What’s Keeping Marketers Awake at Night

1. What’s KeepingMarketers Awake at Night John GustavsonPresident and Chief Executive OfficerCanadian Marketing AssociationCMA Ottawa ChapterJanuary 30, 2007

2. outside-the-box synergy the big idea ROI paradigm shift customer-centric critical mass buzz it is what it is low-hanging fruit 10 buzzwords not to use ina marketing presentation… …from the home office in Wahoo, Nebraska Courtesy the Creative Group

3. Four market realities • Post-Enron marketplace -- More shareholder/public scrutiny • Ethical and trustworthy companies being rewarded with higher degree of customer loyalty • Government will step in if we don’t effectively self-regulate • Canada facing economic uncertainty

4. Four marketing realities • Consumers have more choice • Technologies changing at lightning speed • Push marketing doesn’t work anymore • Consumers determine how they will interact with marketers • New media leading to brand fragmentation • More pressure on marketers to make measurable contribution to bottom-line and to deliver strong brand value

5. Hot marketing issues • Building brands in a complex environment • Marketing ROI • Managing the customer relationship • Emancipation by technology • The talent crunch • The delivery infrastructure • Government’s agenda • National DNC List / telemarketing rules • Consumer privacy • Identity theft

6. Hot marketing issue Building brands ina complex environment

7. The Brand Hot marketing issue • Building brands in a complex environment • Eight key factors • Globalization/internationalization • Impact of U.S. and international brands • Challenge “Canadianizing” global brand • Local brand management – is Canada just a U.S. branch office – are decisions going south? • The empowered consumer • More choice -- Today’s average consumer hit with 20 times as many messages compared to five years ago • Control of experience – driven by want vs. need

8. The Brand Hot marketing issue • Building brands in a complex environment • Key factors (continued) • Media • Cutting through the clutter major challenge for brand managers • Proliferation of new media/fragmentation • Consumer-generated media/interactive • Message blocking/filters • Shouting “at” consumers doesn’t work – successful organizations talk “with” consumers

9. The Brand Hot marketing issue • Building brands in a complex environment • Key factors (continued) • Technology • Consumer customization, personalization • First to market importance • Moving from supply to demand economy • Pace of change unpredictable -- Time to market/cost to market • Economic pressures – CMO taking back seat to CFO

10. The Brand Hot marketing issue • Building brands in a complex environment • Key factors (continued) • Demographics • Baby boomers vs. the online generation • Impact of Canada’s multi-cultural mosaic • More public moral code • Moral persuasion / government “suasion” • Ethical business wins • Organizational change – who owns the brand?

11. Brand 101The Brand Hierarchy The governing ideals that marketers leverage to build brands Brand Esteem Customer Experience Brand Stewardship Brand Knowledge Relevance Differentiation/ Leadership

13. The Brand Hot marketing issue • Building brands in a complex environment • Conclusions: • The brand is in a period of progressive change • Organizations that are flexible & relevant will win • Marketers need to engineer the ideal customer experience • Marketers need to better understand what makes the empowered consumer tick

14. Hot marketing issue MARKETING ROI

15. Marketing ROI Barriers to marketing ROI: • Difficulty agreeing on common definition • Lack of accepted cause and effect • Lack of data reporting capability • Lack of finance buy-in -- arriving at a number that will withstand CFO scrutiny

16. Hot marketing issue • Marketing ROI • Marketers under constant pressureto prove their impact on overall business • Challenges: • Main challenge for marketers is to better understand what they’re measuring and why • Pressure from CEO/CFO to provide immediate short-term results can jeopardize long-term brand health (equity markets focus on quarterly returns)

17. Hot marketing issue • Marketing ROI • No longer realistic to function in a silo where activities and successes are separate from overall corporate goals • Successful marketers shifting measurement thinking from being campaign/product ROI focused to being more customer centric • Latest Longwoods AdTrac study finds that 80% of marketers agree with the statement “it is important to have a measure of ROI that deals with delivery and consumption across multiple channels”

18. Hot marketing issue MANAGING THE CUSTOMER RELATIONSHIP

19. Hot marketing issue • Managing the customer experience • Managing the customer relationship where the consumer is more empowered is especially daunting • Marketers need to: • Respond to customers’ individual needs • Anticipate changes in those needs • Have the right tools to deliver

20. Hot marketing issue • Managing the customer experience • Canada above global benchmark in: • Data collection and use • Customer information • Customer experience • Canada falls below global benchmarks in terms of process management, technology support and retention

21. Hot marketing issue EMANCIPATION BY TECHNOLOGY

22. Hot marketing issue • Emancipation by technology • Personalized media technologies have spawned a "networked self" that is shaping consumer marketing and society at large Faith Popcorn • Seismic shift in brand-customer relationship • Negative customer experiences are broadcast to the world • Blogs, MySpace, YouTube • Impact of search marketing • Does Google own the brand?

23. Hot marketing issue • Emancipation by technology • Flip side: More choice for marketers • Important to engage in two-way dialogue • Push marketing doesn’t work anymore • Blog disclosure/transparency a major issue for corporations and consumer groups • “Paid” bloggers cited in Edelman/Wal-Mart case – October 2006

24. Hot marketing issue • Emancipation by technology • Conclusion: • New technologies are universal listening tools • Creative marketing using new technologies can be very rewarding if done right -- it can also be destructive and dangerous for a brand

25. THE TALENT CRUNCH Hot marketing issue

26. Hot marketing issue • The Talent Crunch • Inability to attract and retain talent number one threat to Canadian corporate profitability Accenture – December 2006 • 26% of Canadian employers find it difficult to fill permanent professional positions (lumped into this group are marketing staff) due to lack of available talent that is threatening growth plans Manpower Inc. – October 2006

27. Hot marketing issue • The Talent Crunch • Staff turnover big issue • Average CMO’s tenure just 23 months/brand manager on the job for 18 months • Impacts brand • Impacts agency/client relations • Major loss of intellectual capital when personnel changes every two years

28. CMA educational programming • Conferences • Advertising/Marketing Forum February 15 • B2B Marketing March 1 • Not-for-Profit (half-day) March 28 & Sept. 20 • Word of Mouth Marketing April 12 • Branding June 21 • Regulatory September TBA • Digital Marketing October TBA • Direct Marketing November TBA • Marketing ROI November 22 • Seminars (Spring 2007) • E-newsletters, introduction to direct marketing, blogs, data mining, copywriting, loyalty programs, effective persuasion • Customized in-house training

29. Hot marketing issue • The delivery infrastructure • Current four-year agreement between Canada Post and CUPW expires Jan. 31/07 • Talks under way to reach negotiated settlement • Potential summer of labour unrest

30. Hot marketing issue Government’s agenda national DNC list tougher telemarketing rules consumer privacy identity theft

31. Government agenda

32. Government agenda • National do-not-call list • Dec. 2004 -- Bill C-37 introduced in House of Commons • Spelled potential disaster for business • 2005 – CMA appears before government • CMA successful in securing: • Exemption where there is an established business relationship • Reasonable penalties • Exemption for charities • Nov. 2005 – Canada introduces amended legislation

33. National DNC List • Definition of “existing business relationship”: • 18 months – exists where a consumer has made a purchase or donation, has rented, leased or contracted for, or has otherwise participated in a organizations provision of products or services within the past 18 months. • 6 months – exists for six months from the dateof an inquiry or application from a consumer

34. Government agenda • Telemarketing • Several outstanding issues (B2B exemption, list cost to business, government responsibility for execution, enforcement, complaint investigations and consumer education) • Choosing DNC List operator part of government procurement process • February/March: RFP to be issued • Late 2007/Early 2008: DNC list up and running

35. Government agenda • CRTC also conducting wholesale review of all telemarketing rules (Note: No exemptions here) • CMA still stands by 2004 position • Need for universal calling hours • Seller-specific internal DNC lists • No agency-specific DNC lists • No need for unique registration number • No toll-free number or live agent requirement • 31-day enforcement window (for both internal & national DNC lists) • No change to existing and contact info rules • ADADs and voicecasting permitting for B2B & EBR telemarketing • PDD: maximum 5% abandonment rate • Spring 2007: CRTC to finalize telemarketing rules

36. Government agenda • Consumer Privacy • Federal privacy law undergoing mandatory five-year parliamentary review • Consumer groups want higher level of consent and stronger enforcement • Privacy Commissioner: • Not looking for more enforcement power • Believes law is “generally working well” • Some concerns around notification of privacy breachesand transborder flow of personal information

37. Government agenda • Review of federal privacy law • CMA appeared before Commons Committee in mid-December (first national association to appear before hearing): • Law appears to be working well • Too early to make any substantial changes

38. Government agenda • Review of federal privacy law • CMA position on data breach notifications: • Organizations have responsibility to notify consumers where loss or theft of personal information poses reasonable risk of harm • Challenge to establish correct threshold for triggering notification • Need for national guidelines

39. Government agenda • Review of federal privacy law • Outcome unknown at this time • Growing uncertainty: • Escalating pressure from privacy advocates for tougher privacy laws • With prospect of federal election, easy win for politicians • Hearings continue • Draft report expected in Spring 2007

40. Other major threat – identity theft

41. Other major threats • Identity theft • People believe their personal information is at risk – phishing attacks, transaction security, credit cards, spam • Number one privacy concern or “worry” for Canadians • Top consumer complaint at U.S. FTC

42. Other major threats • Identity theft – phishing attacks • 176 brands hijacked in October 2006 • Single record for one month (96 brands hijacked in October 2005) • Financial services #1 target Source: Anti-Phishing Working Group

43. Conclusions • Consumers more empowered than ever before • More and more difficult to build brand • More pressure to deliver ROI • New media/technologies changing at lightning speed • Big brother is watching

44. Ongoing CMA role ADVOCACY • Government relations • Self-regulatory initiatives • Do Not Contact service • Code of Ethics and Standards of Practice

45. Ongoing CMA role KNOWLEDGE • Expanding “marketing thought leadership” offering on the hot issues facing marketers • New marketing blog: www.canadianmarketingblog.com • New Advertising and Marketing Forum on “The Business of Ideas” – February 15 • B2B Conference – March 1 • New content on CMA website: www.the-cma.org

46. Ongoing CMA role COMMUNITY

47. outside-the-box synergy the big idea ROI paradigm shift customer-centric critical mass buzz it is what it is low-hanging fruit 10 buzzwords not to use ina marketing presentation… …from the home office in Wahoo, Nebraska Courtesy the Creative Group

48. What’s KeepingMarketers Awake at Night John GustavsonPresident and Chief Executive OfficerCanadian Marketing AssociationCMA Ottawa ChapterJanuary 30, 2007