In February 2008, I co-authored a Forrester report called The Connected Agency with Mary Beth Kemp (who is now at Ogilvy in Paris).
At the time, we observed that different types of agencies faced different challenges:
Traditional agencies were stuck in mass media mindsets
Digital agencies understood interaction but lacked branding chops
Specialists were creating new silos instead of integrating
Our solution was a model called The Connected Agency, focusing on three key shifts:
This prescription was based in no small part to the shifts underway in the digital marketing and social media landscape. While we didn’t get the answer entirely right (i.e. that agencies would integrate with communities), the shift from blasting out push messaging to facilitating consumer experiences is well underway.
If you want an adaptive company, you will need to unleash the creative forces in your organization, so people have the freedom to deliver value to customers and respond to their needs more dynamically. One way to do this is by enabling small, autonomous units that can act and react quickly and easily, without fear of disrupting other business activities – pods.
A pod is a small, autonomous unit that is enabled and empowered to deliver the things that customers value.
Six years after The Connected Agency, I think it’s time to revisit the model and incorporate the lessons learned from years of social business design.
The skyline has changed a bit since I’ve been here and it’s already very different from four months ago when the picture above was taken.
Thinking about the four years I spent in Austin, here’s what I’ll
the people. For the most part, they are still laid back and a little bit weird. This is awesome and refreshing, especially when engaging with the service industry.
the food. I’m not a foodie, so my favorites include Tacodeli, Home Slice, and Rudy’s. Still surprised that I came to accept buying BBQ at a gas station.
the convenience. Austin is small and easy to get around. I only put 6,000 miles on my car a year. The traffic lights go flashing red at night. 10 – 15 minutes to get anywhere unless it’s rush hour.
Gladly leave behind:
the allergies. No one tells you that there’s a different type of nature to make you sneeze, cough, and losing hearing in an ear, all year long.
the bugs. Scorpions belong in cartoons, not in your sink. Roaches that live in trees and attack from above. Mosquitoes that are everywhere and draw blood like little piranhas. In fact, I just killed one on this airplane.
the heat. Although everyone gets used to it after a while, it’s still unpleasant to bake like a chicken tender under a heat lamp every time you walk outside from May through November.
More next week. But for the last week I’m here, I’ll enjoy some breakfast tacos, barbecue, and local brews.
This new book outlines the what, why and how of functional integration, which helps brands win by being “connected by design.”
Once in a while a big idea comes along that helps make perfect sense of what’s going on out there. As companies continue to struggle with digital disruption, R/GA’s Barry Wacksman has identified one (perhaps the) key pathway to success: functional integration. Now, along with Chris Stutzman, he has expanded on this thinking in a must-read book: Connected by Design.
This book expands on the concept of functional integration originally introduced to the world at Cannes in 2012 and explains how world-leading brands including Nike, Apple, and Google have driven digital business transformation by building connected ecosystems that enhance customer experiences, lock in loyalty, and create competitive advantage. I’ve been thinking about this idea for a few years now from a different angle: own the experience, own the future, watching how the companies above as well as Amazon, Microsoft, and Facebook have been building out their businesses.
The seven principles of connecting by design are:
Utility is relevance
Context is king
Synergy captures customers
Reimagine value creation
Redesign value delivery
Redirect toward value capture
Lead like the world depends on it
Business leaders need to understand these principles in order to break free from legacy brand-building approaches including aimless product line proliferation, oversaturating media spend, and incremental innovation. Barry and Chris explain not only what is going on, but why the model works and how other brands can employ it, even if they are not in a high tech industry.
Connected by Design is a must-read book for anyone who wants to understand how to survive and thrive in the digital age. You can download and read the book’s introduction here. While you’re at it, check out Part 3 of this video to hear Barry explain the concept of Functional Integration. Congrats to Barry and Chris on a book well-written (and Karen Murphy at Jossey-Bass/Wiley on editing)!
A Chief Digital Officer is the leader to help companies navigate successfully through the current era of digital disruption.
I’ve just published new research with Constellation focusing on the role of the Chief Digital Officer (CDO). CDOs are relatively new and many organizations desperately need them to help build capabilities and competitiveness.
Digital disruption has affected every industry around the globe, bar none. Emerging technology has shifted the balance of power from long-standing institutions to newly formed entities that have been designed to capitalize specifically on the contemporary operating environment.
A Chief Digital Officer is the leader to help companies navigate successfully through the current era of digital disruption. The CDO charter includes formulating digital business strategy, activating operational initiatives, and managing organizational transformation.
But the roles of CDOs are not one-size-fits-all; brands should hire and focus this executive on a critical set of industry-specific challenges.
The responsibilities of a Chief Digital Officer vary based on industry and company need; I’ve identified three major types of CDO segmented by business model and customer value proposition.
Consolidating these social tools allows the company to sell a one-stop social solution, reflecting a maturing market on the client side where most companies have gotten their social media management (organization, process, and now tools) in order.
ExactTarget can now consolidate its focus on winning marketshare on a bigger stage: marketing, inclusive of social media. Over the past five years, social media has been a catalyst driving technology innovation and marketing opportunity. Now that most brands have figured out where to play and how to win in social, the focus returns to the big picture and bigger budgets.
The Radian6 Buddy Media Social Studio offers everything a brand requires to manage social media: collaborative workspaces, calendars and workflow, multi-platform publishing, listening, and content analytics. I expect the offering to compete primarily against Oracle’s Social Cloud, Sprinklr SxM, and Adobe Social. However, the ExactTarget, Adobe, and Oracle solutions are parts of larger marketing clouds and enterprise platforms, which can help open doors to the larger budgets of the CIO and influence of the CMO, beyond the scrappy social media team that exists at many brands.
Brands will be increasingly offered incentives to commit to a single vendor’s marketing cloud and must weigh the benefits and discount of a single solution versus the risk and cost of self-integrating best-in-class point solutions. Very few brands operate entirely under a single vendor’s cloud today and this is a zero-sum game. For example, JetBlue is referenced as using Radian6 Buddy Media social studio and last week JetBlue was referenced as a Responsys customer. What happens next? Does JetBlue convert to the entire Oracle Marketing Cloud, ditch Responsys for ExactTarget, or continue to operate different tools in what appears to be different silos of the organization? Most brands are going to be asking themselves similar questions over the months ahead.
Challenger brands may believe that “you don’t have to be the biggest to be the best.” However, the market is clearly heading in a direction that values the ability to deliver on a truly customer-centric perspective. Adobe’s Marketing Cloud has a master marketing profile and Oracle’s Marketing Cloud has a universal customer profile. Brands need a single perspective on the customer across the entirety of MARKETING, not just social media. Ultimately the large marketing clouds will win while incorporating innovative features from smaller startup vendors. Although the product name is a mouthful, the Salesforce ExactTarget Marketing Cloud Radian6 Buddy Media Social Studio is an inevitable step towards consolidation and single-source management of the customer relationship/experience.
If you’ve been watching the industry, you may be wondering “didn’t they already have a marketing cloud?” They’ve had all of the pieces, yes. Before yesterday there was an Oracle Social Cloud comprised of the solutions formerly known as Vitrue, Collective Intellect, and Involver. And the company had other marketing solutions including Eloqua, Responsys, Compendium, and BlueKai. As of yesterday, those pieces are now formally brought together as a single solution:
This launch matters in the context of Oracle’s overall go-to-market and here’s what matters:
1) Potential for revenue growth.
Oracle is a $40 billion company. According to President Mark Hurd, the marketing cloud gives Oracle an application to sell in to a new audience: the marketing department. The market for enterprise applications is dominated by a handful of heavyweight contenders including SAP, Oracle, and IBM. All three of these firms are interested in leveraging their longstanding CIO/CTO relationships to connect with the CMO and become the enterprise system of record. The Marketing Cloud business is worth “hundreds of millions of dollars” modeled as annual recurring revenue and selling in to complement financials, operations, and other systems would be a strong source of revenue growth for the company. But Oracle can’t walk into a CMO’s offer with a menagerie of acquired point solutions — the single Marketing Cloud product allows sales to offer an enterprise-level platform.
2) Integration will make or break the Cloud.
Marketing Cloud General Manager Kevin Akeroyd stated the critical success factor in the near-term competitive landscape: “anyone with access to capital can acquire companies, but whoever integrates best will win.” This requires integration of code in order to facilitate data sharing between solutions; in Oracle’s case, it offers a Universal Customer Profile as the customer-centric backbone of its systems. Moreover, change management is just as important in ensuring post-merger integration success and the Oracle teams cite a high retention rate of management from Vitrue and other firms indicating positive results.
3) There’s something missing.
Oracle openly acknowledges there’s additional work to be completed in building out the Marketing Cloud solution. Although AppCloud offers connections to a wide variety of point solutions, Oracle still needs a tightly integrated solution to deliver on the need for marketing metrics tied to business objectives. And not just social media measurement or web analytics — marketers need customer-focused omnichannel metrics with proper attribution to understand campaign performance.
Final thought: social becoming increasingly siloed
It’s interesting to see Oracle’s Social Cloud subsumed by the larger Marketing Cloud. While social media had its heyday and undoubtedly plays an important role in customer engagement strategy, it’s ultimately just one element in the larger marketing picture. Over the course of this year, look for the word “social” to disappear from product offerings and marketer lexicons, just as “.com” disappeared from company names and logos once brands discovered that digital business is really just “business.”
In the other direction, the cloud competition is becoming increasingly expansive and the stakes can’t get much higher. James Bond fans might remember the video game that Sean Connery plays in Never Say Never Again called “Domination,” that delivers electric shocks to the loser. Except in this case the price of defeat is going to cost a lot more than $267,000.
1) The availability of an integrated paid social media solution.
This capability allows Sprinklr clients to manage owned media (publishing), earned media (via listening/engagement), and now paid media (social advertising).
Sprinklr will claim competitive advantage in offering a single integrated data model vs. apps in parallel (Adobe), UX overlay (Salesforce), or API partners (Oracle).
In theory, tighter integration can offer more powerful data analysis capabilities. In practice, Sprinklr cites an unnamed client that saw a 25% lift in paid social ad performance from using the module.
The “big three” marketing clouds already offer paid social ad creation, placement, measurement, and optimization: Adobe’s Media Optimizer, Salesforce’s Social.com, and Oracle via API partners Kenshoo, Nanigans, and SHIFT. This added capability brings Sprinklr up to par with bigger players in social media management functionality and just in time as paid social gains increasing priority in the paid/earned/owned media landscape.
2) A $40 million Series D financing round led by Iconiq Capital
This round brings Sprinklr’s total capital raised to $77.5 million. Sprinklr’s previous three funding rounds only had two participants: Battery Ventures and Intel Capital. But Iconiq Capital isn’t a venture capital company; it’s a registered investment advisor (RIA).
This is an interesting lead investor, especially for the social media space in which Sprinklr currently operates. Unlike VC funds that typically get passive investments from pension funds and insurance companies, Iconiq handles the private, personal investments of individual clients including Mark Zuckerberg, Sheryl Sandberg, and Sean Parker, among others. Investors like to smooth the road ahead for their investment vehicles and those are three pretty powerful operators to have on your side.
Sprinklr tells me that they intend to use the round for “growth.” This can only mean organic expansion, because the round isn’t big enough to start acquiring pieces to build a complete marketing cloud (e.g. a marketing automation solution).
What Sprinklr’s annoucement means
Valuations typically aren’t disclosed, but Sprinklr undoubtedly has its sights set on joining The Unicorn Club and potentially filing for an IPO between now and 2015. The alternate route would require a bigger player stepping in to acquire Sprinklr, which is becoming an increasingly expensive proposition (but still no big deal for the deep pockets of an IBM, SAP, or Microsoft). Sprinklr’s preference would appear to be the former, as it has shown an inclination to build (e.g. listening and paid social) rather than buy (the exception being Dachis Group which provided some code and mostly developers).
Bigger vendors must evaluate the growing threat that Sprinklr poses to the early market-leading clouds. Smaller vendors need to bulk up or get bought out soon, before going the way of Argyle Social. Clients/end-users need to evaluate their marketing technology stack and decide whether running a collection of best-in-breed point solutions still makes sense or if committing to a larger integrated cloud now will pay bigger future dividends.
As a reminder, I’m interested in hearing from companies that enable customer experience management, provide marketing services (including agencies and consultancies) and support innovation agenda items.
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