This paper examines the systemic transformation of advertising and Integrated Marketing Communications (IMC) strategies driven by digital technologies, social media, and advanced analytics. It traces how the rise of Big Data, behavioral analytics, and consumer-generated content is redefining how marketers identify, segment, and engage audiences. Drawing on the persona-based strategies of Walmart and the mass-customization IMC framework of Nike's NikeID product line, the paper illustrates best practices in audience targeting, campaign measurement, and multi-channel coordination. It also addresses how the Internet has restructured the economics of advertising, elevated the importance of search engine optimization, and enabled precise measurement of each promotional channel's contribution to the buying process.
The paper demonstrates applied framework analysis: it introduces established models (the 4Ps, Web 2.0 design objectives, BCG portfolio matrix) and then tests them against actual company behavior, rather than simply describing the models in the abstract. This technique — using conceptual frameworks as lenses rather than as endpoints — is a hallmark of graduate-level marketing analysis.
The paper opens with a broad framing of marketing disruption, then narrows progressively: from industry-wide advertising trends, to the Internet's specific economic and strategic effects, to measurement methodology, and finally to a detailed single-brand case study (Nike). This funnel structure — wide context, focused mechanisms, concrete application — keeps the argument coherent across multiple analytical layers and is well-suited to applied business writing.
The traditional strategies marketers use to attract, sell, and serve prospective customers — and to retain existing ones — are undergoing a systemic, fundamental change. The long-held beliefs centered on product, pricing, promotional strategies, and place or distribution (the 4Ps of marketing) are being challenged by the mercurial nature of today's customers and the speed with which their preferences are shifting.
No longer can a product or service be marketed purely on the basis of its functional value, or worse, its features and purely physical attributes. Customers expect excellent experiences from products, augmented by personalization to their individual tastes and preferences (Ramaswamy, 2008). Marketing services is as much about defining realistic, high expectations as it is about aligning every customer-centered process to delivering a consistently excellent experience. Social media channels are making the task of communicating the experiences customers can expect much easier to accomplish, especially given the rapid adoption of consumer-generated content (CGM) (Bernoff & Li, 2008). Customer referenceability and referential systems that provide prospective customers with insights into the experiences of others are also more widely used than ever before.
Social media is making the tasks of marketers engaged in Integrated Marketing Communications (IMC) more challenging, as each component of an integrated strategy must align with specific audiences' interests within a timeframe that is relevant to them (Gonring, 1994).
One of the most valuable lessons learned by marketers using IMC strategies today is how the perception of their products and services — from the basic value delivered to the affiliative and aspirational aspects of their brands — varies so significantly across audiences and market segments (Tsai, 2005). The increasing reliance on digitally based marketing and selling strategies has given marketers greater insights into these variations by audience and broader segment (LaPointe, 2012). Advertising is going through a revolutionary change today, driven by the insights gained from behavioral and predictive analytics. The emergence of Big Data as an area of marketing analytics and predictive modeling will accelerate over the coming years as marketers seek even greater insights into how prospective and current customers make purchasing decisions and choose which brands to remain loyal to. Combining analytics and Big Data is also giving marketers the ability to define psychographic profiles of their customers — a strategy Walmart uses extensively (Walmart Investor Relations, 2012).
Advertising in general, and IMC strategies specifically, are going through a series of disruptive innovations brought on by the steadily dropping costs of digital marketing channels, the ready availability of advanced analytics, and the rapidly changing nature of customer preferences (Rosenbloom, 2007). This paper evaluates the key issues facing advertising today, assesses the future of advertising, and examines the impact of technological change on advertising strategies. An assessment of how best to measure IMC programs and strategies — along with an analysis of a successful IMC program at Nike — is also provided.
The disruptive innovations that digital technologies are bringing to advertising are the catalyst of current trends and are in large part defining the future of the field. Of the many trends in advertising today, the most significant revolve around the redefining of customer identity and the customer's role in the purchasing process (Beltran-Royo, Zhang, Blanco, & Almagro, 2013). Through the use of advanced analytics technologies now available, marketers are increasingly relying on personas — aggregated definitions of their prospects and customers — to more accurately plan, execute, and measure the effectiveness of advertising campaigns (Herskovitz & Malcolm, 2010). Personas have quickly progressed from relatively simplistic demographic definitions to include very detailed psychographic data about each buyer audience and broader segment.
Walmart's data-centric culture is a leader in this trend of integrating psychographic profile data into customer personas. Based on an analysis of Walmart's filings with the Securities and Exchange Commission (SEC) over the last several years, a detailed picture of the retailer's personas and customer segments emerges. The Price Value Shopper segment is the most loyal to Walmart because the combined effects of advertising, marketing, and promotional strategies sent to this segment — through both traditional and digital channels — stress serving one's family by saving money. Walmart has successfully made this its most profitable segment by deploying highly targeted advertising of specials, effective use of targeted and highly specific promotions and coupons, and pervasive use of social media including email to reach members of this segment. According to Walmart reports, the majority of this segment is female (84%), belongs to families with per capita incomes below $40,000, has children (63%), and falls in the 25-to-34-year-old age group (29%) (Walmart Investor Relations, 2012).
Walmart has successfully integrated advertising strategies based on traditional offline approaches — including newspaper, direct mail, and in-store flyers — with digital advertising to send a consistent message to this specific market segment. Walmart has orchestrated these offline and online marketing strategies around the message that it understands the challenges the Price Value Shopper faces and wants to help by offering lower prices. The Low Price Every Day (LPED) value proposition on which Walmart bases its entire marketing strategy demonstrates how successful the message of low prices has become for this segment (Walmart Investor Relations, 2012). Through advanced demographic and psychographic analytics, along with extensive pricing analysis and price elasticity modeling by product line, Walmart's management teams have a precise understanding of how and where to place specific advertising messages with specific promotional offers, and at which price points. This level of insight depends on one of the most significant trends affecting advertising today — the extensive use of personas combined with analytics.
Another significant trend is the exponential growth of social media in advertising generally and as an essential component of any successful IMC strategy (Bernoff & Li, 2008). The pervasive adoption of social media has completely redefined advertising and will continue to do so for years to come. Facebook, Foursquare, Twitter, and many other social networks have made it possible for customers and marketers to communicate more effectively and openly than ever before (Burton & Soboleva, 2011). As a result, social networks are revolutionizing the advertising, marketing, and IMC strategies of every company. Customers now have the opportunity to share their opinions, likes, dislikes, and preferences for specific products, unrestrained by previous-generation technologies that gave customers no voice (Keller & Fay, 2012). Today social media gives customers an equal — or even louder — voice than that of marketers themselves. Previous generations of marketers had to design separate programs specifically to capture the voice of the customer, with complex processes required to bring those insights into even the most fundamental marketing and advertising strategy. The exponential rise of social media adoption has streamlined these efforts considerably.
The foundational elements of social networks that made this shift possible were established by the Web 2.0 framework and its design objectives. The essence of Web 2.0 states that the web is a platform for open collaboration, communication, and the shared creation of customer experiences (O'Reilly, 2006). Every social network in existence today has used these foundational Web 2.0 elements to ensure that its applications and websites deliver exceptional user — and, on paid sites, customer — experiences. The popularity of Facebook, for example, is based on how well that social network abides by and maximizes these design objectives (Bernoff & Li, 2008). The future of advertising and IMC strategy is clear from a Web 2.0 technology perspective: the customer must be given a chance to collaborate and communicate, even in the initial phases of promotional strategies and programs.
The third most significant trend affecting advertising today — and the one with the greatest potential to revolutionize it over the long term — is the increasing precision that analytics provide across nearly every aspect of marketing, advertising, and promotion. Analytics are extensively used today to monitor which web promotions and specials are most and least effective, and to track relative interest levels by product or service area (Hauser, 2007). Walmart uses analytics to evaluate pricing elasticity of products offered on special and has continuously refined its pricing elasticity analysis for toys during the year-end holiday season (Walmart, 2012). Behavioral analytics are making it possible for companies to combine persona data with social network insights, gaining invaluable real-time visibility into the performance of promotional programs. By combining all available sources of analytics, marketers will be able to achieve a 360-degree view of customers while aligning their promotional strategies to each phase of the buying process with far greater precision than has ever been possible before (Acker, Grone, Blockus, & Bange, 2011).
In strategic terms, the Internet has made digital marketing, promotion, and advertising strategies more precise and measurable. The proliferation of analytics applications — many of them cloud-based — is revolutionizing how marketers plan and execute their promotional, advertising, and service strategies. The Internet has also completely reordered the economics of advertising, reducing the costs of both tactical and strategic campaigns (Bernoff & Li, 2008). This is evident in how the Internet in general, and company websites specifically, are being used as landing pages or destination points for offline and traditional marketing strategies and platforms.
A major part of this economic reordering is the heavy emphasis marketers place on Search Engine Optimization (SEO) — a technique for boosting the relative position at which products and services appear in Google when prospective customers conduct searches. Google's algorithms for ranking content rely on specific approaches to organizing keywords within websites, and this area of marketing is gaining importance and investment over time (Bernoff & Li, 2008). Organic search results are consistently more trusted and acted upon compared to paid search. Google created its AdWords program specifically to enable paid search advertising. AdWords generates on average $300 million per quarter for Google and is one of its most profitable business lines, as marketers are willing to pay premium prices for prominent placement on the popular search engine (Selcuk & Ozluk, 2013).
Traditional marketing techniques and methods — including brochures, flyers, direct mail, print advertising, television, and radio — are increasingly being orchestrated within IMC strategies that drive prospective customers to a company's website. These traditional forms of marketing have long proven effective at moving prospective customers through the buying process toward trying a given product or service. The Internet is now acting as a consolidator of these traditional marketing methodologies, driving the prospective customer to personalized landing pages with specific offers they show a high probability of accepting. Advanced marketing automation applications including Eloqua and Marketo are being used to track and predict the combinatorial effects of flyers, brochures, direct mail, television and radio advertisements, and various forms of external advertising. In conclusion, the Internet has made it possible for marketers to precisely understand the contribution of every aspect of their advertising, promotion, and public relations strategy to the buying process. As the audience and segmentation analysis of Walmart's Price Value Shopper demonstrates, very precise customer segmentation can also be achieved and measured with analytics that provide psychographic insights about audience segments (Walmart Investor Relations, 2012).
The relationship between market share and promotion has also been more clearly defined through the analytics platforms available online. The Internet has made the correlation of promotional spending and market share more predictable for commodity-like products by measuring the impact of price and availability on demand. This has significantly reduced the uncertainty about which promotional strategies to use, when to deploy them, and how much marketing investment they require. The greater the commoditization of a given product, the more likely promotional strategies are to have a direct effect on market share. For highly complex, tailored products — such as a custom home air conditioning system or a home addition — promotional strategies play a critical role in building the trust required to close a sale, even if their relationship to market share is less direct.
The most effective marketers using IMC strategies today concentrate on a series of metrics and key performance indicators (KPIs) that span the entire purchasing process for their products and services. The more complex the selling process, the more precise the metrics and KPIs chosen are, with specific attention paid to feedback from a customer experience management standpoint. Measuring IMC strategies often begins with a program analyzer and dashboard that shows the relative contribution of each component of the IMC strategy. Marketo is a leader in this area and has created a Program Analyzer specifically designed to evaluate the performance of each component of an IMC strategy, measuring relative sales and profit contributions.
The convergence of digital channels, advanced analytics, and social media has permanently altered the economics and execution of advertising. Marketers who align IMC strategy with precise audience personas, real-time measurement, and consumer co-creation — as both Walmart and Nike demonstrate — are best positioned to compete. The continued growth of Big Data, behavioral analytics, and Web 2.0-based collaboration will only deepen this transformation, making the ability to measure, adapt, and personalize advertising at scale the defining competency of successful integrated marketing communications in the years ahead.
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