Written by Paul Zhou, CEO, The Illuminera Group
Marketing Algorithm and Automation to become a reality
With Alibaba's DataBank App Market poised to open, it is likely 2019 will mark the beginning of a proliferation of algorithms, automation, and even AI that can drive anything from business insight to ROI optimization. In 2017 and 2018, Illuminera has amassed considerable learning in formulating marketing algorithms. Now with the App Market, we will be able to scale up the utilization of these algorithms and, potentially, build marketing automation tools based on some of them.
Big Data + Small Data
by 2019 there should be even less people touting the omnipotency of big data. The two to three years prior to 2019 saw the true value of big data in marketing applications but also revealed the limits in big data. While big data is invaluable to bridging the divide between strategy and execution, it becomes almost hopeless in answering the why questions. And the why questions are extremely important in predicting consumer's next moves. Illuminera believes this will become a next hot spot with more and more companies rushing in to build valuable small data set that can compensate big data well. Certainly that's one area which Illuminera is betting our money on in 2019.
Brand Owners crazy about owning consumer data
The trend already emerged in 2018 but will get more real in 2019. Brand owners large or small will feel the urge to own their own consumer data. Already consumers are encouraged to sign up via wechat even when buying a tube of toothpaste. This urge to own data was out of both concerns on the likelihood of concentration of consumer data in the hands of a very few, as well as the fear to be left behind in the digital age. Yet the way many brands acquire and utilize data today will prove futile. Eventually only brands who is able to acquire big and thick data will be able to rip benefits from first party data
Consulting Making Significant Inroads into Creatives
It is no longer news for consulting firms the foray into the territory of creative agencies. So far, some of the bigger names have done so by acquiring existing agencies. The results so far are mixed. Illuminera recently launched our own strategic creative agency - STORiE. This is a different take than the conventional wisdom. We believe the best way to build the next generation creative houses is not through piecemeal incremental adaptation of existing creative practices, but rather by devising a brand new way to woven data, strategy and creative together.
Media Agency Under Siege
While consulting firms have seen the possibility of upturning the creative agencies, so far very few have had reveal insight that can support an invasion into the media planning and buying business. Well, that might not last very long. With closed-loop big data for Alibaba and JD becoming accessible to more and more brand owners, it is just a matter of time for clients and outsiders to question the industry's media-centric (as opposed to consumer-centric), data scarce, vague and indirect ROI, and conflict of interest (think media rebate and price differentials) way of operations. In fact, in 2019 Illuminera is poised to test the water by introducing algorithms together with better transparency and accountability.
Transparency gaining Transparency
It is no small wonder that the current state of the media placement (misleading ROI, media rebate, price differentials, outright fraud, and etc.) hasn't caused a major uproar on the client side. Which other industry has endured so much mistreatment and, as a result, seen their money down the drain has stayed eerily quiet? Now with a slowing economy and ever declining ROI, Ogilvy's "50% wasted" became an aspirational goal instead of butt of joke. Will brand owners facing dooms unless they get the bang for their bucks finally wake up and cry foul in 2019? We'll see.
New Product Launch Heavily Title toward online
We have seen a clear trend that more and more brands are launched online in either Tmall or other shopping platforms. Mars chose to do so with its Matisers which was launched on Tmall. Apparently launching new product online saves the cost and risk associated with offline distributions. But it also comes with other benefits. In Mars' case, with data analytics support from Illuminera, Mars ripped the following benefits by doing so: 1. the brand received solid data support from Tmall which the allow the brand to improve its strategy prior to launch in a time and cost efficient manner; 2. the brand was able to translate its broad and abstract strategy into plans that can be executed faithfully in Tmall; 3. the brand was able to review and fine-tune its strategy merely four weeks after launch. Given these and other significant benefits, it is reasonable to foresee more and more brands will be launched on line.
Brand Owners Divided into Digital empowerment Haves and Have-nots
In the intense competition for share of wallet, brands have tried almost all avenues to squeeze competitive advantage: product innovations, celebrity endorsement, traffic dividend, ... In many cases, competitive edge is hard to come by and, even if it does, unlikely to be sustainable. For example, Tmall's traffic dividend has been exhausted, where is the next wave? Yet increasingly more and more brand owners realize that there is another competitive edge that's achievable and repeatable: data empowerment. Routinely, through big data and algorithms, Illuminera has delivered dramatic improvement in conversion rate and ROI. We have also seen that many companies are now rushing to invest in this area: Mars, Suntory, Nestle, ... just to name a few. In 2019, a lot more brand owners will try to get onto this bandwagon. Brands who do not enjoy data empowerment will be at a great disadvantage.
The disappearing line between Ecommerce and Marketing
Depending on the specific categories with consumer products, it is estimated that 40-60% of consumers use ecommerce platforms (esp. brand flagship stores) to do research on the brands of their interests. On wechat, a staggering amount (though no official stats so far) products are being sold through Moment and wechat groups. It is already a stupid question to ask whether ecommerce is a sales channel or a marketing channel. Yet, for a great majority of brands, organizationally this market reality hasn't been recognized at all - ecommerce is typically a separate function standing along or reporting to the sales head. This mis-match creates serious problems. for one, ecommerce dept does not have the expertise and budget to handle brand communications; also ecommerc is typically assessed on sales KPIs. We have started to see companies realizing this mistake and started to experiment with various solutions.
