Sandeep Goyal
Nov 20, 2017

Blog: Aggressive action and existential risks - The Forrester 2018 Predictions

The Forrester Report is a must-read-must-imbibe for all CMOs and their next in commands; also for their extended digital teams

Blog: Aggressive action and existential risks - The Forrester 2018 Predictions
The Forrester 2018 Report is out. My friend B. ‘Nary’ Narayanswamy, now in ‘active’ retirement in Puducherry sent it to me last week. Nary is the first to access all such reports and I am the kind beneficiary of some of his cerebral benevolence. 
 
As per The Forrester 2018 Report, major dynamics that will shape 2018 include:
1. Performance expectations for CX (customer experience).
2. Success rate of digital transformation efforts.
3. How scarce talent affects the market.
4. Intelligent agents' influence on consumer spending.
5. How brands will fare in understanding the lingua franca of platform algorithms.
6. The impact of consumers cocooning themselves from "digital noise".
7. The fate of traditional advertising.
8. The chances firms will comply with GDPR.
9. How open banking will determine the future of many banks.
10. How digital platforms will impact traditional retailers.
11. The evolution and pace of artificial intelligence.
12. The evolution and pace of blockchain.
13. How security evolves to confront threats without degrading CX.
 
Forrester is one of the most influential research and advisory firms in the world. They work with business and technology leaders to develop customer-obsessed strategies that drive growth. Forrester's unique insights are grounded in annual surveys of more than 675,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of their most innovative clients. Through proprietary research, data, custom consulting, exclusive executive peer groups, and events, the Forrester experience is about a singular and powerful purpose: to challenge the thinking of their clients to help them lead change in organizations. I have been following Forrester’s work for some years and have always found it cutting-edge and illuminating. This year’s Report too is full of enlightening insights. 
 
First to Forrester’s views on traditional advertising. Forrester’s research shows that instead of plowing money into traditional ad spending, CMOs will increase spend on: 
1. Revitalizing CX to drive affinity and stem churn. 
2. Synchronizing loyalty programs to customer expectations. 
3. Understanding how to decode digital platform algorithms. 
4. Advancing martech to deliver individualized experiences at scale. 
 
The result: Forrester predicts that ad spends will be flat in 2018 and cause a painful correction in the agency and adtech markets. Which really is bad news for advertising as we know it. For years now, I have felt that ad agencies have refused to evolve and transform. If that steadfast refusal continues, if that obstinacy continues to hold, ad agencies are in for a very tough time in the days ahead. 
 
The biggest pointer in the Forrester Report is that customer experience (CX) has become the centerpiece of business strategy as companies adjust to the ‘experience economy’. Customers’ expectations will outpace companies’ ability in 2018 to evolve or invent experiences, and that means that companies can’t adjust fast enough or well enough to the pace of change. Smart executives will intervene to make CX an internal disruptive force, one that is underpinned by the fundamentals of CX management with customer trust at the core.
 
The next big pointer in Forrester is that digital transformation is not elective surgery. It is the critical response needed to meet rising customer expectations, deliver individualized experiences at scale, and operate at the speed of the market.
 
Forrester predicts that in 2018, 10% of purchase decisions will be guided by a platform’s agent and start the real economic impact of empowered machines. Empowered customers are already wreaking havoc on markets, changing the rules and destroying once-sturdy business models. Power has shifted away from institutions to customers. Enter the machine. 2018, and onwards, platforms and associated intelligent agents will collect preferences, behaviors, transactions, and emotions, creating a rich view of an individual. Intelligent agents will use that data to increasingly influence consumer options and decisions. This model is not new. It was a longstanding part of advertising logic in a world where brands had greater sway over customer choices. The difference is that this model is based on the emerging, dynamic, and emotional relationship between the intelligent agent and the individual. Some of this machine learning is scary, but is the new emerging reality.
 
In 2018, as per Forrester, CMOs will need to source talent to interpret and influence AI-driven platforms. Twenty-five percent of CMOs will fail, resulting in their brand becoming undifferentiated and silenced in the market. The Forrester argument is that the algorithm is foundational to digital platforms like Google and Amazon. It is how platforms make sense of customer preferences, recommend actions, learn, and act. The algorithm is the language of platforms. Yet brands have been slow to understand the lingua franca of platform algorithms, especially when the brand is not part of the customer’s existing preference and the algorithm is choosing whether to introduce that brand to the customer. It is akin to not understanding search algorithms — but with far greater consequences. It is one thing to be disintermediated by the platform and its associated intelligent agent; it is another to not understand or have any real influence on that relationship. Frankly, skill sets in current digital agencies and within client organizations are at a very elementary level in India. The belief still is that digital is ‘emerging’ media. Most marketers and their digital agents are in for a big shock, if one is to repose faith in Forrester’s predictions. 
 
Forrester has another interesting perspective for 2018. Current trends like yoga, KonMari, and hygge can be seen as fads. But perhaps they are signals that individuals are withdrawing from clutter in search of simplicity; those individuals will use intelligent agents to filter away the noise of the day: multitasking, endless choices, non-stop ads on any device. The emotional labor of these distractions is converting to fatigue for consumers today. 1% of the US population, with spend equivalent to $ 24 billion, will join the AI revolution to cocoon themselves from the noise. Yes, the noise we call advertising. 
 
Forrester’s Report points out that retailers will need to consider how to work with intelligent agents that will take a greater share of how customers discover and order; create immersive, dynamic store experiences; use physical stores as logistics nodes for intraday fulfillment; expand the digital catalog to match platforms like Amazon; and harmonize all of this in a graceful, differentiated journey for customers.
 
In sum, Forrester’s 2018 predictions describe the market dynamics that favor those taking aggressive action and create existential risk for those still holding on to what has worked before. 2018 will force decisive action for firms looking to: 
 
1. Take control of their destiny as platforms like Amazon and Google drive up disintermediation risk and make some companies unintentional utilities. 
 
2. Shift spend away from acquisition to confront escalating churn. 
 
3. Revitalize customer experience in a market where rewards and punishments are doled out experience by experience.
 
4. Transition to digital companies while maintaining their corporate identity and soul. We hope our 2018 predictions provide new insights and help catalyze action.
 
To me, the Forrester Report is a must-read-must-imbibe for all CMOs and their next in commands; also for their extended digital teams. Understanding of IoT and AI in India is pathetic in most companies. Baby steps are being taken by some CTOs and CXOs but most CMOs are still to learn even the ‘a-b-c’ of the new revolutions sweeping the digital world. There is cause for serious concern, and serious worry. 
(Sandeep Goyal is one of the few advertising professionals who has seriously evangelized digital to clients and brands. He remains passionate about digital transformation of marketing and communication.) 

 

Source:
Campaign India

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