Back to AshtonCast homepage / Digital Marketing Maturity: Part 5
DIGITAL MARKETING MATURITY PART 5 | Full interview with Michael Schniering, Managing Director and Partner, Boston Consulting Group (BCG)
Digital Marketing Maturity – brought to you by our friends at Google Marketing Platform. Visit Google Marketing Platform to find out how they can help your business.
Gavin: [00:00:00] We are here with Michael Schniering, the Managing Director and partner at BCG. Michael, how are you doing today?
Michael: [00:00:07] Oh, I’m very well, thanks Gav.
Gavin: [00:00:09] Excellent mate. So obviously we’re, we’re living in some fairly unusual times to say the least, and you know, it’s all down to COVID-19 so where were you when you first thought, Oh man, this, this COVID-19 thing is going to be bad. And, and what made you think that.
Michael: [00:00:26] Yeah. Gav. I think I’m early on in the COVID-19 crisis, uh, BCG started tracking data on the progression, uh, quite closely, uh, and I remember, uh, China or just moved past its peak. Uh, in terms of cases, uh, we were seeing an exponential curve. Uh, in terms of cases in Italy, they are the first reports out of the, uh, New York city and in the U S uh, and I remember looking at this data, um, coming through almost daily, uh, through, through the channels we have internally.
Uh, and you could really see how serious this was going to be, uh, in terms of outlook. Um, on a more personal note, I remember the moment when I was sitting in my lounge room and the PM was addressing Australia and talking about, um, you know, I remember him using the words repeatedly, look, we can’t do this anymore. Or all the things that we could no longer do, seeing friends, um, you know, sad things like not being able to have funerals, um, attend church. Uh, and, and between those two things, that’s when it really hit me that this was going to be a pretty, serious, uh, impact both the health crisis and, and then, uh, economically, uh, on various markets across the globe.
Um, and that we were in for a fairly long ride, um, with, with COVID.
Gavin: [00:01:41] It’s been a been a crazy ride so far and yeah. When, when you first knew that it was going to be a bad thing, how, how’d that make you feel?
Michael: [00:01:49] Look, I think, uh, like most of us, uh, the first thought is, you know, for more so our people and families, um, you know, our own personal safety and those that might be impacted around us.
Um, and I think that was, that was the first thing. You know, internally at BCG we were very focused on in terms of our people’s health, safety, wellbeing, and I could see companies in Australia that I was working with a similar focus as well as, you know, friends and family, a similar thing. So that the, the first thought turned to that, and I think.
As the weeks have progressed, and, um, at least in Australia, it has settled down a little bit. Um, uh, you know, I think we’re, we’ve got longer to go. Um, you know, the, the resultant impact on jobs business, the economy, I think really started to sink in and what that might mean as an outlook for us.
Gavin: [00:02:45] Yeah.
Interesting. And so, um, like most people, uh, chatting from home. At the moment. And that’s because we’re working from home. So how long, how long have you been working from home?
Michael: [00:02:55] Uh, so Gavin’s, it’s been eight weeks now. Um, we made the move relatively early to, to start working from home, um, and, uh, you know, consistent with what our clients were doing.
Um, and, and also our own internal policies. Um, and it’s been a pretty. Substantial shift in ways of working over the last eight weeks. Um, you know, of course there’s the obvious things that most are adjusting to life on VCs and, uh, you know, using new digital tools, whether that be Trello and Slack and all the things that, that bring teams together in the way that we have before.
Um, my own personal observation is then there’s the, the adjustment on personal lives and family lives and trying to make work. Happen, uh, in, amongst all these things that are, that are blurring together at home. So, um, I can’t say it’s been easy over the last eight weeks, but, uh, you know, I feel at least, uh, into somewhat of a new pattern under this new normal for a while.
Gavin: [00:03:51] So I sort of sort of found your, found your new groove, but I suppose, you know, one of the biggest challenges is, is hibernation. And you know, and, and so, you know, w w we’ve all been in hibernation for a while. Some of the, some of the rules are starting to loosen up a little bit, but what do you miss the most.
Michael: [00:04:10] I think one of the things I miss the most is that feeling of collaboration and teamwork you get when you’re co located. And, uh, working together in a, in a team or a squad, uh, on, on tough problems. And you can recreate a little bit that virtually, uh, and, you know, tools help. Uh, but there’s something about the, uh, the feeling of being able to, uh.
Be in the room together as a team, um, you know, run sessions in in-person, uh, and be able to, um, solve what are now really tough and quite dynamic questions and problems in this environment. You know, consumer behavior is changing very rapidly. Um, you know, companies are having to respond to a very different.
Uh, spend patterns to ways in which the market’s reacting. And, you know, I miss being able to be in the room with teams, solving those problems live and seeing things change really quickly. Um, and the sorts of random encounters you get when you walk the halls or, uh, you know, when you’re, uh, in that environment that you’re able to think through ideas and solve problems spontaneously, which unfortunately, as good as digital tools are, you just don’t quite get.
Um, working from home. So, um, you know, I think we’ve all made the best of this new work environment. Um, but hibernation has certainly been an adjustment, um, and a change in, in the typical things you’d get out of being in person with, uh, with teams and clients.
Gavin: [00:05:42] Yeah. I think you, uh, really miss the energy of being around other people and just being able to bounce off, you know, one another.
And there are so many, you know, signals. I mean, obviously 90% of communication is nonverbal, right? So, you know. Being able to, to not be able to be in the room with the people can be, you know, it’s certainly very difficult. So, um, in terms of changes, you spoke about this briefly, but what are the most immediate differences that we’ve seen in the marketplace after COVID-19?
Michael: [00:06:10] Well, I think there’s, um, uh, three main things that I’m seeing, which are quite different, particularly from a consumer perspective. That have changed in this marketplace, um, that the first is that the past is no longer predicting the future. So in Australia as an example, uh, as, uh, the impacts of social distancing and movement restrictions started to take place in the Australian market.
We saw very different consumer behavior, uh, in, in, um, how they are shopping, what they are shopping on, what they were doing in interacting with Australian companies. So, you know, we saw initially the demand surge in supermarkets and we all witnessed that, um, with, uh, you know, toilet paper and various other staples and
Gavin: [00:06:56] like a toilet paper fight.
Michael: [00:06:58] Exactly. Um, you know, I mean, we joke now, but that was only a few weeks ago that Australians were clamoring to get toilet paper and basically. Staples. And luckily it’s settled down now. But these demand surges, you know, and we saw this in other developed markets that BCG was tracking consumer sentiment and demand on, uh, that, uh, categories like, you know, drinks and alcohol, DIY projects, home furnishing, particularly, um, purchased online, uh, consumers started responding and changing very quickly, uh, and, and changing behavior.
And, and so, you know, what companies have looked at over the last. 12 months, two years in terms of consumer behavior. You know, my view is that it no longer predicts how consumers will behave, particularly during this, um, this phase where we still have restrictions on the way that people can move. And, and, uh.
And interact. So I think the past will no longer predict how consumers, um, and, and, and our customers will behave in. That’s important. Um, th the second, the second theme I think is, um. Behavior has changed. I think the question is how long will it last? Um, so again, a big difference we’ve seen since Cobra 19.
Uh, and the implications that have, that have, um, come from that is, uh, consumers have shifted their spend patterns to online. So, you know, we saw 45% year on year in groceries locally in Australia. Um, we saw 67%, uh, in fashion online. Uh, in Australia, so increasing in online spend, um, at the moment, uh, you know, for groceries, we think that’s accounting for 9% of overall sales.
Uh, so yes, consumer behavior has changed very rapidly, and, and, and, uh, often in directions that, uh, organizations and brands have been pushing, uh, to change that behavior. For me, I think the question will be. Um, what will stick in that behavior in a, in a post COVID world, and how different will that behavior be in terms of channel and, uh, types of transactions, uh, going forward?
Um, and how long, how long that lasts. So I think, uh, you know, similar to the, to the first thing where we can no longer look back on what consumer behavior is. I think, um, in a post COVID world, uh, what things stick and what change permanently will be, will be still, uh, will be still a question. And then I think the third thing is the response.
And how can companies or brands respond to this is now, um. With changed or probably forever in my view. So we are entering a new norm. A BCG talks about three phases of responding to COVID. So there was a flattened phase, um, where both, uh, private sector and, and, uh, more importantly, public sector were responding to the initial outbreak of the virus.
Uh, there was the fight phase, which were, which most developed economies are now in where, uh, companies are seeking to, um. Uh, and, and, and economies are seeking to respond to the changes that are happening, um, and then what we call the future, which is ultimately a new norm out of this where, where companies, uh, where companies respond.
And so I think that the third major difference that we’re seeing post COVID is that companies will have to have new capabilities and adapt. Um, almost permanently, I think T to this change. So their ability to quickly adapt and respond to the types of, um, behavior changes that we’ve, we’ve talked, talked about GAF, um, how they then, uh, tune there.
Marketing messages, their products, their services to respond to this. How they then test and learn, I think will be, um, what, uh, enables companies to succeed in that future phase, uh, beyond, beyond, uh, what has happened in terms of the implications of the crisis. So, um, you know, companies I think need to prepare themselves now for that, um, for that change.
Gavin: [00:11:07] Interesting times ahead. And I think, um, you know, what, what do you think about the previous global challenges such as nine 11 and the GFC and how they’ve affected global business? I mean, w how does this compare?
Michael: [00:11:21] So, uh, early on in, um, the. COVID crisis, and then the resulting economic crisis, uh, we locally looked at, um, uh, what were, what was the impact of the GFC, uh, just on the economy.
So, uh, recognizing that we now have, uh, two things playing together, the, um, progression of the pandemic, both locally and globally, as well as now the economic impact and how that’s gonna play out. Um, so looking back at the GFC, I think, um. Is informative and can give some indication of what happened.
Equally, I think we are genuinely in uncertain times now as to what is going to play out in response to this. So having said that, when we looked at, um, what had happened during the GFC in Australia at least, uh, you know, a few things happened. The first was con consumer confidence, uh, dropped quite substantially.
So from about 127 points to 90 in just six months. Um. W what that resulted in, uh, over a period of 12 months was GDP growth declining from 11% to negative 0.6%, resulting in one quarter of negative growth in Australia. Um, so the GFC, uh, the impact was substantial. Uh, and of course, the story was different by different sectors during the GFC.
And I’ll come a little bit to, um, in, in. The current situation. A similar, uh, similar story. Uh, so during the GFC, you know, we saw. Uh, spend categories like transport services, purchase the vehicles, decline around 30%. Uh, we saw entertainment, cafes, recreation decline, 10 to 20%, sorry, 10 to 12%. Uh, household staples such as food, clothes, and drinks declined six to 8%.
Um, and this was from the, you know, the peak spend to the trough of, of the GFC. So the, the impact was substantial. That was an economic crisis. Only, and I say, only now, given the situation we’re in. Um, you know, it, it feels mild compared to where we are now. Um, but I think really the important thing, looking back on past events is to, to look to different sectors, different categories as to what the change was, because it did vary quite substantially.
And I think as we’ll come to Gav, uh. In response to COVID, we’re seeing the same thing now, but the response of consumers and the impact on different categories and spend has varied by, uh, different sectors. And, um, you know, I think that’s important for brands to know, uh, so that they can see. What’s playing out in their own sector, how consumers are changing, and then, uh, how, how might they respond, um, E uh, in response.
Gavin: [00:14:14] So who, who in the marketplace has shown to be well prepared, you think, and or is rapidly adapted to the shifts that we’re talking about?
Michael: [00:14:25] So, look, I think. W without naming any specific players, I think for me there’s been some hallmarks of those who have been well prepared and who have responded well.
And I think there’s a few consistent themes with what they have done over the last just eight weeks. I think the first is they’ve acted decisively and they’ve acted quickly. Um, and these are everything from responses that keep their customers and their people safe. So changing. Uh, store layouts and, and the physical environment to protect both frontline employees and, and customers all the way through to how organizations have responded to meet the financial pressure.
That is unfolding, uh, in response to the economic crisis. So securing additional debt facilities and shoring up their balance sheet. So those organizations that took those measures quickly early on, I think have positioned themselves well in response to this crisis. Uh, the second thing that I think those that have done well, uh, have all done, is they’ve focused on looking after their customer.
Um, and. Doing the right thing by their customer, regardless of the cost and, and the commercial implications to them. So, uh, I mentioned the physical changes to certain retail environments, uh, that I think also included, uh, changes in, um, uh. Marketing, measure marketing messages and communications to customers through to financial support and, um, uh, relaxation of commitments.
So, uh, what the banks did, uh, in relation to our commitments on things like mortgages and small, uh, small business lending. Um, so I think there was, uh. A group of companies in Australia that responded very quickly to make sure that they were acting in their interest of the customer. Um, and I think, uh, again, as we’ll come to in a little bit, uh, at those customers who did that well, have been able to lift their trust, uh, with customers and consumers as, as a result.
And then I think the third hallmark of, uh, those that did well in response in responding to this is they responded quickly to. They flattened and fight phases. So everything from crisis response to the operational changes to, um, ensuring, uh, they looked after their employees. And then those that then shifted to think about.
The future phase and how they’re going to set up an organization that will respond and rebound quickly. Uh, when, uh, the crisis starts to, uh, uh, come into a more predictable pattern and in, and we start to see pockets of growth and recovery. Um, there are organizations planning, investing, uh. Looking at that phase in this, um, response.
And I think those organizations will come out much stronger out of the back of this, um, because they’re planning early for that recovery recovery phase.
Gavin: [00:17:38] Hmm. Interesting. And so what, what role has digital marketing maturity played in coping with the crisis?
Michael: [00:17:45] So I think. Digital. The maturity of companies in digital marketing, I think has been pivotal in this consumer and customer response that, that we’ve talked about.
Um, so, uh, those that are most mature in digital marketing, uh, I think already had the capabilities that are, that are critical to respond to the changes that are unfolding. So, for example, uh, they were already. Capturing first and third party data to understand and sense the shifting consumer behavior so that we’re seeing those signals earlier than others.
Um, uh. And adapting their marketing approach. Um, in response, uh, they, the most mature organizations are already in the rhythm of test and learn and experimentation and operating in an agile way. So we’re able to. Uh, adjust, offer, adjust communications, adjust the channel, and spend, uh, in response to those signals that we’re saying and be able to respond more quickly to the crisis.
And then. Then the most mature organizations were also able to measure and understand what was working and what wasn’t in that response. Um, so being able to use the data and the measurement of what bearer, uh, changing in the market, interacting with their consumers, uh, to then, um, adjust. Their, their marketing communications, their offers, their promotions, and in particular how they are engaging consumers through this very challenging time.
Uh, to now emphasize things like building trust, building consumer confidence. Um, you know, whilst also understanding. When and what would be the right time to think about, um, uh, offers and sales related messages. So I think those that were most mature had the sorts of capabilities that are critical for this environment.
I think those that were less mature. In digital marketing, the need for these capabilities, which have always been there are now, um, much more apparent and more acute, uh, to be able to have the sorts of capabilities that respond quickly as I described. And so the importance of lifting maturity and investing those capabilities, I think is now are even more important as a result of the changes.
From that, it flowed through from COVID.
Gavin: [00:20:15] They’ve had to move very, very quickly in a lot of cases. So given the large scale marketplace shift, what kinds of companies have been able to respond effectively to this
Michael: [00:20:28] crisis? Uh, so I think. Th th the, the customer that, the companies that are, I think there’s less of a correlation between kinds of companies.
I think you can see across sectors, different companies have, um, have, have done well. So I think it comes down to what sort of capabilities they either have or have continued to build in response, um, to these shifts. And I think that’s the consistent thing between companies that have, have done this effectively.
So a few of the. The capabilities are the elements that I’ve seen, at least in the market and working with clients in Australia. So, uh, the first is, um, uh, quickly bringing in the signals through data to be able to understand what changes are happening. So, uh, commonly that’s using a set of third party data signals.
So, um, you know, for example, third-party web browsing or sentiment or patents. Quickly connecting that with internal data sources. So first party data sources to be able to understand and, uh, sense much more quickly and as close to real time as possible. Uh, the changes that are, that are happening, um, the best companies, um, on this dimension are then using other.
Sources of data. So whether that be email response rates, uh, of course, their own point of sale and sales data, um, to then bring that together, connect it, and then importantly, make it consumable and linked to the biggest drivers of value and change, uh, to that company. Um, so. I think that’s the first capability I’ve seen that organizations who have effectively responded had in place.
Uh, the second capability, uh, and I think this is still emerging. We’re still only eight weeks in or, or 10 weeks in, at least locally to, to the, um, most acute changes in response to the crisis is, since the second capability is, uh, lots of experimentation. Uh, and, and what I mean by that is, um. Companies now need to experiment with what consumers are buying.
So they might be shifting their own categories or skews or their own products and services, um, as a result of the changes in our local marketplace. Importantly, that’s now coupled together with quite rapid changes with how consumers are buying. And there’s the obvious ones, like e-commerce and online sales.
That’s, that’s a really obvious one. Uh, but in some of BCGs research, um, in, in a number of different markets, we’ve think seen. Elements like transaction sizes and, uh, consumers shopping more locally, um, or transacting more locally or seeking, you know, channels and service more locally. Um, that is also changing at the same time.
So, um, for. Uh, marketers and those that are engaging customers and consumers. Um, how then you experiment with different messages, different media, uh, you know, small micro offers and communications. So you learn how consumers respond. Before going to be on a large campaign or all one shots on appealing to a consumer, I think is important because I think we’re all learning very quickly how these changes are unfolding with consumers.
And then the third thing, and this, the third common hallmark for companies that have done well, I think is then the ability to adapt and respond. Quickly. And I think that’s everything from, uh, making sure you get the measurement and the right measurement of these experiments and the actions that, um, uh, marketing communication offers, uh, um, having in the marketplace.
Um, and that you have the, uh, organization set up and the teams in place that can then respond to them. Um, uh, so. Their ability to make changes quickly, make decisions, um, get new features or, um, uh, marketing messages or campaigns into market, and then do the same thing again. Um, those. Uh, that ability I think is quite critical.
And, uh, having worked with a few clients through this crisis, those that do that well, I think have been able to respond much more effectively, um, that those that didn’t have those capabilities in place.
Gavin: [00:25:03] And I think one of the, one of the key things that has come up again and again in conversations I’ve had is, um.
Resilience and I from a personal perspective, but also from, from a business perspective. So it’s a, how do you say that? Digital marketing maturity, playing a role in a business’s ability to be resilient.
Michael: [00:25:23] Yeah. So let me start with just a few kind of interesting scene setting things on, on resilience and, and.
What digital marketing maturity might, um, might mean going forward. Uh, w basically ran locally a consumer sentiment survey just in the last weeks. And there were a few interesting findings from that. I thought that that was interesting, uh, in thinking about wool. Going forward, what will make companies more resilient through this?
Uh, one theme was, um, uh, consumers showing a continued shift. And it has been a trend we’ve been seeing for some time, but a continued shift to purchase from Australian brands. So. We’ve seen 20 percentage points since 2016 shift in preference to Australian brands. My own personal view is I think that’s gonna continue and be further reinforced through this, where consumers are thinking much more about.
Uh, local, um, and the domestic, um, environment for buying good services. You know, think travel and tourism, I think is going to be very much domestic linked for quite some time. And so, uh, that’s just an example of, I think, the, the orientation towards Australian brands into Australian. Um. Uh, uh, goods and services is going to, is going to continue to shift that way.
Uh, but the second thing that we saw was, um, uh, the net trust. Of consumers for those institutions that responded really well to this crisis, um, has actually increased. Um, and so we’ve seen that in sectors like health care and, and even supermarkets who are some of the first to have to respond to changes in purchasing behavior and buying lots of toilet paper.
Um, and you know, those that responded well. Uh, we’ve actually already seen a net improvement in trust. Um, and so I think that’s an important takeaway in terms of. How market is thinking about responding to this and really what’s going to make the brand resilient over the medium term. This concept of, of maintaining and lifting consumer trust and, um, that, that being a source of both value and advantage, but then where things like repeat purchase comes from.
Um, and then the third, and this is again, a possibly an obvious one, but it, it needs to be said, is, um, the continued increase in spend on online and e-commerce, um, being, you know, in a post COVID world or in, in, um. Uh, this fight phase. I think being something that has prompted probably some of the shifts that brands have been trying to create into in digital buying, but is, is here to stay.
Um, so how to remain, remain resilient in those contexts. I think, um, there’s a, there’s a macro theme here where marketers need to think about how they continue in their more, um. Tactical and response driven marketing to keep lifting and building trusting consumers and lifting their brand. I think that’s going to be something that is enduring and those that do it well.
I think we’ll be much more resilient as further changes unfold in response to this crisis because I think none of us can really predict where this goes, but I think that’s something that’s. Gonna make organizations more, um, a brand as a whole, more resilient, but, but certainly needs to be front of mind in terms of marketing.
Then I think there’s some more specifics. So two thoughts on specifics here for some categories. We know that. Uh, spend, has declined and will decline or will remain lower than, um, uh, pre COVID levels. There’s some really obvious ones. Travel and recreation and all the things we used to love and do outside of the home.
Um, yeah, can’t do it. So it’s, um, the, the impact is quite substantial. So, you know, I think. Thinking about the quality of the dollar that brands are going after and thinking about repeat purchase will be, will be important. Um, and there will be pockets of consumers. Our survey showed who will still trade up and who will go for some, um, high price, you know, um, indulge yourself at home type purchases.
And so, um, you know. Marketers need to think about in their category, where are the pockets of consumers or customers for whom they can still appeal, um, to, uh, spend and trade up. Um, and then equally that the second set of more tactical thing is, uh, some pools will start to grow. Um, you know, whether that’s, uh, the shift to digital.
Or certain segments. Uh, you know, we’ve seen to date, I mentioned a few at the beginning of this podcast, uh, such as DIY products, online home furnishings, where will there be categories where there is growth and therefore the role of marketing to help tap into those, um, growth categories or growth pools where that’s relevant for a brand.
Um, and particularly, um. Give the brand the best shot possible when we start to return to, you know, in person, um, uh, consumption of retail and insert in-person consumption of services and other, other products. Um, so that they’re, uh, positioning the organization to respond to that. And I think if you get those few things right, um.
There’s the mid to long term resilience in the brand, but then the tactics day to day that will make brands resilient to the changes in consumer behavior and consumer sentiment.
Gavin: [00:31:01] Fascinating insight. Uh, if I’m a CMO or a marketing leader, what, what should I be doing right now to protect and strengthen my business for the longterm?
Michael: [00:31:14] Yeah, look, I think, um, now more than ever, the role of the CMO is, um. At the forefront of this change and critical to the organization, and I think a number of things the CMOs should be doing. Are still there and have just been accelerated or enhanced, heightened, uh, in, in response to the changes from COVID.
So I can think of a few things. They may not be complete, but, um, this would be my list. Uh, the first is I think. Um, marketing and CMOs now more than ever need to think cross-functional across the organization to be effective. Um, and depending on the sector that, that, that the other functions varies. But for me, channels, the product development part of the organisation, perhaps loyalty offers, promotions, merchandise. More than ever, marketers need to be thinking in a way that brings those parts of the organization together. And there’s a consistent and coherent approach, either to shorter term experimentation like we’ve, we’ve talked about. So how, how, and where they’ll experiment with, uh, changes in offers and, um, uh, responding to consumer behavior such as channel choice, but also this concept of, um.
Building and enhancing trust with the consumer and building the brand, which will also be, um, uh, often either product or service related tech related. Take for example, the, um. What we talked about before, which is the response of the banks in certain consumer and small business products and giving flexibility and repayments.
You know, that is something, um, that is, I think one of the reasons why we’re seeing that trust increase, um, but requires a cross functional approach and, and the messages need to be right and needs to be across the organization. So that’s the, that’s the first thing I think that, uh, same I should think about.
I think the second. Touched on it a fair bit in this podcast is, um, the ability to test and learn, do rapid experimentation, measure the results and do things, you know, think, um. Think big in terms of the results that can be created, even in this quite challenging, um, market. Uh, but then act really small in terms of, uh, small scale campaigns, small scale trials where we test and learn.
Uh, because my own view is, it’s very hard at the moment to stare at it. Any amount of data that give you the ability to really pinpoint what’s going to work. I think it will give you a general indication of where you should experiment and how you should respond. And so understanding consumer behavior and what’s happening is important.
I think organizations that get the frequency and scale of experiments high will will learn much more quickly and be able to able to adapt. And then the third thing is, um, I think now is the time, uh, for CMOs to look for ways to continue to invest in new capabilities, um, and often, uh, not, not completely, but often, uh, through investments in data platforms and new technology.
Um, so I think they need to remain really focused on what is it that they want to communicate, or what features do they want. To, for example, personalize offers or, um, be much closer to the customer and then look back into, well, what investments need to be Mack made either in bringing to the other that data that’s needed, investing in the MarTech stack, uh, to be able to do that well and importantly, go beyond one or two experiments and, and, and do that at scale.
So, um, many organizations in, in, uh, in, in the local market, I know are. Managing their cashflow, managing their investments. But I think this is one spot where continued investment in capability I think is very important. It always has been a, but is now even more important. Um, as brands continue to respond and adapt to changes in consumer behavior.
Gavin: [00:35:40] So you need to adapt very quickly is what I’m taking from that. Um, so we’re gonna switch it up a little bit here and, uh, you know, obviously advancing digital maturity is challenging, whether or not we’re in the midst of a global pandemic. So, for you, for you personally, who would you look up to as, say, a mentor or a role model for your own digital guidance?
Michael: [00:36:06] So I think, um, uh, I think there’s some of the classic examples, um, whether it’s, um, uh, Jeff Bezos or others who have, uh, shown, uh, so, so I think the direct answer gap is no one single person. Um, but I think it’s both companies and individuals who, uh, do two things. One, um. Show that they are invested in, uh, giving customers things that they value, things that are important to them, um, and respond to a customer need.
Um, and, and secondly, uh, that. Are able to cut through some of the clutter and noise by using data to be able to do that, um, and go beyond, uh, the, um, the, the gut feel and are able to measure response, uh, and then, and then respond. Um, and, uh, you know, organizations like Amazon and Jeff Bezos, um, I think are good examples of those that have done that really well.
Gavin: [00:37:14] So it’s a tribe of digital mentors rather than
Michael: [00:37:17] individual? I think so. I think there’s, um, you usually take away something from, um. You know, you know, many leaders in the digital space, both, both individuals and organizations, because I think no one individual or company gets it all right, honestly, um, and are still learning, adapting.
And that’s the whole actually of those that, that lead in this space. Um, and, uh, you know, equally, uh, this, there’s often something to be learned in how, um, uh, many respond to these sorts of changes.
Gavin: [00:37:51] Yeah, absolutely. And so what, what books or podcasts or media are you consuming right now that’s helping with digital education for, for both yourself and your clients?
Michael: [00:38:02] Yeah. So the one that comes to mind for me that are, that I read recently is, um, Robert Aug book on the history of Disney. Um, it’s called the ride of a lifetime. Um, and, uh, you know, it was both a fascinating history of, um, of Disney as a company from its early days, um, you know, through to the, um. Digital media and entertainment giant that it is now.
Uh, but, but importantly, I think the thing that I took away was this notion of a continued need to innovate, invest for, or bring in new capabilities and do that in a way that, uh, um, he’s. Um, relentless on pushing, uh, you know, teams and the organization, the organizations forward. It’s, uh, you know, there’s a great, um, story around the, the long relationship until they merged with, um, or acquired Pixar, um, as a very new set of digital capabilities that were critical to the organization.
You know, equally toward the end of the book, it talks about, uh, how they had to disrupt themselves. Um. Uh, when they launched Disney plus, and that required some quite bold leadership to think very differently. And that
Gavin: [00:39:20] was very, very bold the way they did that. I think it’s brilliant. And I bet you against watched a lot, your house
Michael: [00:39:25] with three kids
Gavin: [00:39:26] under the age of
Michael: [00:39:27] 10, right?
It certainly does. I mean, they’re not. They don’t discriminate between channels, but certainly, um, the, the Disney adventures, uh, uh, uh, our favorite here as well. Uh, and so you can see how, um, you know, and that’s a, that’s a product that’s been launched in the last months. Um,
Gavin: [00:39:44] you know, have the timing. Right.
Perfect. Brilliant timing.
Michael: [00:39:47] Couldn’t, couldn’t have picked it better, uh, when everyone’s at home. Um. The surge in demand for services like that, but, but, you know, they continued to think about, we’ve got to change the consumer offering and we’ve got to disrupt our prior revenue streams, um, in, in content sales and, uh, create this service.
And so I think, um. Yeah. That was a, that was for me, a fascinating story overall, both of, um, uh, the company, the individual, but then these sorts of steps where organizations, um, make pretty big calls to build new capabilities, advance the organization, uh, and not all of them paid off. Um, but I think importantly, it’s, um, uh, being relentless on pushing, uh, to, to, to the next one, to keep
Gavin: [00:40:34] experimenting and innovating our guests.
So what. Is the trend that your personally most excited about in digital? Like what’s, what’s really exciting you at the moment?
Michael: [00:40:43] Yeah, look, I think, I mean, this may not surprise to many people, but, um, the use of data and AI, um, in, in digital more broadly, but in, um, marketing and how brands interact with their consumers, I think is, I think is very exciting.
And I don’t, I’m not of the camp that. Everything must be AI driven or advanced data analytics. There are some, uh, great lifts that brands can experience, uh. Doing better marketing, better communications without using AI. But I think the sorts of use cases I’ve seen, even for some of my clients locally on using AI to better personalize and tailor, uh, messages, offers, interactions with consumers, I think, um, is, is very exciting.
Um, it’s equally very challenging to get right, but I think that’s what makes it more exciting. Because those organizations who invest for the midterm, we talked earlier about preparing now for the future phase, uh, of the response to this crisis. I think those that stay the course and keep investing in capabilities like, uh, AI, uh, for the future and go up the learning curve cause there is a learning curve.
Uh, we’ll be, we’ll be really well-placed, but I think, um. The, the, the results that we’ve seen, often organizations that get this right, say six to 10% revenue or sales improvements for cohorts of customers that they are applying AI to. Um, I think that is a quite substantial and fundamental change for commercial results, but also a much better customer experience, um, in being able to.
Yeah, meet the customer where they are, meet the customer with what they want. And I think data on AI is allowing organizations to do that much more effectively and importantly, be able to scale it, um, through the use of data and technology. So, uh, I think that’s going to be, um. Uh, something that’s going to, uh, propel the wide brands, interact with their customers and consumers.
And I think certainly is going to reshape the way, uh, marketing as a capability, uh, is saying over the next, um, uh, over the next years.
Gavin: [00:43:06] Interesting. I’ve had some very interesting chats with people about AOI over the years, you know, running lots of lots of stuff in digital technology events. Um, where do you think AI is going to land in terms of, uh, in terms of both marketing and beyond?
Like what, what does, what does the future look like for, for AI, do you think?
Michael: [00:43:24] I think it’s going to be in, in, uh, two phases. I think, uh, brands are going to experiment with AI and data over the next. Um, yes. Um, I don’t know the exact timeframe, but call it three to five years and some things are gonna work.
Some things aren’t gonna work. Uh, and so I think there is a learning curve that organizations are going to have to go on to, uh, old go through on AI, uh, to be able to understand how to effectively develop the technology, integrate the data. Fond the use cases and execute them so that they can make changes that actually matter to a customer or matter to the results of a company.
And I think that’s going to be the phase we’re in for a little while that it’s not all going to be perfect. There’s going to be pockets of good results and the the, the promise will be there of what AI can do. And then I think there’s going to be a second phase, which is actually. Harnessing the capabilities and the, um, the power of humans and creativity and the whole design space of marketing and, um, and digital together with AI.
And I think it’s the combination of, um, uh. Having good teams and you know, really high caliber people together with the smarts of data technology and AI, and when you can bring that together effectively, I think that’s. Going to be the capability that organizations will want or need, um, in a, in a new marketplace.
But I think there’s necessarily going to be a, a path to get there on a learning curve, um, that organizations are going to have to stay the course on. So, um, I think it’s not. I on its own. I think it’s how you bring people plus AI together. Um, we, we talk a lot internally and with our clients about 70, 2010 that it’s, you know, 70% of the people and the change, um, 20%, the algorithms, 10%, the technology, uh, and, and so therefore you need to.
Uh, think about that in terms of how you use AI in whatever use case, uh, is relevant for the, for the organization. Um, and I think that’s what’s gonna, um, apply out at the time with, with AI.
Gavin: [00:45:44] Brilliant. One more question and then you’re off the hook model. Um, so if you could tell someone 10 years ago, one interesting thing about how digital would turn out now, what would that be?
Michael: [00:46:05] I, I think it was, I think it, um, would center on, um, shift and use of small of small scale capabilities and. Features and teams as a way to really drive value. And, and, um, what I mean by that is, you know, if I think back 10 years ago to, uh, the promise of cloud, uh, you know, changing, um, you know, core systems. Whether they’d be running banks or retailers or other companies, uh, kind of the fundamental shifts of, um, uh, you know, the open heart surgery of, um, a company and, and, and using tech for that.
I think what’s really interesting for me is, yes, that’s still happening and many organizations have gone through that now. I think there is, um, uh, when you get the right, like even just small teams. Um, supported by a bit of tech or data, but with real focus on how am I going to use that in a customer context and an ability to work across organizations to then scale what works.
I think that has that sort of the new norm for me in digital that if you can focus on, if you can focus on that. Um. Uh, you know, and it might require some broader scale technology changes, um, that there’s immense value. So I, I’m not sure, um, 10 years ago we would have predicted that, you know, it’s almost on this curve of.
I need to do these whole, they are very large scale whole, um, holistic changes around digital to actually, I can start in small pockets, um, uh, really get something to succeed and then scale up beyond. For me, that’s quite a shift we’ve all made in terms of how to think about driving the benefit of and then, and then scaling digital capabilities.
Gavin: [00:48:09] Brilliant. Michael sharing, thank you very much for your time and thanks for joining us on Ashton cast. Have yourself a wonderful day.
Michael: [00:48:15] Thank you very much, Jeff. Pleasure to be here.