What You Missed at Management Conference: The Digital Economy in 90 Minutes

A few weeks ago, Chicago Booth held its 61st annual Management Conference. One of the sessions was a panel discussion (I moderated) about marketing in the digital economy. We had outstanding panelists participate—Ryan Shamir from Kraft Foods, Jason Keith from Digitas, and Ron Gibori and Girish Pai from Idea Booth. We also had an outstanding audience that raised many important issues and questions about digital versus offline media; the role of social media in business-to-business and mature product contexts; the ways IT and marketing groups are coping with issues such as big data and new software used to monitor online activity; the role of analytics and the need for marketers to be comfortable with statistics and concepts from computer science; lessons from the digital age for those using traditional media; differences across countries in the role of digital media, etc. In this post, I will talk about some of these issues.

The topic was broad, and no 90-minute discussion could have done it justice. The digital economy, broadly construed, can mean a lot of things. At a macro level, it encompasses issues faced by governments, such as the movement of digital goods and services across borders, as well as issues of piracy and hacking at the highest levels, even by governments. Within a country, there are issues of privacy, taxes that consumers have to pay when making purchases online, and piracy that governments need to deal with. In many countries, the digital economy has resulted in a significant reduction in waste due to the availability of up-to-date information. For example, fishermen in Kerala, India, who must decide which market along the shoreline they should head to with their fish previously did not have information about prices at these various markets, but now they do because of the presence of cellphones. The digital economy has even improved health outcomes. For example, Operation ASHA, an NGO based in India with an aim of eradicating tuberculosis, can better ensure compliance on the part of patients undergoing treatment by using fingerprint-based systems to record and monitor the consumption of medicines.

Getting closer to what marketers care about, the digital economy has created new business models. For example, the cloud and related cloud-based services, as well as new types of products such as Netflix, have helped in the promotion of products using digital media (banner ads, search and search ads, social media), and have resulted in new types of pricing (e.g., the pricing of Office 365). We even have new virtual currencies such as bitcoin!

Of more immediate concern to marketers is the traditional ecosystem comprising the consumer, the company, the channel, and the communication media. This ecosystem has been transformed, and some would say upended, by the digital age. In the past, if you were selling ice cream or detergent, you did some “pull” advertising on TV or in the print media, dropped some coupons in the daily paper, and got the supermarkets to stock your product. Then you waited for your monthly syndicated sales report, which would help you decide what needed to be done next.

Today, it is a completely different world. An ice-cream brand on a hot day can team up with a cellphone provider to send a consumer a coupon while she is walking past a store. If I sell detergents, I can tweet during a Super Bowl blackout about how, while my detergent cannot rid the audience of the blackout, it can at least take the stains out.

Today, as marketers, we have a different media landscape with search, social media, etc. We have a different collaborator landscape—the mobile-service provider and an ice-cream brand, say. Most important, however, is that our ability to measure the consequences of our actions has improved. If I am Kleenex and I find more cold-related searches from some part of the country, I can dial up my marketing in those areas and then assess what happens next. The nature of the media, combined with the ability to measure the effects of marketing actions, has also resulted in a renewed interest in the concept of “test and learn.” Such experiments were often expensive when dealing with traditional media such as television advertising, but with digital media, carefully executed and controlled experiments can be a valuable source of information.

Several other topics were discussed as well. One was the need for top management that is willing to invest in infrastructure and that encourages constant monitoring of what is happening offline and online. Related to this, an organization needs to be prepared to make decisions at short notice in rapid response to unfolding events and to not get bogged down in an elaborate bureaucracy. Another topic discussed was the need to ensure that what is being done while rapidly responding to events ties in with the overall marketing strategy, message, and positioning of the brand. This requires the people concerned have an intimate knowledge of what the brand stands for and ensure that all activities “stay on message.” A third topic discussed was the need for brands to have a key story or message to convey, and to then engage current users to amplify the message to future, potential users.

All in all, the audience and the panel discussed a variety of issues that marketers are likely to be wrestling with in the weeks, months, and quarters to come.

Pradeep K. Chintagunta is the Joseph T. and Bernice S. Lewis Distinguished Professor of Marketing at Chicago Booth.