Hitting your mark

Fire the marketing department. That’s what Ducati did. By engaging a community of customers to provide feedback on design, performance and general customer experience, and through methods made quick and simple by using a variety of new media communication tools, the Italian motorcycle manufacturer has dispensed with its internal marketing department.

For those of you who have read The Tipping Point this news will simply be an expected consequence of mavens, connectors and salesmen getting together in cyberspace. For those of you who haven’t read it, shame on you. Stop reading this immediately and order a copy online.

At Ducati, blogs have superseded formal research methods and the company is able to embrace its customer community in an ongoing, real-time, informal feedback loop.

Ducati CEO Patrizia Cianetti, speaking at a recent Forrester Research Marketing Forum in Europe, explained how the company’s organisation chart looks more like a spider’s web than a typical command-and-control hierarchy. It has “the community department at the centre, surrounded by departments like Ducati.com, events and fairs, the factory experience, the creative centre, and the club”.

This was music to my ears. It has always puzzled me why, in most companies, marketing is a department. Marketing is not a departmental function; it’s a philosophy that, in its purest form, underpins running a business with customers’ needs in view. Everyone in the company should be involved in marketing.

If a business has customers, marketing is the business.

Accounting is a department, as is manufacturing, distribution or procurement. But not marketing. It’s as silly as a law firm saying it has a legal department; imagine a church having a religion department, or a hospital with a health department. Law, religion and health are their respective reasons for being, not discrete functions within a wider organisation.

Ducati now calls itself a tribe of employees and customers who ‘share emotions’ and ‘fight together’.
Smart marketers know the good old days of big-budget TV advertising pushing products onto mass audiences through traditional sales channels are fading fast. Online retail sales in the US alone are growing by about 20% year on year, and this year will total more than US$100 billion.

It’s not that Ducati and firms like it are trying to kill off marketing, it’s just that they’re trying to make it work better in the current media/communication context.

Hits on Ducati.com grew by more than 60% and the company reported selling 31% more bikes in the last quarter of 2005 than in the same period in 2004.

Ducati’s move has major implications for the advertising business, with recent polls indicating people’s trust in advertising is diminishing rapidly. According to a US study by the Yankelovich research organisation carried out in 2004, kids aged between 12 and 24 showed declining faith in advertising. Faced with myriad media choices and knowing the control they are able to exert over those choices, they have little tolerance for traditional advertising that conducts a one-way conversation.

The study found teenagers’ trust in advertising dropped from 25% to 18% between 1999 and 2004. In Europe a similar story is unfolding, with fewer than 25% of people having faith in advertising, most relying instead on websites or word-of-mouth recommendations from friends. This shift in attitude gives rise to an enormous opportunity for progressive companies to establish communities built on permission-based interactive programming and marketing initiatives.

The portent of disillusionment with traditional advertising methods should, in itself, be enough to shake the foundations of most marketing companies. They should be asking how they can effectively engage consumers in a meaningful dialogue to improve products and performance.

Of course it works best if their brands have a passionate following. But if they don’t, what are the companies doing wrong? Why do their people bother coming to work in the morning?

However, the idea of consumers giving free feedback for marketers must also have a limited life. It’s not going to be long before they’ll want to be on the payroll. And that raises the spectre of an entirely new kind of company: a central hub around which the other functions revolve; a virtual organisation calling on freelance intellectual resources when required.

Just as terrorist groups like Al Qaeda have forced the US military to rethink how its armed forces should be structured, so new media is forcing marketers to reinvent themselves. The delineation between firms and their customers blurs as organisations shrink and the ranks of committed customers grow. The most active and influential consumers within brand communities will be seeking fees to help redesign products or recommend initiatives. The ability of marketers to identify their customers will expand exponentially — they’ll know who’s most loyal through their participation in feedback loops.

To paraphrase Voltaire: the marketing gods are not on the side of the big battalions, but on the side of the best shots.

hutch@lighthouse-ventures.com