Chapter 1
The Age of the Customer

Customer relationship marketing (CRM) isn't merely about the implementation of a tactical marketing plan. A true customer-centric business strategy requires a fundamental shift in the organization's framework-its leadership, its priorities, its processes, even its culture. These changes result in a new paradigm for the company's goals, its customers' expectations, and its trajectory for the future. The force behind this shift is the state of today's consumer marketplace, which can be characterized as the age of the customer.

Think back to the brand revolution of the 1950s, when the advent of national television broadcasting created coast-to-coast demand and brand recognition. The companies that had the vision and resources to seize the opportunity and take their brands nationwide were the clear winners. Brands like Tide and Chevrolet became household names across the country, triumphing over smaller companies that faded away in their wake during the age of the brand.

The channel revolution was symbolic of the 1990s and early 2000s. It exploded when online marketers like Amazon and eBay changed the meaning of "going shopping" by making Internet purchasing commonplace. And GEICO, a proven insurance industry innovator, managed to shift the buying norm by introducing consumers to a whole new way to shop for insurance. Today, 13.1 percent of Americans are considered digital natives,1 having never known a time when the world was not at their fingertips. The result of this way of life is an unfathomable amount of data that can either overwhelm marketers or help them increase their customer knowledge and drive strong relationships.

During the age of the channel, marketers like Capital One and GEICO pioneered the use of individual-level data and analytics to target and personalize direct marketing efforts that drove new customer acquisition and strengthened customer relationships. The innovative application of analytics on valuable first-party data (owned customer information) and third-party data (acquired from data providers) within direct mail and telemarketing (the addressable media of the day) resulted in massive scale and efficiencies. These one-to-one trailblazers recognized the market opportunity of the moment, and like Tide and Chevrolet before them, they capitalized on it. They used a strategy of addressability at scale to gain enormous market share in highly competitive markets.

Today, we're facing another moment-in-time opportunity to harness the power of addressability at scale. Simply defined, this refers to the application of data and analytics to drive highly efficient, individual-level targeting and personalized experiences to consumers-and doing it at massive scale. It is now the age of the customer, where consumers are empowered with the tools to make their own purchase decisions-and they know how to use them. The gateway to competitive dominance lies in the addressable audience platforms that are being created for the "always-on consumer," who engages with brands through digital media and channels, across multiple screens and platforms, 24/7. Leading third-party providers are scaling their platforms to deliver the experiences consumers seek, while creating an addressable marketing stage for advertisers. Some of these are household names, such as AOL, Facebook, and Twitter, providing tools for advertisers to reach their logged-in users. Others, like Rubicon Project and AppNexus, are little known technology players that are leveraging their place in the ad delivery ecosystem to create addressable experiences across an open web of thousands of publishers. The competition for advertising dollars among the major platform players is driving increased targeting, tracking, and content capabilities that continually enhance the opportunity for the marketer to implement addressable consumer experiences.

The opportunity for efficiency and scale within the addressable audience platforms dwarfs that of the aforementioned offline direct marketing opportunity of the channel age. In our opinion, it is poised to generate many times the value for those companies willing to take first-mover advantage. Further, due to the increased complexity of leveraging data and analytics in today's digital world, addressability at scale will create more enduring competitive power for those leaders.

Creating Competitive Advantage Through the Digital Audience Platforms

The opportunity for brands to create competitive advantage rests squarely on their ability to achieve addressability at scale. Addressability at scale is enabled through the application of data and analytics to the digital audience platform marketplace that is now at massive scale. And CRM is all about using addressability to increase the targetability, relevance, and measurement of marketing impressions and experiences across the customer lifecycle, in all channels and media, both online and offline.

Consumers are changing every day in the ways they interact with brands-shifting their media consumption patterns and decision processes. We have observed three prominent macro trends emerging from these changing behaviors, which are driving the market toward more individualized interactions. The first is the scaling of digital media; the second is the proliferation and penetration of social media; and the third is the multiscreen, always-on mobile population. We will delve more deeply into these trends in Chapter 4, but it's important to note that, as they continue to increase in scale, so will our capacity for addressability-and our commitment to customer centricity and individualized digital experiences across media and channels.

Over the time period of 2010 to 2014, we've seen a marked downward shift in the consumption of traditional media such as radio and print; at the same time, consumers have drastically increased the number of hours spent on digital media, social in particular, with an increase from about 52 minutes a day to nearly 90.2 In 2010 Google didn't have a social media capability, and today, 540 million people have accounts on Google+.3 Pinterest is a 300-person company, and one in every four women in the United States is using it on a weekly basis.incredible.4

Mobile is scaling, too. Today, we've hit an inflection point, where mobile Internet use is actually eclipsing desktop use.5 Who would have thought that would happen so fast? So the shift is on from traditional media to new media. And marketers are trying to leverage the use of data to figure out to whom-and how-they should offer individualized digital experiences. Advertisers in particular are shifting their dollars into this effort. In response to massive consumer migration to digital, brands are scaling their mobile and social media advertising budgets across formats such as native and video.

All of this digital interaction is creating a tremendous amount of data. Each day, 182 billion emails are sent.6 Each month, 70 billion pieces of content are shared on Facebook.7 As Google Executive Chairman Eric Schmidt observed, "There were five exabytes (5 million terabytes) of information created from the dawn of civilization to 2003, but that much information is now created every two days, and the pace is increasing." For one of our top clients, we manage a single database that contains over 8 billion page views and more than 24 terabytes of data for a single brand.

The exhaust coming from all of this digital movement is data. Lots of it. And it's scaling quickly.

To consider addressability in the context of this much data is overwhelming. It simply can't be achieved through traditional methods. Not only is the overall digital media marketplace going to be $61 billion by 2017,8 but a significant portion of digital media today is, in fact, being bought programmatically, meaning through an automated approach that uses technology to select audiences based on data and analytic insights. Real-time bidding on media is actually going to reach $10.5 billion by 2017,9 growing more than 50 percent. And we estimate custom audiences, or "identified addressability," to reach the $8 billion mark by that time. So the shift is toward digital but to the individual addressability opportunity within digital as well. As marketers, we're trying to build strategies for first-party and third-party data to aggregate that information so that we can apply analytics to it and deploy on this abundance of digital platforms. Brands-and the marketers charged with driving their growth-cannot keep up with this pace without continually upskilling themselves to capitalize on the massive opportunity. You will make swift progress or you will fall by the wayside while other companies-and other marketing executives with them-pass you by.

The power of addressability to create competitive advantage, both for the organization and for the marketer, has been proven by history. To set up some context, it is meaningful to consider its roots, which are surprisingly deep. We observe, in general, two distinct eras of addressability at scale (see Figure 1.1). Each possesses three common criteria of scale and effectiveness to drive superior performance. The first is individual-level addressability, which goes beyond broad segments, demographics, or panel-level data to reach individuals directly. The second is that the...