectiveness. Of course, it is also important to adjust creative content and targeting attributes based on audience response. Marketing organizations should establish a data-driven workflow through measures such as online video so that highly effective TV commercials can be delivered in the future.
Unify effectiveness measurement and evaluation methods
Once household-by-household viewing data becomes available for aggregation, the ambiguous indicator of GRP will become meaningless. With the addition of indicators used to evaluate digital advertising, more rigorous effectiveness measurement and evaluation methods will be established. Quantitative indicators based on the number of people reached, qualitative indicators that show the degree of attitude change based on brand lift research, and value indicators that show the cost per acquisition per person at each stage of the funnel. By comprehensively analyzing these indicators, it is possible to clarify the return on investment of advertising and marketing issues that need to be prioritized for improvement. As companies move toward the convergence of TV and digital, they should establish a unified method of measuring and evaluating effectiveness across departments and brands.
Variation Production Know-How
The approach to targeted advertising creative is very different from current mass marketing measures such as TV commercials. In mass marketing, where a single message is sent to the masses, it is important to increase relevance to a larger number of consumers, but in targeted advertising, it is important to match the pinpoint needs of a small niche segment. The benefits a company can provide to consumers vary greatly depending on the age, gender, employment status, and family structure of the target audience. It is a matter of calculating the expected return on investment and creating the most appropriate creative for each small segment with different needs.
Producing variations of ad creative takes a certain amount of cost and time; you can't spend 10 times your production budget to create a video for 10 segments. In the age of addressable TV, you need to know how to create more variations that meet the needs of different niche segments within a limited budget and time frame.
We now need to strategically reorganize our marketing organizations to align them with the current and future changes in the media environment. The ideal structure may differ from organization to organization, but a structure that can continuously uncover insights and a structure that can respond to addressable TV are probably what most advertisers need. Even if management does not need to implement digital initiatives themselves, they must understand their potential and the speed of change, and develop a vision for the marketing organization that creates an advantageous situation.
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