India’s IT muscle was developed to meet the needs of the CIO. But as a sign of changing consumer needs, today the average CMO is spending around 25 percent of her marketing budget on technology
In an ‘era-defining’ deal, Amazon founder Jeff Bezos bought the iconic Washington Post, after it had had six consecutive years of declining revenues. As much as this deal highlights Bezos’s vision, it also underscores a phenomenon of our times: Media and advertising companies are getting disrupted, changing forever.
The factors reshaping how brands and consumers connect—leading to this disruption—are also factors that, I believe, will alter the contours of the $100 billion Indian IT industry. For instance, this year, for the first time in history, the average US adult will spend more time online than on watching television. This shift in the media consumption pattern has driven corporations to increasingly move their advertising dollars to digital media, leading to the challenges that the Washington Post encountered.
Consider that in 2008, social media overtook porn as the number one activity on the web. As much as we use our social network to connect with friends and lead declarative lives, we increasingly draw on it to make purchase decisions. Today, a recommendation from a friend is seven times more effective at driving a product purchase than a newspaper advertisement. This has had profound implications on the role of consumers in shaping the brand story.
At the end of 2012, the number of connected devices on the planet surpassed the human population. This proliferation of mobile phones, tablets and interactive displays has changed how consumers access media. With the choice of multiple screens, the attention span of the consumer is now just a few seconds, with a growing tendency to scan and discard non-stimulating content. This has forced brands to rethink how to create immersive experiences that sustain consumer interest.
What is amazing about all this is not that technology has changed, but how much it has changed us. We have become more vocal, empowered and connected, seeking greater engagement with brands. The days of brands driving one-way communication by interrupting our favourite television programmes are getting over. As an ad executive recently said, traditional advertising is like going on a date and not letting the other person talk. Today customer engagement is the name of the game.
The cumulative impact of these changes has been massive for companies. Brands are struggling to cope with the shift from a small number of standardised communication mechanisms to several fractured and changing channels, devices and audience contexts, where a mistake can get shared with unprecedented speed and amplification. Expectedly, the organisation function undergoing the biggest change as a result is marketing.
Traditionally, marketing used to interact with consumers primarily through brand communication. Today, it has become imperative for the brand to deliver experiences consistent with its message. The risk of the consumer’s version of the brand story making its way across the world and destroying the ‘official’ narrative within minutes is too large to live with.
Marketing, therefore, has started taking responsibility for the consumer experience—a huge increase in scope, especially given the explosion in consumer touchpoints.
Most chief marketing officers (CMOs) have responded to this with a mix of strategies:
This represents both a challenge and an opportunity for the Indian IT industry. This year alone, our estimate puts the size of this opportunity at a staggering $400 billion.
(This story appears in the 04 October, 2013 issue of Forbes India. To visit our Archives, click here.)