John Wanamaker was an early department store owner and innovator who was born in 1838. Replace "advertising" with "marketing" and you have a refrain that is familiar to generations of business execs. It's hard to believe that a quote attributable to a man born almost 180 years ago is still widely cited by marketing execs today. Unfortunately for Mr Wanamaker, future generations aren't likely to cite him quite as frequently. That's thanks to the fundamental transformation of marketing that started 15 years ago with the commercial development of the internet and has accelerated in the last 5 years as digital marketing has matured.
This transformation of marketing is as real for consumer marketers as it is for business-to-business marketers and for big companies as it is for small ones. But while big companies have the human and financial resources to experiment, their DNA makes it very difficult for them to fully embrace these changes. Old habits die hard. This creates new opportunities for smaller companies and startups who have less ability to dabble, their limited resources force them to focus. As a venture capitalist who invests in early stage companies, this transformation is a wonderful thing. Historically startups have had to innovate on one dimension - product - and then fight it out with incumbents where the rules of the game are well understood by both startup and incumbent. Now startups can innovate on product AND go-to-market. Startups that innovate effectively on go-to-market are able to tip the playing field even more in their direction away from incumbents.
Marketing is now accountable.
When you live in a world where it's acceptable to waste 50% of your budget, and effectively none of that budget is directly attributable, you tend not to have strong accountability. Marketing has traditionally had softer metrics than other parts of the organization. The classic struggle between marketing and sales was that marketing was responsible for delivering leads (Marketing's quantifiable metric) and sales would always complain that the leads marketing delivered were garbage. In today's world, neither of those things are acceptable. The tracking enabled by digital marketing provides the foundation for a rich set of metrics that can, and should, be used to hold marketing accountable. Every marketing program or initiative can be measured, and since it can be measured, it can be more effectively managed. I often tell engineering founders that they should think of marketing as an engine that they can build, tweak, and optimize - it's no longer a black-box. I've seen this change manifest itself in the way portfolio companies track and report KPI's or Key Performance Indicators. When I started in the venture business 10 years ago, the bulk of the KPI's were owned by sales or, in some cases, operations. Now if the marketing department isn't responsible for a majority of those KPI's, they are at least responsible for a plurality. It's not OK in the startup world for marketing to hide behind soft metrics.
The same channels of communication don't work any more.
Gary Sevounts, the VP of Marketing at Zetta.net recently told me that Google is the new Gartner. It used to be for enterprise technology purchasers, the analysts were their primary source of independent information. Now all users have to do is search Google to find a treasure-trove of relevant and independent information about any vendor and it's competitors.
There has also been a move away from traditional paid advertising to get your message out and towards earned media and content marketing. Prospects don't want to be told what to do in this new world. They are telling marketers and companies what they want when they want it. This means that a marketers job is no longer to just deliver a message through a megaphone, but to listen and provide prospects with easy on-ramps to learn about their wares.
Most channels of communication in the past evolved in a world where mass communication was the norm. As a result, marketers were used to blasting their message out to huge audiences hoping to score a few hits. It used to be acceptable, for instance, to spend oodles of money on a trade-show where only a small percentage of attendees might be receptive to your message. Why would a sophisticated marketer today use such a blunt instrument when they can engage target prospects who are receptive through webinars that are available when the prospect wants.
It's no longer about awareness, it's about engagement.
Marketing has historically been primarily about awareness - the tippy top of the funnel. Marketing is moving further and further down the funnel as companies are trying to be more efficient and their go-to-market gets more economical. We're already seeing with many of our companies that marketing's job is to land the customer - get them to pull out their credit card and start paying. It's then sales job to upsell them and grow that customer over time. In order to get a prospect to that point, you need to do more than just inform, you need to engage. Engagement can happen many different ways. It can mean getting the prospect to share, in detail, the problem they are trying to solve and the shortcomings of their current solution. It can also mean getting the prospect to actually start using some part of the product. In many cases, engagement means both of those things and it culminates in the prospect already having used the product through a trial becoming a paying customer without ever having interacted with a sales person.
Now there is a Marketing Pipeline too.
The pipeline has long been associated with sales activities. Over the last 20+ years, sophisticated enterprise solutions have been built around managing that sales pipeline. The largest SaaS company today started out as a solution for managing that sales pipeline as their name suggests: Salesforce.com. The majority of our companies are now also talking about a marketing pipeline and managing prospects through that pipeline. I mentioned above the KPI's that marketing is now responsible for - in many cases, those KPI's are associated with different stages of the marketing pipeline. The marketing pipeline can be thought of the stages of engagement a company wants to take a prospect through before turning that prospect over to sales. In a company where the Marketing Pipeline is rigorously managed, Sales no longer has to worry about getting poor quality leads.
The tools of the trade are evolving.
Just as it took more than 20 years for the tools for managing the sales pipeline to evolve to their current state of maturity and ubiquitous use, it is likely to take a while for the tools that manage the marketing pipeline to mature enough to be used ubiquitously. Even today, if you use all of the best tools that exist, leading edge companies still need to integrate their product/customer interface into the marketing and sales pipeline. This integration can range from demos of specific functionality all the way to full-fledged trials of the product. These "Product qualified lead" - leads that have already engaged positively with the product - are for many companies, the only leads worth following up on.
A more scientific and accountable approach to managing marketing is better for everyone: investors get to see how their investment dollars are put to good use; sales gets higher quality leads; and the CEO can hold Marketing fully accountable and replace the Marketing exec if he/she can't deliver.