Marketers may still be a little leery of using new-media and consumer-generated media tactics in their plans. But, as Michael Bush finds, those companies that are excelling in this new marketing environment are discovering that taking the plunge is well worth the investment
As Delta Air Lines was preparing to exit bankruptcy, its marketing and communications departments wanted a way to break through the advertising clutter of the highly competitive travel industry.
In their discussions on how to do so, customer engagement was a theme that came up as a possible answer. But to do so more effectively, the airline was going to have to rely somewhat heavily on new media and consumer-generated media (CGM) - marketing tools it hadn't used all that much in the past.
Mark Krolick, MD of worldwide marketing communications at Delta, says rather than just talk at customers, the goal now is to engage them and provide them the opportunity to help drive Delta's product development, marketing, and advertising.
One of the first steps in this direction is the recent launch of SiteSeer Travelcast, a series of free, downloadable video travel shows intended to provide passengers with highlights of the travel experiences of the airline's employees. Krolick says SiteSeer Travelcast will use a number of CGM tools, including blogs, forums, and user-generated content.
While Delta has cautiously stepped into the world of new media and CGM, its story is far less common than one might think. Even now, many years after it first became the new buzzword in marketing, new media - and how to effectively use it - still remains an enigma to a large percentage of marketers. And while some marketers continue to take their time and approach new media with great caution, others are jumping into the deep end of the pool and figuring out how best to utilize new media and all of its applications as they go along.
The aggressive approach is working for some, like General Motors, which, with its effective use of blogs, is fast becoming recognized as a leader in the new-media space. Others, like Wal-Mart, have occasionally stumbled along the way.
But those either unwilling or apprehensive about entering the new-media fray stand a good chance of falling off the radar screens of consumers, because whether it's blogs, vlogs, Twitter, YouTube, text messaging, or social networking, these media are being used at increasingly high rates by consumers. And all signs point toward that activity continuing its upswing.
The CGM factor
But among the many new-media tools available, it's CGM that is currently making the most noise. And most surprisingly - or maybe not - many marketers don't see its use as an important part of the marketing mix.
The 2007 PRWeek/MS&L Marketing Management Survey finds that only 7.5% of the 279 marketers polled say CGM is a "very important" part of the their marketing platforms. Directors/associate directors of marketing (33.7%) were the largest group of respondents to this year's survey, followed by marketing managers (25.4%), VPs of marketing (24%), and CMOs (7.9%). Other respondents included advertising managers, directors/associate directors of advertising, brand managers, and product managers.
For the first time, this year the survey also asked marketers to rate major advertisers based on the stimulating environment they believe they provide for marketers. Walt Disney scored the highest with 53% rating it "very stimulating." Sony (40.9%), Procter & Gamble (30.1%), Toyota Motor Corp. (25.8%), and Time Warner (25.4%) rounded out the top five. Not surprisingly, most of those companies are actively engaged in new-media and CGM activities. (Scroll down for a sidebar on Sony's marketing department)
Mark Hass, CEO of MS&L, says marketers are highly aware of the power that consumers wield and he's heard them talk endlessly about turning the brand over to consumers. Yet, he adds, most are still afraid to actually do it.
"Despite the increased awareness of the power of consumers in a digital age on brands and sales, marketing execs are still control freaks, unwilling to give up control to these empowered consumers," Hass says. "CGM is still regarded as an 'alternative add on' rather than a core pursuit."
Clarke Caywood, professor of integrated marketing communications at Northwestern University, says it's not only CGM that marketers are underutilizing, but also new media in general.
"Marketers are not using a lot of it," he says. "They're putting their toe in the water on blogging and discovered the value of the Internet generally as a new-media form with e-mail and their Web sites. But they have not really spent much time on the more edgy aspects of new media, including Second Life or YouTube, or combinations of these things, which is what we're seeing."
So what exactly is it that's keeping marketers from letting consumers take a little control? When asked why their company was not engaging in CGM effort, 31.5% of respondents say there is no clear ROI, and 6.1% say they don't want consumers that close to the business. Nearly one-third (32.6%) gave various other reasons, including "Management doesn't embrace it yet," "[We] simply haven't given it enough priority to consider at this point," "[We're an] old company with old ideas," and "[We've had] difficulty in getting the establishment to understand it."
Hass doesn't buy the lack of ROI reasoning.
"Lack of ROI is a convenient excuse," he says. "It's smoke that masks the real reason, which is these cultures just don't have the knowledge and comfort to really participate in this space. It's a fear of the unknown, but they recognize the fact that they need to talk about it and be players in it."
Betsy Lazar, executive director of advertising and media operations at GM North America, an MS&L client, has a very simple take on the idea of turning the brand over to consumers.
"You really need to just let it go, and it's interesting how accurate consumers can be," she says. "It can really enhance the marketing platform. Obviously every category and brand is a little different, and it may not work for everyone. You need the right fit."
Lazar also sees CGM as another technique that can be used to drive much deeper engagement with consumers. For this year's Chevrolet Super Bowl ad, the company conducted a contest that targeted college students and invited them to submit ideas for a commercial. The finalists came in and presented their ideas to Chevrolet management, and the winners later worked with GM's ad agency to produce the commercial.
"I've been preaching this to GM for seven years," Hass says. "It has assembled a good team of people who believe in this, and I hope this is a sign of what other companies are going to be doing in the future. It is courageous in its willingness to pioneer in this space, and its judgment has been very good about how to do it."
A way to get ahead
In fact, a desire to be innovative and ahead of the competition in executing the latest marketing trend (35.8%) was the biggest reason for marketers to use new media and CGM. Belief in cost efficiency of consumer-generated media vs. traditional advertising and marketing (31.5%), and the declining credibility of traditional advertising and marketing (30.5%) were the other most popular reasons.
Rick Clancy, SVP of corporate communications for Sony Electronics, says the consumer electronics division has been engaged in CGM for a few years now. It has a relationship with Current TV, a cable channel featuring consumer-generated content.
"[On Current TV,] we have integrated promotions featuring consumer-generated content and our cameras and camcorders," says Clancy. "These are both news and informational, and could become advertising. We're seeing what consumers can do to tell a story about our products."
Ken Calwell, CMO and EVP at Domino's Pizza, says the company is not at the point where its customers are "creating marketing plans for us, but we are very much getting them actively involved, and have for some time, in product design efforts and product quality efforts that we have done."
Calwell adds that the company has been doing extensive research on its consumers and their media consumption habits for the past few years. He believes this has given the company strong insight into what makes "more sense than less sense" in the new-media space.
"When going into new areas where you haven't had a lot of experience, you want to do a lot of modeling and testing," he says. "We have come together and made a very specific list of which media we want to spend more on and which we want to spend less on over time. We do intend to lessen our reliance on overall national TV as a part of our overall marketing plan going forward. That's a stated objective. It's already started impacting our spending for the last year and a half, and it will affect it even more going forward from here.
"We don't have every answer figured out by any means," he adds, "but we have left a fund of money on the side where we can still experiment and test some of the new-media tools, over and above the model."
The budget problem
For those companies that have not yet explored new media and CGM, part of the reason appears to be funding. The survey shows that 30.5% of those polled say they have no budget for such programs, while 43.7% say there was no change to the amount of funding for new media and CGM efforts over the past year. In addition, the survey shows that nearly 50% of respondents spend 10% or less of their company's marketing budget on new-media and CGM efforts. Industrywide, the technology sector spent the most, coming in ahead of consumer, healthcare, and b-to-b.
GM is one company that's putting its money where its mouth is in terms of funding new-media activities. Lazar says the amount of GM's ad budget allocated toward new-media ventures is more than $100 million. "That is significant, and it's been growing aggressively each year," she adds.
GM's inclination to take money from the ad budget to support new media is not unusual. According to the survey, most (45.5%) of the money allocated to new-media initiatives comes from advertising budgets, and 14.7% comes from the PR budgets. Only 16.5% of respondents say they have a totally separate budget for new-media initiatives.
"These people allocate small, if any, budgets to CGM and basically address this trend by using Web sites to get consumer feedback," Hass says.
This raises another concern for Hass, which is whether marketers really grasp the concept of new media and CGM. He believes many of them view the use of a Web site or asking for consumer feedback on their site as some sort of cutting-edge new-media tactic.
Web site production (71.3%) was the most popular form of new-media technique used by the companies of those polled. Consumer feedback for marketing product strategies was second at 49.8%, followed by viral Web campaigns (25.4%), creating blogs (24.4%), and podcasting (23.3%). Blogger outreach (18.3%), social networking (16.1%), consumer-generated advertising (13.6%), creating YouTube videos (13.3%), and text messaging (10%) were at the bottom end of the list.
"That's troubling because consumer-generated media is blogger outreach, social networking, consumer-generated advertising, YouTube, text messages, and video blogs, and those are at the bottom of the list," Hass says. "When I'm talking to clients, this is what I'm talking about. Those are the techniques you need to be using."
Second to specialists
But what Hass finds alarming is the results from this year's question: What external partners would you consider first for executing a new-media or consumer-generated campaign? An overwhelming amount of respondents say they would turn to Internet/new-media specialists (47.7%) first. PR agencies came in second at 18.3%. Direct marketing agencies (15.1%), advertising agencies (14.7%), and consulting companies (13.6%) rounded out the results.
In fact, GM's Lazar says newly acquired Publicis agency Digitas handles the majority of its digital work.
"What's most troubling, perhaps, is that the PR industry is not generally regarded as an important player in the digital transformation of marketing," Hass says. "These people who have the big budgets who are thinking about how digital fits into the marketing mix don't look at us, despite our traditional expertise in very targeted messaging and communications as a go-to discipline. This represents a big opportunity and potentially a big threat for us. These guys are going to eat our lunch if we don't demonstrate the technology expertise."
While PR agencies were not the first choice for digital strategy implementation, coming in second certainly isn't a terrible thing.
"We were more likely to be considered first for new media and CGM than ad agencies, so we're there and at the table, and they're working with us," Hass says.
"It's open space for us, and if this industry is going to grow, we need to get in this space in an aggressive way because a lot of the growth is going to be driven by digital spend."
If anything, Hass says the results are an indication that PR needs to do a better job educating marketing executives about the importance of message targeting, "rather than just assuming that expertise comes along with technology prowess." And as the practice of PR evolves, it signifies that one of the industry's key competitors is the digital/new-media firm.
Northwestern's Caywood does not believe the PR industry will be able to fully capitalize on that opportunity.
"Here's the dilemma: PR agencies and the traditional education of PR students are not equipped to have them manage technologies that either have analytics involved with them or even newer technologies," he explains. "The problem is, almost all the new media demand some metrics, and you have to be able to start talking in terms of marketing and advertising and translate that into PR implications. The best example of that is the failure of the industry to adopt the automated metrics and artificial intelligence systems that track media and experts and so forth."
Caywood doesn't think the PR industry will be able to demonstrate some form of thought leadership on blogs, how to measure blogs, or even the integration of videos and blogs.
"I don't want to be totally negative, but it just discourages me that we are still so tactical and willing to use these methods to send a message out," Caywood says. "To a lot of my friends in PR, [new media] is like another press release vehicle, and that's not what it's all about. It's about the fact that it's digital, and it can be measured, and it's two-way, which press releases never were, really. It's a strategic opportunity that I am afraid is going to pass them by if they don't see the research part of it."
But Hass says there might be another reason that PR agencies aren't the first choice for digital strategies.
"I think one of the reasons these executives may be more comfortable with an Internet firm, as opposed to a PR firm, is that they are uncomfortable with these new technologies and they are putting the process in the hands of process and content experts," Hass says. "The challenge for our industry is going to be to educate these marketing executives that PR is equipped to deliver the content and technology expertise."
Steve Jett, national advertising and engagement marketing manager at Toyota Motor Sales USA, says the automaker tends to work more with Internet-specific and engagement-oriented agencies on its digital and new-media efforts. "Our PR involvement is primarily connected to our PR department at Toyota," Jett says.
And Anthony Rose, associate director of global beauty external relations at P&G, says his division works with specialist interactive agencies on its digital efforts.
Traditional online activities took the top spot at 82.4% among respondents when asked what general communications disciplines they will use or consider using in the next year. Targeting influencers (69.9%), media relations (65.2%), events sponsorship (60.2%), grassroots and direct-to-consumer activities (55.3%), and consumer-generated media (43.4%) were the other top choices.
Finding the right fit
Recognizing that new media and CGM may not be a perfect fit for every company, Hass says there are two types of brands that need to be heavily engaged with new media and CGM: those that have emotional involvement in people's lives, and those involved in social matters.
"The more emotional the issues the brand is involved with, the more important it is for it to be engaged in this space," Hass says. "It's not really an intellectual space. If you get into blogging and consumer-generated media, it's really emotional. If you're a company that is perceived as a player in highly emotional public issues, you better be in there."
The fact that people heavily research automobiles before making a purchase makes the segment a perfect fit for new-media and CGM programs.
Scott Keogh, CMO at Audi, says the two reasons new media works well for the automaker is that a majority of its customers are online.
"About 88% of anyone who purchased an Audi in the US in the last year spent time on our Web site, so we know, irrefutably, our audience is online," Keogh says. "I think we're a brand of discovery. It's one of these brands you need to find out more about, and I think certainly for the proficiencies, [new media] works well for us. People want to understand more and get more, there's some mystery or unknown, and the Web plays right into our hands for that."
Keogh says new media is "absolutely" going to be a bigger part of its marketing mix. Some of the tools Audi uses are vodcasts, which are made available on iTunes.
"The best way to take advantage of and highlight the features of our cars, as opposed to reading a manual, was to put these cool slick tutorials on video and make them available as downloads for iPods," Keogh says. "A lot of people might say, 'Who is interested in an MMI Interface of an Audi?' Well, a lot of people are interested in it. They want to discover and get the facts, and this is such a better way to get it out there than mailing them a pamphlet or brochure."
Audi recently launched "Truth In Engineering," an integrated ad campaign with both a major television and a Web presence.
"If you look at some of the recent ad campaigns we did, yes, it is an ad campaign, and it did run on television, but the whole thing was designed without a doubt to have much of its main applications online," Keogh explains. "It wasn't designed to be just 100% exclusive for TV and then reformatted to go online. It was expected to be relevant, viable, and active online."
Keogh likes the measurement aspect of new media and says the company has really refined its measurement capabilities.
"We love this area because we can absolutely deliver hard numbers behind the stuff that we do," he says. "We measure the upper-funnel type of stuff in terms of click-throughs, the amount of people we reach, and downloads. And we have a monthly tracking system where we look at the leads generated, we know how many leads we sent to what markets and what dealers followed up, how quickly they followed up, and what cars we sold."
The survey shows that 48.4% of respondents measure the impact of new-media and CGM programs by their impact on sales and revenue. The increase in consumer awareness of a brand or product (36.2%) and the increase in market share (25.1%) complete the top three.
Most people are using CGM to raise brand awareness (25.1%). Marketers are also using it to build a brand (21.5%), be perceived as an innovator (20.4%), and drive sales (15.4%).
GM's Lazar says she is trying to keep her eye on the entire landscape and says as the capabilities in mobile marketing continue to expand, it will become a bigger focus of the company's new-media efforts in the upcoming year.
"I do quite a bit of work with our global regions outside the US, and some countries and markets are more advanced than the US," she says. "Mobile is certainly more advanced in some countries than it is here, and it's been a really interesting experience to trade information around the globe because once these patterns start to emerge, they become quite predictable. So mo- bile is an area that we are ratcheting up on in the US because it's so prevalent, and the capabilities are expanding, and there are so many [potential] partnerships."
Because GM does a lot of marketing online, the lines between the marketing and PR departments have become blurred, creating a more seamless relationship, Lazar says.
"We have become really well integrated over the last year," she adds. "I think everyone in the industry has seen the need for that integration because, especially on the Web, the lines between PR and marketing are really blurred. Consumers look for content in many different places and [from] many different sources."
Lazar cites this year's launch of Igotshotgun.com as the primary example of the PR and marketing partnership. The site contains behind-the-scenes footage and celebrity interviews from GM events, including the Indianapolis 500, the Super Bowl, and the Grammy Awards.
The challenge of breaking down silos and creating a more integrated partnership between PR and marketing departments is still a task. This year's survey finds that nearly three-quarters (74.6%) of respondents claim their companies have a "somewhat integrated" marketing mix. Far fewer (17.6%) say the mix is seamless, though, on a more hopeful note, only 7.9% say there is no integration at all.
P&G is often cited as one of the better examples of a large corporation that manages to pull off seamless integration among marketing disciplines. Rose says that developing a tight relationship is something that takes a while to get right.
"The outside world sees this as seamless integration, but it does not happen overnight," he says. "There's a lot of work that goes on behind the scenes, and there is a tremendous amount of collaboration that goes on to make this happen. In our category, we have gotten much better at this."
In order to launch its national rebranding campaign, announce its exit from bankruptcy, and plan its re-entry onto the New York Stock Exchange, it was vital for Delta to get all of its departments working together.
"We're a big company, so we have the same struggles that any other company has, but now, more than ever, we are all on the same page," Krolick says. "One of the great things about launching a new brand is everybody started from ground zero. Everybody is learning the new brand, tone, voice, and identity, and the way we actually develop programs and talk to customers and the media. I think [integration] has been redefined in this new brand. Now, more than ever, we truly are integrated."
Sony's Clancy says the relationship between communications, product marketing, and corporate marketing is very interactive. "There's a constant dialogue, and we put everything on the table and share information and support each other where it makes sense, and we'll also do things that are unique to what we can do, as will they, all in a focused effort to support the issue of the moment."
Audi takes integration so seriously that it has its CMO and head of communications sitting next to each other to generate ideas together on every aspect of what each is working on.
"I think we're pretty darn good," Keogh says. "None of us would say it's perfect, and we're of the mindset that we can always do better."
Toyota's Jett says over the past three or four years, "we began to see the value of connecting the marketing story with the PR story, and that's been particularly important as we have gone down to doing more grassroots engagement marketing activities at the local level. The ability to work closely internally and with our regional offices has added a stronger one-two punch in terms of overall marketing."
Core functions remain
The survey shows that while PR agencies may not be top of mind when considering an agency for a new-media campaign, its core competencies remain the same. The survey reveals that PR agencies are most often used to handle media relations (65.2%) for companies.
Corporations are also likely to tap PR professionals for corporate and product branding work (64.5%), crisis and issues management (44.8%), word of mouth (41.6%), influencer marketing (40.1%), consumer marketing (38.7%), and workplace and employee communications (37.3%).
Freddy Bharucha, marketing director of hair care at P&G, says PR is used for building business for the company.
"Marketing obviously owns and leads the process," Bharucha says. "Our PR agencies - like all of our other agencies - have a seat at the table from the start of the marketing process and are able to lead or shape several of the bigger marketing ideas. Several of the holistic marketing campaigns have been inspired by PR."
Domino's Calwell says PR serves to provide consumers with insight into what is going on within the company.
"They amplify the news to our consumer and tell the story behind the story," Calwell says. "There will be things that we think are interesting and wanted to put into a commercial, but did not really have the time - we will share that insight with our PR group, and they will figure out how to turn that into a story. They're sometimes able to target an audience that we may not have the time to."
Sony's Clancy says PR is a strategic part of a number of activities from buzz building and product launching to media relations and crisis management.
"I have a seat on the management committee of the company, and we are at the table when it comes to any significant product launch or development or new technologies," Clancy says. "We are also there to defend the company and brand when we see something portrayed inaccurately or unfairly. We're doing that more often these days as the cyber world gets more intense. There's a lot of misinformation going on out there, and we have to be responsive to opinions and assumptions that are not so well-informed."
The survey also finds that PR (48.4%) is used most often by companies when they want to generate buzz as opposed to digital/online agencies (37.6%) and advertising agencies (24%).
"PR is the discipline best equipped to generate buzz, to change minds and to build, maintain, or repair corporate reputations, probably because it is viewed as best suited for media relations, where buzz gets generated, minds get changed, and reputations established," Hass says.
Some companies, though, aren't even using PR agencies for media relations. The survey shows that 16.5% of respondents say their organization bought advertising in return for a news story, and 5% say their organization has paid or provided a gift of value to an editor or producer to place a news story about their product or company. Hass says even if it's a small company trying to maximize its marketing dollars, it should choose another strategy.
"Even the 5% that gave a direct gift of value in direct return for a story, it's an issue," Hass says. "There are people in the marketing industry who think it's OK; they don't respect the role of earned media."
Respondents are also aware that the definition of ethics is changing in the digital world. More than half (54.5%) say Wal-Mart's non-disclosure of a blogger's identity is the most representative of a breach in marketing ethics.
"People do understand there is a line, but my theory about that is that it was on their radar only after Wal-Mart got found out and it blew up so badly," Hass says. "Ethical issues in the digital age need to be part of the discussion, and if they're not, people will start to err on the side of excess and start doing the wrong thing."
The PRWeek/MS&L survey was conducted by PRWeek and Millward Brown. E-mail notification was sent to approximately 12,809 marketing professionals, and a total of 279 executives completed the survey online between April 26 and May 9, 2007. Results are not weighted. Excel files of raw data are available for $150. Please contact firstname.lastname@example.org.
Sony's bullet strategy
Rick Clancy, SVP of corporate communications for Sony Electronics, believes the reason marketing executives polled chose Sony as one of the more stimulating companies to work for is because of its innovative nature and willingness to take chances.
"In marketing and communications circles, I think we are seen as an innovative marketer, especially in the consumer electronics field," Clancy says. "In the US, we are seen as a company that is creative and open-minded and wiling to take risks and try some things - even some that don't turn out so successfully. But I think people see Sony as a spirited company where they come in, have an impact, and put their ideas out there freely and have some of them adopted."
This year, Sony's marketing approach will be to focus its resources around strategic business initiatives in concentrated periods of time. For example, the past few months finds the company heavily promoting its digital-imaging business. Sony is currently in the midst of a highly integrated marketing campaign - being run by its corporate marketing team, product marketing group, and corporate communications team - for its digital cameras and camcorders.
"There is a concentration of television commercials, print ads, and Web advertising, as well as in-store sales promotion," Clancy notes. "Corporate communications has been very focused on getting coverage for product announcements and the campaign."
The effort also includes a number of new-media/consumer-generated media components, including integrated promotions with Current TV and blogger outreach.
"In the digital-imaging community, there's a very passionate core of experts and enthusiasts who follow this business and product development and technology, and they are very important to us, and they have been for a number of years," he says. "We work closely with them on our various digital camera initiatives and focus on them as much and, in some cases, more than traditional media."
Clancy adds that these types of "bulleted" approaches will continue and will be utilized across other categories, such as hi-definition TVs and bio-computers.
"Sony has a leadership position in many categories, so we can envision there will be other bulleted campaigns or windows of focus around other things coming up in the months ahead," he says. "The other thing we are going to initiate this year is an external blog for consumers in the US that could involve a variety of guest bloggers from our management team."
Sony recently introduced an internal blog from its president for employees.