When David Raines, Coke's VP-integrated communications, explained that Publicis Groupe's Starcom and MediaVest had the best ability to think through the issues facing Coca-Cola (such as media clutter and audience fragmentation), he sent a clear message: that lip service to the important changes taking place in media today would no longer suffice.
The days of trotting out the "new-media guy" for the pitch, and then putting him back in his box and going back to business as usual after the assignment is won, are over.
It is almost a cliche to write that digital technology is rapidly changing marketing and media. Anyone with children who have access to a PC and an iPod knows consumer control and convenience is at the root of it. The next generation will behave very differently than their cable-TV era parents. It's already happening. TiVo is the Neanderthal Man of consumer electronics. We are evolving rapidly.
The irony of the dismantling of mass media is that brands will matter more, not less, in this new era. Consumer control is a huge force toward commodity pricing. Brands become an even more important fortress against the commoditizing effects of the Internet and other digital technologies. As Spence Hapoienu, founder of database marketing firm Insight Out of Chaos, has written, "Consumers have learned to rule with an iron whim because of the power of choice and the abundance of information."
Marketers must begin to organize around this control shift. Devising responses cannot be left to middle managers. They won't do it. Senior management, many of whom may be uncomfortable with change and with new technologies, must demand that middle managers support innovation, must derive new measures to understand what is happening and then must hold people accountable.
As a part of this process, senior marketing managers must carefully define what they can expect from their agency partners, which partners add thought leadership and which are simply going through the motions. If these managers expect their agencies to be a part of the solution, they must really reward the agency for getting in the game and driving innovation, and punish them when they don't. Change involves risk. Managers unable to deal with risk must go.
Substantive progress almost always occurs from the top down, when the CEO and team are aligned around a brand- and business-building strategy that leads to marketing innovation. Bottom-up change is too slow. It happens on the margins, in experimental ghettos. When we look at the most innovative players, we see engaged CEOs (often risk-tolerant founders) who simply do not tolerate business-as-usual approaches. Examples:
Three CEOs take charge
JetBlue drives its marketing proposition through everything: its cost structure to its Web site to its distribution strategy. The brand has become a destination online, allowing CEO David Neeleman to stay clear of Web intermediaries such as HotWire and Expedia. Southwest is the granddaddy of this approach, but JetBlue has taken it to a new level by doing 60% of its bookings online.
When Gary Loveman came to Harrah's in the late `90s, the casino was falling behind larger competitors. He developed a new business strategy based on leading-edge retail-marketing principles, rooted in customer analytics and loyalty while investing heavily in the brand. Its eTotal Rewards program is among the most innovative in any industry.
BMW CEO Helmut Panke speaks passionately about the "promise aspect" of his brand, the fact that premium pricing leads to better engineering and "content," and the authenticity aspect of BMW's marketing strategy (think BMW Films on the Web). While the Internet has dramatically shifted power in the car buyer's direction, BMW sells its cars at or near the Manufacturer's Suggest Retail Price.
Three CEOs. Three different categories.
It is no coincidence that each of these companies leads its industry in financial performance. By recognizing the control shift in consumer behavior and the impact digital tech- nology is having on customers, each of these companies is breaking further from the pack.
Now, as Coca-Cola Co. enters the fray, we shall begin to see how one of the world's largest packaged goods brands will lead in a whole new category.
Martin Nisenholtz is CEO, New York Times Co.'s New York Times Digital.