What happens when that is wrong?  What does marketing do when it STARTS with the purchase?

This is an extreme version of what Procter calls “store back”.  However, based on shopper insights research I have conducted, I believe that, for grocery products, over half of first-time purchases are unplanned; in fact, the shopper might not even have been aware of the product before buying it.  In those cases, it all STARTS with the purchase and ENDS with awareness.  The purchase funnel is totally flipped.

When it all starts with the purchase, the role of marketing communications changes.  Now marketing must get the product noticed at shelf and impart meaning to it instantaneously for the shopper.  Packaging, shelf placement, thematic displays, signage, mobile messages that are location-aware, shopper offers based on that shopper’s history, and master brand familiarity become the main vectors for creating meaning.  In this communications model, when someone encounters a product they were unfamiliar with they should be able make sense of it instantly; to tell YOU (the marketer) what the product is about, rather than you having to tell them in a concept statement.  After the product is bought and being used, there is more sense-making that occurs.  If the consumer is really into the product as they are using it, now you have an opportunity to build engagement:  they might join a community, become a fan in Facebook, share comments, start seeking out advertising and recalling it, seek out the brand’s “creation story”, etc.  In this scenario, the impact of brand narrative, brand values, social media engagement, etc. come AFTER the purchase, so they solidify rather than precondition the brand-customer relationship. 

Could it really be that it all starts with the purchase?  Well, for certain types of products and retailing situations, I believe it does.  Consider this:

• Conduct a study to measure the percent of products bought for the first time that are discovered in-store (I got 50%+)
• Do you think the products bought for the first time on impulse in a Kroger’s, Trader Joes, Costco, Target, etc. are all the same and were previously known? If not, then you believe that brand adoption can START via the shopping experience.
• Consider shopping styles that people have, reflecting their relationship with a product category.  Can you imagine categories (e.g. artisan cheeses) where shoppers like to explore and find new interesting products to buy?

This last point is perhaps the most important.  People have different shopping styles for different product categories which means that the heuristics they use to make decisions are systematic.  You might not ever buy carbonated soft drinks the way you buy interesting dips that you just tried at a tasting station.  This is where behavioral economics intersects marketing; the study of how people decide is often more interesting than theoretical purchase intentions.  Hence, some products will predominantly be bought via a process that starts in-store.  Others will be bought based more on the traditional marketing model requiring awareness built via mass media. You need to study HOW people decide in order to understand when to start from the traditional end of the funnel and when you start from the other end of the funnel.

When it all STARTS with the purchase, everything that you thought was upstream becomes downstream and the thing that was the most downstream of all, the purchase, becomes the most upstream event. 

This is “store back” on steroids.

Now, the researcher in me has to ask the rhetorical question, “Does the marketing community have the research tools to act on this new way of thinking?”  Rhetorical because, I don’t think we do.

Everything will become digital

Digital used to be synonymous with online but everything will become digital. Dave Poltrack from CBS predicts a huge increase in HD, 3D, and IPTV TV sales.  David Verklin, President of Canoe Ventures talks about the interactive TV advertising experience that will be nationally available via Canoe (a joint venture of the biggest cable operators).  video in Facebook?  How about facebook built into your new 55″ HD 3D TV? The future of print media is being revolutionized by electronic readers like iPad.  One can also imagine codes being inserted into print advertising or editorial pieces that, when captured by a smart phone, instantly leads to a multi-media experience or electronic coupon. Radio sees a digital path forward with servable audio streaming.

Digitization is transformational to the media experience, advertising possibilities and media businesses.  No longer is CBS a TV company or Time, Inc. a magazine; no longer is “media platform” the business organizing principle.  Now, the media property is the organizing principle and it must live synergistically across platforms.  Advertising on traditional media no longer has to be static and served to a whole audience (but more on this later).

As traditional media reinvent themselves in a digital age, they will hold onto, even increase, their attractiveness to advertisers.

Data will always trail the media possibilities

New touchpoints are emerging weekly it seems.  Advertising via the iPad is exciting and was born so very recently.  Apps for smart phones that create amazing location-aware and shopper marketing options are emerging so fast it is mind-numbing.  How can a manufacturer not want to put codes on packages that, via a reader that any smart phone can now have, bring a brand’s story to life with sight, sound, and motion at point of purchase?

Digitization allows a marketer to guide a consumer along the path to purchase right to the check-out.  Imagine a TV commercial where you can request a coupon that then gets delivered to your cell phone and is integrated with cell phone payment via a reader (exists in Asia already).

The point is, syndicated media research data bases, custom marketing research assessment can’t possibly get ahead of this; they will always be playing catch-up, focusing on the most significant of the touchpoints that are attracting substantial funds. The marketer who is cautionary and wants to wait for “solid evidence” of the effectiveness of a new media option will find themselves behind their competitors.

The importance of understanding audience size will diminish as we go to ad serving

The most important things in traditional media, the stats we all understand, relate to audience size ( GRPs, circ, etc.) However, imagine watching an episode of House on a platform that allows for selective ad serving.  As soon as two different households start getting different ads served to them, measuring total audience becomes less important to the advertiser.  They need to know how many got served the ad according to targeting ad serving rules, but total program audience is not a measure of reach in a targeting world.  Online, monthly uniques are a guide to which sites an advertiser should consider but they are paying for impressions served (or clicks).  “Traditional” media could/should move to this model as it becomes digital.

If this comes to pass as traditional media become digital, imagine the implications for syndicated media currency databases, and media tools.  While this will be traumatic to the existing infrastructure for “traditional media”, the increased business value of advertising and the increased CPMs that advertising should command when it is made more relevant based on intelligent serving rules are potentially very significant.

While last year the story was about the specific media (Twitter came out of nowhere, Facebook eclipsed My Space), this year, it’s a story about marketers getting real about social media.

Now we have great case histories that demonstrate the power of social media from a marketing, innovation, and insights perspective.  We also have a reaffirmed understanding of the power that social media places in the hands of consumers (ask Toyota).

Last year, social media was still a little theoretical.  Now it’s real.  The advertising models are starting to emerge, consumer-created beverages (e.g. Vitamin Water Connect) via Facebook and proprietary environments have gotten launched, and listening is now being used a source of shopper insights that manufacturers are sharing with retail partners.  Yes, even the most primal of marketers…retail merchants…are listening!

I believe that the principles of brand management are changing in our digital age (I’ll actually be teaching an MBA course at NYU on this).  Marketing teams guide the meaning of brands but no longer control it.  You have to let consumers into your brand.  There are only two possibilities—either consumers don’t care about your brand, or they DO care and if they do, they want to be heard.  If you are not encouraging conversation, you will risk turning ambassadors into angry activists.

In the new digital age, creating this access and authenticity means you start with listening (how are conversations starting, where do they take place, what is the language?) and then evolves into you becoming a welcomed part of a community.  In this world, research and insights lead to marketing, rather than insisting on their separation (the language of surveys always begins, “we are conducting a marketing research study and won’t sell you anything”). 

In a world where you have put the human at the center of marketing thinking, listening is critical and social media is a huge conversation catalyst. 

To move the industry forward, the ARF is conducting its “Social Media Bootcamp” for the second year.  This year, there is a greater emphasis on case histories (Facebook, Kraft, and Vitamin Water who gave fans the tools to create a new flavor that was launched in March) because that is the stage we are at.  BIG marketers, are now taking social media seriously, not just those who couldn’t afford TV.

Social media is getting real and marketers and marketing researchers need to understand what this means for their business and how to set up effective social media strategies.

“Have senior, seasoned impact players on the front line (who are experts doing what the client can’t do vs. what the client doesn’t have time to do) focused on deploying their creativity on ideas that drive client’s business. Be focused on value creation, embrace and use data and analytics to elevate work, and be collaborative.”  

–Tony Palmer, chief marketing officer of Kimberly-Clark quoted in Ad Age May, 2010

Actually, Mr. Palmer was referring to K/C’s relationship with its advertising agencies but the statement could easily apply to what a progressive research/insights team wants from its research partners (take a minute and reread it with that in mind).

At the annual ARF Rethink conference, Susan Wagner, Vice President, Global Strategic Insights, Johnson & Johnson Group of Consumer Companies called for this level of servicing and said she would pay more for it.  Stan Stanunathan, VP Marketing Strategy and Insights , The Coca-Cola Company said he would be interested in creating leveraged compensation models where the research agency gets a bonus for superior business outcomes (which is starting to happen with ad agency compensation approaches).

Could the evolution of advertising agencies provide footprints in the snow for the evolution of marketing research firms?  If so, let’s examine ad agency evolution.

About 15 years ago, at super-agency conglomerates like WPP, the media parts from the different agencies were consolidated while the creative agencies were kept distinct.  The reason this made sense, as Erwin Ephron explained to me, is that media buying is about scale much more than the creative side is.  One could imagine thinking that media was like the factory and the creative side was where catching lightening in a bottle happens.  So an advertiser might find a super-agency, rotate among the creative teams until they get what they are looking for, and keep the media buying consistent.

Now a funny thing happened in the advertising industry; I’m not sure that these two halves of the business evolved as anticipated.  Today, media agencies are not a commodity service; they have highly differentiated offerings based on buying power, approaches, tools, and ability to impact media strategy which is becoming increasingly central to brand strategy. Media agencies are often the lead agency, have created planner teams (like creative agencies) and are even building their own creative teams supposedly to communicate more seamlessly with the creative agencies chosen by the advertiser.  In other words, the media agencies have evolved such that they are also in the value creation business.

Here’s the analogy to super-research agencies.  Online panels…the “factory” that executes the research is built on scale like media buying and the research account teams offering strategic thinking and branded solutions …or should be…are analogous to the creative agencies (splicing in Tony’s quote)”…deploying their creativity on ideas that drive client’s business. Be focused on value creation, embrace and use data and analytics to elevate work, and be collaborative.”

In fact, the consolidation of online research “factories” is happening.  For example, Kantar has built and acquired research agencies accounting for billions of dollars of billings which are served by a consolidated online research panel, Lightspeed.  We also see the emergence of companies that are basically production companies like GMI and Peanut labs.

If the big research agencies were to split their businesses this way, I’d say that both pieces have impressive business opportunities.  The marketing research agency’s commercial model is still mostly based on running research projects or programs efficiently and then analyzing the results from those programs.  However, in the ARF Insights Value Creation Model, we see the opportunity for “synthesis” to add tremendous value.  Right now, I’d say that consultants, account planners, and buyer-side insights teams are much more in the “synthesis” business than research agency account teams, but if research agencies  cultivate new skills in their account teams and ratchet up their offerings they can compete by providing a whole new level of business impact. There an opportunity to create a new type of research and insights firm with a high level of expertise at finding the “so what”.

Panel operations “companies” would have three great opportunities.  Improve online research data trustworthiness, develop strategies for obtaining representative data from hard to research consumer groups, and offer effective and efficient access to these capabilities to the broad research community.

At the ARF Research Transformation initiative, research firms are having this much needed conversation collaboratively with their clients about the future of the research ecosystem.

“Inspiring better business futures, by enabling organizations to bring value to daily lives, through continuous learning, listening and translating people and markets.”

It’s about being an agent of change for the whole organization.  Inspiring better business futures is what we do.  Research and insights is just our fastball. As Donna Goldfarb from Unilever said when asked what her job is, “I sell soap”.

Then we heard a sobering factoid from McKinsey; 70% of all transformation efforts FAIL.

So, how do we make sure that our Research transformation initiative is a lasting metamorphosis rather than something that reverts back to old beliefs and ways of working?

One of the great insights from the meeting came from Guarav Bhatnagar, Assoc. Partner, McKinsey who said that most transformation initiatives are impelled by an “oh sh*t” motivation which, he notes, is not sustainable.  As soon as things start getting a little better, the sense of urgency diminishes to the point that the transformation mandate loses its steam.  So while this is a great way to create a call to action, a transformation must also find the “oh wow” for the whole organization.

The original motivator for the ARF research transformation initiative was from an ARF meeting in July 2008 about listening methods which quickly become a discussion about how the research function is not making the impact on organizations that it should be.  At that meeting, leaders said things like:

• “We have lost the capacity to listen for the unexpected”
• “Surveys are torture”
• And the famous Kim Dedeker (then at P&G) remark; “Research as we know it will be on life support by 2012’. 

Clearly, we had our “oh crap” call to action.  To make our transformation sustainable, we must find the “oh wow” and we need to find it for the organization, not just for the research profession to make our transformation sustainable.  Guarav also noted organizations don’t transform, unless people transform.

This perspective ties perfectly into the July 2009 ARF workshop where we thought of the research function as if it were a brand and sought to find a new brand narrative.  The thinking from the book Primal Branding (Pat Hanlon author) is that brands are belief systems.  For the brand “research”, those beliefs must become corporate culture, permeating the whole organization.

Brand narratives should be about the “oh wow” and changing the belief systems of people, meeting the McKinsey acid test for lasting transformations.  Here are selected passages from the Research brand narrative created at the ARF:

Before digital media and the long-tail of choices, things were different. ..Today, marketing organizations must commit top to bottom to becoming fast learning organizations and immediately sense seismic trembles in people’s needs, preferences, attitudes, changing behavioral patterns in social and media communities, and on and on.  Inspired by human insights, today’s business leaders must create their own future.

…In a great leap forward, the Research/Insights function serves as an agent of change for creating the fast-learning organization.  We bring the voice of the human into the boardroom. We use proven methods for surveys and for “listening” to social media, search, shopper databases, digital behaviors, customer care, continuous and other naturally occurring data.  We also take advantage of new methods such as biometrics, communities, virtual environments…to help us uncover the next marketplace move, even when consumers cannot yet articulate the changes themselves.

Then, we translate for the organization the meaning of what we are learning about human beings and markets into lucid foresight that tells us where to play–and where to win.  Research used to be about the what (data), then about the so what? (analysis). Today, we go to the now what? (strategy, action), and we find ourselves accountable for the business results of what we recommend. 

…Our team needs to continually retool, going beyond business metrics that merely quantify–and commit to listening for the unexpected (which is where change and innovation and leapfrogging your competition comes from). .. the enterprise must realize that funding consumer and market learning is a critical investment, not a discretionary expense. 

We need to create a new breed of “researcher”: inquisitive and courageous by nature, analytical by training. They are passionate about understanding consumers, translating insights into business opportunities, leveraging social sciences and analytic skills, and then using storytelling to communicate these insights in unforgettable ways.

Above all, they bring energy and insights into the boardroom.

While some decision makers may prefer to trust their own instinct, and some traditional researchers are more comfortable crunching numbers than “listening” to consumers, they are today’s minority and against great odds.  We must understand that the big innovative successes will always be driven by human and market insights and that this is the new path forward…

The rituals of how we work together are changing and must continue to change.  We are brought into big issues from the beginning, we help frame the challenges and opportunities, we take stands based from our perspective of human behavior…We build windows, not walls. We create sparks of insight … that light the way to growth. Forward.

Via The ARF Research Transformation Super Council, industry leadership will be creating the roadmap to this vision.