"The Forest For the Trees"
How well do we understand the cultural trends, competitive forces and consumer drivers of demand in 2020?
Does silo-ed, short-term digital data obscure our understanding of the big picture, the total ecosystem in which we live?
Richard Powers' 2018 novel “The Overstory" is the tale of interconnected lives formed and altered over time by the relationships of the protagonists to the environment, the forest, and each other. As we anticipate 2020, the forest is an apt metaphor for our understanding of consumer culture, social connections and marketing change.
LUMA Partners publishes an annual "State of Digital Media" report. LUMA is always forward in their thinking. The 2018 report kept its tongue in its cheek when it challenged firms to "Fire your CMO", citing the rapid growth of Direct-to-Consumer insurgents on traditional markets and incumbent brands. This year LUMA's 2019 Report unusually proposed that marketers think about "The Forest for the Trees”. This may be our generation’s wake-up call to enterprises, the "Marketing Myopia" of its time.
In evaluating marketing effectiveness modern practitioners have used two approaches. Focusing on paid media, Media Mix Modeling (MMM) analyzes only a subset of the budget and resources marketing commands. Tracking individuals through the digital journey, Multi-Touch Attribution (MTA) focuses only on short-term performance improvements. Both have under-delivered as frequently reported (e.g.) Inconvenient Truths of MultiTouch Attribution. Both omit the emotional and social dimensions of consumer behavior.
Marketing is ever more complex and changing. We tracked over 50 new tools and practices in the first half of 2019 alone. Marketing is also more important to business than ever. New solutions are necessary to inter-relate over time all dimensions of a brand's marketing investments and strategies: from sponsorship, communication and influencer marketing, to creativity, engagement and messaging content. The search for holistic, wide-angle and long-term solutions is resulting in the development of new approaches like our Brand Growth Modeling with its focus on prediction not attribution.
Marketers may be charged with accountability for growth, but they know their brands succeed or fail within the context of the consumer culture of their time. In particular, we understand that today brands have even less control over the marketplace conversations about their brands than ever. Concepts like brand positioning may still be relevant, but now it is the consumer who positions the brand not the enterprise, and it is consumer perceptions of value and relevance that ultimately determine demand.
Thus, even a comprehensive categorization of a brand's marketing is only one of the factors important to measure effectiveness and forecast the brand's outlook for an uncertain future as close as 2020. It would be myopic to assume otherwise.
Those still using MMM and MTA may consider the shifts we captured in television media, social networking, business models and new product categories, that few anticipated:
In television and broadcast, from linear and cable to streaming video on-demand services from cable, with advertising (Hulu) and without (Netflix)
In social networking from Facebook to Instagram and Snapchat, and the even more dramatic rise in adoption of Tik Tok
In business models the continuing rise of DTC and development of sustainable, recyclable services from new and current retailers
In product categories, the emergence of hard seltzer the "new drink of the summer", led by a White Claw brand as surprised as any by demand
The highest profile illustration of the impact of these shifts may be the Kraft Heinz impairment charges attributable to updated brand valuations.
What destroyed brand value at Kraft Heinz? Was it the budget reductions mandated by acquirers 3G Capital (as most pundits assert)? Or was it that the company was badly run and its marketing poorly executed (leading to executive change)? Or was it that supermarket private label brands eroded differentiation and depressed profitability (yet other brand owners like P&G and Unilever perform well)?
Kraft Heinz has iconic, powerful, global brands. Heinz ketchup was loved and a recent You Gov survey confirms its enduring appeal in the U.K.. Working on the brand many years ago, a researcher told us how she watched as mothers admitted to buying a supermarket brand but confessed to serving it in an old Heinz bottle they kept: because otherwise, the family would not accept it. And yes, they guessed quickly it was not Heinz.
I doubt Kraft Heinz mismanaged or under-invested in its brands. Could the pundits have done better? Do they understand the true driver of marketing effectiveness is no longer spending on paid media? Here’s a radical thought: the dominant factor in the erosion of brand value at Kraft Heinz is that we no longer trust processed foods as a source of nutrition for ourselves and families.
This is a consumer culture and societal trend.
Consider the outlook for any of the world's largest food manufacturers. Their challenge is not simply to measure the impact of marketing on today's sales, and prioritize the right segments, messages and channels to grow demand. The leading CPG brands almost all excel at marketing and are learning to build their first-party data to personalize at scale. Their challenge is more complex: to measure the impact of the shifts and trends today on their brands, anticipate how these will develop, forecast ahead, and plan to align their products as well as their marketing to align to their consumers.
This goes beyond consumer centricity and individual targeting. Individual channels are the roots of the trees. What matters is the health of the forest as an ecosystem.
What do we think about when we think about forests? Dialogues about the environment and climate change are generating another significant cultural shift. What for example does this mean for the manufacturers of paper products? How accurately can incumbent and insurgent brands measure the impact of these trends, and navigate the evolving world of consumer perceptions and expectations about how a brand should behave?
My first ever consumer brand assignment was for a manufacturer of toilet paper. Paper product categories have been among the most stable for decades. Now toilet paper may be about to become one of the most dynamic and fast-moving of categories as long-term incumbents are challenged by environmentally friendly insurgents (The Honest Company) and Direct-to-Consumer innovators (Who Gives a Crap).
Marketers can now evaluate their business not only through the lens of their own brands, not only through their immediate category and competitors, but additionally through the entire marketplace and consumer culture evolving and impacting their business models and brands at an accelerating pace.
Success in 2020 will depend on navigating this accelerating pace of change, seeing the forest for the trees.
Contact Stewart at Stewart Pearson at Consilient-Group