We believe that there has never been a more exciting time to be a marketer. Digital technologies may be arming marketers with new tools to deliver their strategy. But it is the deeper shift towards a digital economy that demands a more fundamental resetting of a brand’s long-term strategy than many appreciate.

To help understand how brands can win in a digital economy, we conducted a global survey of 1,000 CMOs and senior-level marketers from across ten markets and across industry sectors.

Our analysis shows marketing in flux, but by no means finished. Most CMOs expect their budgets to increase over the next 12 months. But the composition of that spend is changing. Those able to adapt quickly enough to the realities of the digital economy will be the winners.

Barriers to entry are being eroded

• Digital technologies have helped erode barriers to entry and create the conditions of near-perfect competition between producers and consumers. In this demand-led economy, growth is emerging from unexpected quarters as brands step out of their traditional industry.
• Within this context, CMOs are in a unique position as the ‘growth antennae’ of the business, turning consumer insight into the next commercial opportunity. Reflecting this, two-thirds of CMOs see driving business growth as their primary role.
• How can CMOs support business growth? Primarily by securing long-term consumer relationships (70%) and finding new sources of revenue (63%).

Data is unlocking new growth—and risk

• Data is the enabler that allows businesses to identify new growth opportunities. If you have the data, you have the advantage. Over the next 2-3 years, CMOs see the ability to use data to reach real people, rather than proxies or customer segments, as the number 1 strategic opportunity.
• However, a data breach or misuse of consumer data is also the number 1 strategic risk, identified by a third of CMOs globally. Furthermore, 60% of CMOs believe that the European Union’s General Data Protection Regulation (GDPR) will make it harder to build a direct relationship with consumers.

Competition for consumers is intensifying

• While the ways in which brands can reach consumers are becoming more diverse and tech-driven, the challenge is that many consumers are simply not that interested in ‘traditional’ forms of advertising.
• CMOs confirm that engaging is the most challenging part of the consumer lifecycle for businesses to deliver against—both today and in the future. Why? Increasing levels of competition (56%); consumers’ intolerance for advertising (46%); and information overload (44%).
• As competition intensifies for consumer attention, how can brands capitalise on moments of interaction that will be increasingly rare and most often initiated by consumers themselves?

Capitalising on consumer attention

The answer lies in creating a model of consumer interaction where each touchpoint provides a potential route to a transaction, requiring all elements of the marketing machine to be aligned in real time. How can brands create these perfect moments of marketing? Five ingredients stand out:

1. Create experiences: Creating ideas and campaigns that connect emotionally and endure will be critical if brands are to attract consumers to them, rather than pushing more traditional messaging to them. 71% of CMOs believe this to be the case.
2. Target real people: 79% of CMOs believe that the use of data to target real people rather than proxies will be important to maximising the value of consumer relationships over the next 2-3 years. Adapting to a fluid regulatory environment and flexing capability across people-based, device and panel data will be key.
3. Rethink media: The definition of media is changing and has moved beyond distribution channels alone. CMOs also choose to define it more broadly across technology (48%), content (44%), distribution channels (41%) and data (38%). Each of these provides a potential source of consumer insight and a more holistic way of using media to reset strategy. But, while CMOs agree that value from media investment lies in sales growth (identified by 76% of CMOs), as yet a far smaller proportion are using this insight to reset their strategy.
4. Close the brand commerce gap: Maximising the potential value of consumer engagement requires brands to ensure that each point of interaction can potentially result in a sale. More than two-thirds of CMOs say that integrating brand engagement and commerce/conversion will be an important way of engaging consumers over the next 2-3 years.
5. Embrace authentic brand purpose: Nearly 70% of CMOs said that connecting their brands to social impacts was an important way to engage consumers. As younger generations take an active interest in the social and ethical performance of brands in their decision-making, this capability will only increase in importance.

But a number of challenges need to be addressed

While the key ingredients of success in the digital economy are emerging, there are a number of challenges that will need to be overcome if this potential is going to be fully realised. A handful emerge from our survey:

Making marketing an innovation engine

• Only one third of CMOs see their primary role as leading disruptive innovation—and only a slightly higher proportion see their role as delivering business transformation. These activities will likely need to grow as priorities if brands are going to reorient themselves quickly around the needs and wants of the consumer, reassessing their strategy and changing the business accordingly.

Securing long-term investment

• Nearly half of CMOs identify securing long-term investment as the biggest challenge to delivering their marketing strategy. CMOs find themselves managing competing imperatives—not least, the need to deliver short-term results while also building a long-term brand proposition. Shifting the focus back to long-term, sustainable brand health will be needed to help engage consumers and deliver consistently.

Managing the data deluge

• While there is more data available today, 61% of CMOs believe it is harder to extract insight from it. This places a new emphasis on skills and capabilities, particularly in such areas as data science. Brands are currently focusing on ‘build’ versus ‘buy’ strategies to engage consumers better through data, including making better use of existing data (57%); hiring specialist talent (52%) and developing training programmes for existing employees (48%).

Harnessing the ecosystem

• The way in which brands engage with external partners and suppliers is changing. For example, 52% of CMOs will bring more marketing capabilities in-house over the next 2-3 years, while one third will reduce the number of marketing agencies they work with. Building internal capability while also marshalling an increasingly diverse set of service providers will be equally important.

Working better with marketing agencies

CMOs believe that an explicit focus on efficiency and cost reduction is the weakest area demonstrated by the marketing agencies they work with— followed closely by their ability to provide fully integrated solutions across all elements of the marketing mix. This finding speaks to the need for agencies to reduce complexity for brands while also maintaining a clear eye on the competitive cost pressures they face.