Does Your Company Need a Chief Digital Officer?
Companies are digitally innovating faster than ever as digital assets are often at the center of today’s marketing and social media initiatives. The list is long but some of the significant initiatives include user interfaces, apps, social networking functions, personalization options on web pages, subscriber perks and new products and services related to digital assets. As this inherently crosses over long standing company silos, forward-looking companies are arming themselves with a new senior executive – the Chief Digital Officer or CDO. The CDO’s main role is to bridge the fragmented corporate environment by connecting marketing, social media, IT, research and development, intellectual property and privacy experts and other key stakeholders to ensure digital assets are being developed and utilized strategically.
For many companies that don’t have a CDO or if the CDO’s role is undefined, underutilized or unclear, a CMO and the marketing team have a tremendous opportunity to help shape the role of the CDO and break down the cross-department silos that exist today in order for marketing to fully leverage and integrate with all aspects of digital. In many instances, if marketing doesn’t take the lead in shaping the role, then IT will quickly take over. While there are many functions to the role of the CDO, integrating with marketing is most central to long-term success. Additionally, the role of the CDO can bolster marketing if cultivated in a way to integrate the many facets of digital strategy into the overall company marketing strategy. Without leadership from marketing in developing and empowering the role, digital may never realize its full potential or worse yet, spin off into its own silo and be counterproductive to traditional marketing initiatives.
A few leading companies have already announced the CDO role. Microsoft, Starbucks, The Washington Post, Lincoln Financial, TOMS and even universities such as Harvard and MIT have restructured with a CDO. These smart, forward-looking organizations understand the evolving role of digital in business today and recognize that having digital fragmented across groups was not effectively tapping into the power of digital strategy and assets. For example, most CDO’s tackle building a social media engagement platform and then connecting that platform with e-commerce, Wi-Fi strategies (for brick and mortar outlets), mobile applications and other functions as a starting point to build return on investment for digital efforts. Additionally, bridging offline and online experiences is essential as a first step – this inherently requires a connection to and understanding of marketing.
Recent leading industry reports show that companies now spend more on social media and apps and mobile messaging than on traditional media. For most companies, this is a departure from past days of marketing covering everything from market and consumer research to television, product placement, couponing, promotions, print, sponsorship, radio and other traditional advertising and marketing efforts. Social media departments have popped up across companies or outsourced to specialty agencies focused on social networks and mobile apps and messaging. With these activities often parsed out to separate brand managers, few organizations have tied it all under once strategic digital roof where economies of scale and better implementation could prevail.
In the last 20 years, chief marketing officers have been required to learn a whole new language and manage big data that challenges every aspect of how organizations are run. Now savvy marketers recognize the valuable data and intelligence driven from digital-related marketing efforts. As the very fabric of our lives is in the digital space, it is now generally accepted that most consumers are spending more time online or in mobile messaging than in any other media. Every piece of data that we need to respond to market demands comes from a digital world. Add to this the upcoming explosion of the internet with thousands of new generic top level domains (gTLDs) set to begin to launching this year—potentially shifting the domain name landscape forever. The reach of digital is too broad to be housed in any existing department and warrants its own leader. For marketing executives, now is the time to get engaged in defining that role.
The Role of the CDO
The role of the CDO is to provide strategic direction of how the company leverages its digital assets and reputation in a digital world. A CDO should work in collaboration with the CMO who is largely responsible for all marketing efforts in more traditional distribution methods and ensures that the digital strategy is in synch. The CDO taps into data and research that may be valuable for innovation or other activities throughout the company and centralizes it into knowledge sharing tools. Since this is the most valuable information the company is gathering (i.e. the data through digital tracking), it should be centralized and shared from top to bottom. If this remains fragmented, then the company is likely wasting money reworking the same tasks in different divisions with varying data sets without a unifying cohesive strategy. If marketing helps shape the role, then it ensures the ability to capture this knowledge and redirect into a cohesive marketing strategy.
In addition to working with the CMO, the CDO will cross over divides to work with the CIO and CLO and corporate communications to ensure that the reputation of the company is monitored and information is distributed, brands and assets are protected, privacy issues are evaluated and audited regularly and the technical infrastructure of its digital assets are properly developed in synch with legacy company technology.
CDO’s can also help a company integrate e-commerce into a cohesive strategy to utilize data to drive other marketing initiatives. As more marketers become content creators versus just marketers or advertisers, the need for data about consumer choice is essential to drive the creation of new entertainment created by marketers for consumers. Starbucks, for example, launched its Starbucks Digital Network to provide WI-FI and also stream fresh, localized, valuable content, enhancing the overall consumer experience, as a content curator. Starbuck’s CDO has gone a step further driving social innovation through job initiatives and other social movements. The CDO can also work hand-in-hand with marketing to utilize data captured through digital strategies to find, attract and engage new customers. Ultimately, the key messaging and themes of these digital initiatives must flow in and out of marketing messaging and strategies.
The Return on Investment of the CDO
At its core, the return on investment can be calculated with data points by determining the P&L of digital initiatives. Marketing should be involved in this modeling to ensure it does not lose its allocation of the credit for company revenues. In addition to the traditional P&L, a few other advantages to the company include eliminating the rework and unfocused work associated with fragmentation of digital initiatives across the company. The ability to use data analytics across numerous departments could be widely distributed to improve overall company performance. For example, the same data that helps detect counterfeiting or brand infringement can also be used to help corporate communications stop rumors or reputation management. Or, redirecting key data points to research and development as key consumer insights for new product development, without investing in costly outside studies. A CDO can also work to eliminate digital blunders with more focused strategy and implementation. How many companies and CEOs have gotten in trouble because of a tweet, a post on Facebook or a text gone awry?
The role of the CDO is emerging and will become more important as the pace we live our lives in the digital world increases. Forward thinking companies will begin to look at this as an important next step in the evolution of the corporate structure. Savvy marketing executives will can lead the changing landscape by shaping the role of the CDO to strategically integrate and align with marketing initiatives.