Marketing’s manufacturing problem

Business in the 20th century was characterized by a relentless pursuit of supply chain efficiency. The end game was plant and logistics that required the fewest inputs, the fewest people, just in time manufacture of customized and market relevant goods all executed in ever more vibrant shades of green.

 

For many enterprises the point of diminishing returns from such efficiencies has been reached, or will be soon enough. For businesses in the marketing services part of the supply chain the hot breath of procurement was felt in the form of production cost auditing, pressure on service pricing and increasing demand to lower the price of media inventory, easily the biggest cost in that value chain.

 

All well and good and an entirely reasonable approach but one that may now be working against the interests of marketers and the brands that produce the revenue that keeps them in business.

 

A decade ago a major packaged goods firm in any developed market would, on an annual basis, create half a dozen television commercials for a given brand, two or three print executions, a similar number of pieces for billboards, the occasional promotional execution piece for newspapers, an amount of in store material and maybe some direct and PR marketing items.

 

It would then distribute those items among a small group of media vendors of whom perhaps 7 or 8 would represent 80% or more of the total transaction value and manage relatively limited flows of data to track brand health and the contribution to that health of marketing activity. All this determined the size and shape of marketing teams and the teams at the agencies that served them and of course the people costs on both sides of the house.

 

This is all well and good until we pause to consider the following blindingly obvious sequence of events:

  1. Media fragments and ‘per unit’ audiences fall
  2. Media proliferates in terms of number and type of outlets
  3. Advertising / marketing formats proliferate on ‘Google’ time
  4. Media is produced by everyone (in their millions)
  5. The data derived from media multiplies exponentially

 

This is an almost perfect counterpoint to the manufacturing issue in which everything consolidates and thereby (you would think) requires a different kind of response. That response should be for advertisers to re-calibrate the number of people both inside their own businesses and their supply chain that are required to prosecute effective programs against this changing environment.

 

Today we need to make more material, make it more quickly in more and rapidly changing formats. We need to distribute it in massively more channels, measure infinitely greater and more timely data streams, negotiate with more partners for different kinds of inventory and support all that with an ever growing arsenal of technology and talent.

 

If you are a marketer that thinks you have cracked this code then well done. If you are not (and you will be in the majority) maybe it’s time to speak to your board and explain that the value opportunity of customer intimacy, granular targeting and customized communication represent the best chance yet to solve the Wanamaker conundrum and that a relatively small part of the ‘50% dividend’ that the solution may yield needs to be reinvested in the talent and resources that will produce it.

 

Perhaps then the 21st century in business will be characterized by the relentless pursuit of demand side effectiveness rather than supply side efficiency.

 

 

 

 

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