IBM Unveils 'Smarter Commerce' Initiative for Marketers Seeking Their Own Watson

Program Combines Everything From Analytics to Campaign Management to Change Marketing's Focus From Spending to Outcomes

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As IBM made a series of acquisitions last year in and around market research and web analytics, the nearly $100 billion tech giant provoked industry buzz about what it was up to. The answer, Dear Watson, turns out to be elementary: It's trying to make marketing a lot more like information technology in its predictability and accountability.

IBM yesterday announced its "Smarter Commerce" initiative that links 2010 acquisitions Coremetrics, a web-analytics firm; Unica, an interactive-campaign-management firm; and Sterling Commerce, a retail-systems and analytics company. IBM is clearly trying to move its flag from information technology to consulting to marketing services, in the process taking on everyone from Nielsen Co. to Accenture. But the company hopes no one else offers quite the same toolkit in a market it describes as a $70 billion opportunity.


The Smarter Commerce practice will analyze everything from social-media buzz to what time of day consumers buy which products to marketing-campaign effectiveness. It also aims to provide automated personalized shopping experiences, marketing and promotions -- a subject increasingly on the minds of executives such as Procter & Gamble Co. Chairman-CEO Bob McDonald, among others.

Among 2,000 brands already on board are Group Danone, Staples and 1-800-Flowers, IBM said.

The initiative isn't directly tied to the massive buzz behind IBM's Watson supercomputer, who outwitted humans on "Jeopardy." But the Watson buzz definitely helps, said Craig Hayman, IBM general manager-software industry solutions. And the Watson technology is "part of the proposition," he said, for example, in running the content-analytics piece of Smarter Commerce. "Marketing professionals often say: 'Where's my Watson?'" Mr. Hayman said. "They want their own Watson, but with their own data connected to their operational settings."

The goal of Smarter Commerce ultimately is to shift the focus of marketing from spending to outcomes, he said.

"It's been my experience that in any market, when people talk about how much money they spend, it's a sign of failure," Mr. Hayman said. Years ago, people in information technology talked a lot more about how much money they were spending. But today, IT spending generally only comes up in the context of project failure, he said.

"Today, when you talk about advertising and marketing, there is a lot of conversation about how much money is being spent," he said, "but really not a lot of discussion about the outcome of that spend." Five years from now, he believes Smarter Commerce will help shift the focus to outcomes.

Focusing heavily on the digital-marketing-to-retail link makes increasing sense, according to IBM, because 70% of a customer's first interaction with a product or service now takes place online and 64% of customers across all businesses now make a first purchase because of a digital experience. Smarter Commerce, Mr. Hayman said, aims to address the consequences of digital technology shifting power from the seller to the buyer.

"Businesses require a new set of capabilities that start with the ability to hear the global conversations taking place about their products and brands," said Paul Papas, global Smarter Commerce practice leader at IBM. "This new level of insight has to be followed by an entirely different kind of engagement with these customers, including a tighter and highly responsive network of suppliers and partners."

In a survey of 500 economists around the world, IBM found that they blamed much of the $15 trillion in global "system inefficiencies" on inventory backlogs, failed product launches and ineffective marketing campaigns -- things IBM hopes to fix with Smarter Commerce.

Michael Stich, Cincinnati-based chief operating officer of digital shop Rockfish Interactive and a former executive with Dell, Texas Instruments and McKinsey & Co., thinks IBM could be crucial in helping bridge the gap between IT and marketing and between chief information officers and chief marketing officers.

"I think they're largely responding to demand from their clients," said Mr. Stich, who last year did a benchmarking study of 30 marketers regarding their marketing technology practices and organizations.

He called IBM's effort essentially a rollup of web analytics, consumer behavioral data, store data and consumer research "that can be served up in an integrated, company-specific way for better decision-making. I think it's a great growth path for them, and I do think they're going to be successful."

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