BCG's Rose: Marketing Comms At 'Break Point'


After years of evolutionary change, digital media have now brought marketing communications to a "break point" requiring a new model. Companies that recognize this and implement fundamental structural changes to address the new realities of marketing management will thrive in the years ahead, and those that don't will fall by the wayside.

Those are the key messages of Boston Consulting Group's John Rose, who shared his thoughts about the firm's latest report, "The CMO's Imperative: Tackling the New Digital Realities," with Marketing Daily. That report is based on a 2010 BCG study on the future of marketing and advertising that encompassed a quantitative survey of marketing executives, one-on-one interviews and benchmarking research.

"Quite a few executives continue to believe that social media and the explosion of mobile technology amount to more evolutionary steps for marketing communications -- or that once the economy rebounds, it will basically be a matter of employing the consumer communications strategies that worked in the mid-2000's and adding some investments and skill sets in these emerging channels," says Rose, a senior partner in BCG's New York office and an author of the report. "This was basically the case with developments like search and online advertising -- which is not to say that those were easy. They weren't. But while important, they did not represent 'succeed or fail' scenarios from an overall marketing standpoint.



"The new scenario is indeed a succeed/fail one," says Rose. "We strongly disagree with the view that companies will be able to succeed going forward by just adding some new stuff onto the old structure or model. We think it's clear that the new consumer communications mandate -- to engage in real-time, curated conversations -- represents discontinuity, or a true break from the past. While the phrase 'new paradigm' has become clichéd, in this case, that's precisely what is required. It's been a long time since marketing communications has been a significant contributor to enterprise value, but we believe that companies who get this need for a paradigm shift and change accordingly will show significantly higher enterprise values in the years ahead."

While marketers are still in need of more effective and standardized metrics and tools for managing media mix integration, the real challenge now is "how to build essentially new organizations with very different skill sets and ways of integrating communications above and below the line," maintains Rose. "We're talking fundamental structural changes, both in terms of internal resources and in how corporate marketing organizations work with agencies and third-party services providers - who must also change fundamentally in order to remain relevant."

The new watchwords for marketers are transparency, authenticity and engagement -- emphases that require radically different structures and capabilities than those needed for the dominant traditional model of centrally created, custom-crafted messages broadcast or pushed to consumers, points out Rose. And as the report notes, while traditional media -- particularly television -- will continue to dominate media spending budgets for years to come, the shift to spending less on media buys and more on labor-intensive tasks like managing digital content will continue.

While building new internal capabilities structures is mandatory, the exact nature of those must be carefully thought out, the report stresses. Given the increasingly powerful effects of social media communications on brand image, engagement and loyalty, the risk levels associated with poor execution are high -- and "too often, companies entrust these tasks to 20-year-old interns or third-party PR firms or digital agencies that lack sufficient context," note the authors.

At the same time, it's difficult and costly for companies to attract and retain staff who are both technically competent and can manage the complexities and nuances of social media brand communications. To make sound decisions regarding which activities should be in-house and which outsourced, CMOs need to consider the sensitivity/risk level of each activity, the availability of genuinely qualified third parties, and the difficulties/costs of building internal capabilities, the report advises.

Where do agencies fit in? Just 31% of marketing executives surveyed by BCG said that they consider their agencies helpful in making the right trade-offs between digital and traditional media. "The third-party services world hasn't figured out how to be fully helpful yet," sums up Rose.

While large agencies will continue to play critical roles in brand image and traditional media strategy, they risk becoming increasingly marginalized unless they change their financial models and become service providers capable of "having the ear of the CEO and being true, strategic brand stewards," says Rose. This, he adds, will require breaking down divisional/separate agency silos and motivating them on a financial level to work together for the client's greater good to a much greater degree than exists today.

Focused, digital agencies have their own limitations, including lack of scale and global coverage, lack of a broader perspective that incorporates traditional media, and inability to coordinate strategies across the full range of media, notes the report. BCG expects companies to continue to move toward a model that integrates use of traditional "holding company" agencies, digital agencies and PR agencies, and says that success will lie in ensuring that these providers collaborate by employing practices such as all-provider briefings and financial incentives for effective cooperation.

At the same time, the report recommends "embracing new-style advertising agencies that support their [client] relationships with integrated campaigns involving all vendors" and are starting to fill "the gap left by a fragmented array of digital and traditional agencies."

On a bigger-picture level, the report (downloadable on BCG's Web site) advises that companies develop digital marketing strategies "as closely as possible to the business unit." Other key strategic recommendations: Articulate an integrated marketing strategy; use an integrated model that assesses return on marketing investment across the full range of marketing vehicles; design customized metrics for digital; and set minimums for digital investment and incentives for experimentation among marketing executives.

8 comments about "BCG's Rose: Marketing Comms At 'Break Point' ".
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  1. Blaine Mathieu from Compound Marketing Group, February 21, 2011 at 9:46 a.m.

    Interesting article. I'm sure glad they finally got around to talking about marketing integration at the end. The idea of a "break point" is overdone here for marketing effect. What it really boils down to is that the new media and new ways of communicating need to be tightly integrated with more traditional media to achieve a "compounding" effect. I write a lot more about this on my blog:–-part-2/

    One very insightful comment was what a mistake it is to trust your online brand to a 20 year old intern. How true yet so many do - made me laugh.

    Blaine Mathieu
    Blog: Http://

  2. Sid Liebenson from Personifeye, February 21, 2011 at 12:27 p.m.

    Interesting and insightful interpretation of the BCG report. And totally in agreement with the Personifeye perspective. For several years, we've been advising agencies about the need for fundamental structural change in order to thrive in an increasingly digital media environment -- and helping them make the transition. Describing the challenge as "succeed or fail" is right on the money.

  3. Doug Garnett from Protonik, LLC, February 21, 2011 at 1:11 p.m.

    Why is it that the ad business gets so easily sucked into believing that "everything will change"?

    There are a few good insights here - especially about the 20-year olds. (What he doesn't mention is that all-too-often creative choices for billion dollar brands are also dumped onto 20-year olds - because that's how conglomerate agencies make money for their investors.)

    Too bad all this content directed marketing is really such a tiny part of the consumer's real world.

    Here's my alternative take:

  4. Kevin Horne from Lairig Marketing, February 21, 2011 at 2:15 p.m.

    God, this was impossible to read. Suppositions about the "future of marketing" from another buzzword-generating management (not marketing) consulting firm.

    Had to laugh at the claim of "integrating above and below the line"...(a) that's been going on for about 15 years now, and (b) very few people use that terminology anymore.

    So much for a breaking point...

  5. Sufi M from The Glaring Facts, February 21, 2011 at 2:21 p.m.

    The advertising industry is slowly becoming eroded by online platforms and new systems simply because these companies who hire and depend on the old-school advertisers and marketers are no where achieving the potential that a company can achieve via integrative, socially-adaptable and online marketing methods.

    <a href="">The Glaring Facts</a>

  6. Doug Garnett from Protonik, LLC, February 21, 2011 at 4:13 p.m.

    @sufi -

    I know what you say is commonly accepted theory in many places. But, for example, let's look at Facebook for advertising (I know, it's not for viral, but let's look anyway).

    Facebook's recently published clickthrough rate is .053%. Our TV campaigns often sell product to .5% of the viewing audience (sales from all channels).

    A click is a minimal consumer action. Paying money for product is a massive consumer action.

    So I disagree with your broad conclusion. Where, I would agree is if you suggested traditional agencies have thrown all meaning out of most advertising resulting in work that isn't compelling. That's probably true.

    But, when you use traditional media AND say something important to consumers, stand back. Online just can't keep up. (Note the recent announcement by Best Buy that they're returning to TV because they can't drive a big business with online.)

  7. Ron Ladouceur, February 21, 2011 at 4:18 p.m.

    Pick at the buzzwords if you want, but don't let it keep you from taking seriously John Rose's words of warning.

    Everything isn't going to change, of course. Even Rose admits that traditional marketing forms "will continue to dominate media spending budgets for years to come." But smart phones, social media and all the rest are most definitely driving a "discontinuity."

    For me, a manager at a marketing firm right in the middle of the maelstrom, this article offers one of the clearest description I've read of the real-time reality our agency has been living with – and inventing structures, processes and tools to address – for at least the last two years.

    I'm off to download the paper.

  8. Karen Ticktin from brandthis, February 23, 2011 at 3:52 p.m.

    For us, social media is not a budget line item or a new channel to push our a brand's marcom messages. Rather, it is all about a brand making a strategic decision to engage in an authentic, transparent , and on-going conversation with its current and potential customers.

    It's about pulling consumers into the conversation with compelling and relevant 'social currency'. That said it's also about listening to your consumers to see what they are talking about. It always amuses me to be reading a brand's Facebook wall and see a pre-programmed totally irrelevant brand post pop up in the middle of a vibrant conversation. Or to see the identical content appear on Facebook and Twitter.

    For us there are no short cuts just lots of long hours spent building meaningful relationships on behalf of our clients, fostering and facilitating earned media.

    As far as measurement goes, we don't have the perfect ROI or ROE metrics yet - funny I don't remember being asked to demonstrate the power of my $40mm tv budget.

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