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ROI takes center stage at CMO summit

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Proving ROI, using new technologies and leveraging partner marketing were key topics at Red Herring's CMO 2008 conference in San Diego last week.

The conference drew more than 300 senior marketing executives, mostly from b-to-b companies, who shared strategies for competing in today's challenging business environment.

One of the hot topics was partner marketing, with presentations by several executives whose companies use channel marketing models.

Stephen DiFranco, corporate VP-corporate and channels marketing at chip maker AMD, discussed how the company has leveraged its partner channel to confront rival Intel Corp.

"Four years ago, in looking at how we were going to compete with Intel, we made the decision that we would stop marketing to consumers," DiFranco said. "How are we going to compete in the consumer marketplace if our competition is that big with that much money to spend, and we're not?"

Instead, AMD decided to focus its marketing efforts on building relationships with its partners, including OEMs, distributors and resellers.

"When we talk about customer intimacy, we are not talking about consumers," he said. "We are talking about companies like Hewlett-Packard, Dell and Ingram Micro. We are talking about the family with a PC-building business in Vietnam."

Investment in relationships

Now, instead of spending money advertising the AMD brand, the company invests in marketing programs with its partners, such as building relationships with retail stores.

"Who really decides if you get a laptop with an AMD processor? What matters is if it's on the shelf at Best Buy," DiFranco said.

Three years ago, AMD launched a marketing initiative called "War in the Store," with a goal of making sure that at least one-third of all computers sold in retail stores were AMD-based.

"We went from 5% market share in retail stores to 50% share [over a two-year period], and we didn't spend a dollar advertising to the consumer," DiFranco said.

He jokingly noted that Intel is AMD's best marketing partner because Intel's advertising drives buyers to stores.

"I get 30% of their marketing spend back. I wish they'd spend more on advertising," DiFranco said.

Carol Kurimsky, VP-marketing at technology distributor Ingram Micro, also talked about the importance of partner marketing.

"We don't really go out and market Ingram very much," Kurimsky said. "We are a partner to help our partners sell their products."

One of the key ways Ingram does this is through extensive data mining and analytics that help its partners achieve a better ROI, she said.

When Kurimsky joined up about two years ago, the company was not doing much to mine its data, she said. "We had data sitting in a thousand different places," she said. "First, we had to make sure we had all the right data in the right sources."

Ingram also needed to beef up its data analytics department, now called the Business Intelligence Center. Over the past year, the team has grown from three analysts to 11, eight with master's degrees in statistics and two with Ph.D.s.

The Business Intelligence Center has a database with information on more than 40,000 resellers, 1,400 vendors and more than 1 million unique users who buy through resellers each year.

"We can build models that are very predictive about reseller behavior," Kurimsky said.

For example, Ingram builds analytic models that can predict which value-added resellers are the best targets for new products, which VARs have the greatest chance of growing (and which don't), and which products have good upsell potential.

Kurimsky also presented a few case studies of how Ingram has helped its partners grow their business and achieve a positive ROI.

Technology was another hot topic at the Red Herring conference, with marketers discussing applications such as social networks, mobile communications and digital video recording devices.

Mark Gambill, VP-CMO of CDW Corp., discussed how the technology provider is using social networks during a panel discussion on leveraging such networks.

He was the lone b-to-b marketer on the panel, with other panelists representing social networking sites Cyworld, Friendster and LinkedIn.

"We look at it from three perspectives—what are [customers] doing and how are they leveraging these tools; what kinds of content energize those who use social networks; and the third piece, which most marketers haven't figured out, is the transactional component," Gambill said.

To find out how IT users are using social networks, CDW set up a social networking site at www.cdwconduit.com. "We looked at the characteristics of Myspace, Facebook and Friendster to see what positive elements of those kinds of sites we could apply to a business site," Gambill said.

So far, IT professionals are using the site to network with peers, discuss topics of interest such as security and deploying new technology, and access information such as case studies and white papers.

CDW is also realizing some marketing benefits from the site. CDW Conduit is sponsored by Lenovo, and CDW also uses the network to promote webcasts and gain research insight. For example, the current poll on the site asks users what their typical review timeline is for major IT investments.

Mobility was another topic of conversation at the conference.

Dan Novak, VP-global marketing at Qualcomm, a wireless technology provider, discussed innovations in mobile communications.

"The mobile device world has changed dramatically," he said, pointing to 3.1 billion cell phone users in the world, 1 billion of whom have access to 3G broadband networks. "It is time for the applications to really evolve."

He cited a few examples of innovative mobile applications that Qualcomm is involved with, including a program called Fisher Friend that delivers local weather and market prices to fisherman using cell phones, and the development of digital wallet technology through the acquisition of Firethorn, an Atlanta-based mobile commerce company.

Clent Richardson, CMO of TiVo and former CMO of Nortel Networks, talked about how digital video recording technology has changed traditional advertising.

"The currency of traditional communications has been, if you want to do something important, do a TV ad. All of a sudden, people are fast-forwarding through TV ads," he said. "Our opportunity is to communicate with people when and where they want to be communicated with."

He said one opportunity for marketers lies in using social network sites and viral video. Another is in making wise decisions about where to invest marketing dollars. "It's so much about measurement," he said. "Put a plan in place, agree on the metrics and be able to measure it."

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