5 Minutes with Forresters Melissa Parrish

That may seem a little creepy until you consider you bought those devices to get helpful information, and in order to help you, they need to know the who-where-when-why of what you're all about. Of course, marketers want that info, too.

In the parlance of Melissa Parrish, this makes you "addressable," and it's transforming the very nature of marketing. About half of US online adults are now "always addressable," she says, and the number is rising oh-so rapidly.

Parrish, vice president and research director for the marketing leadership group of Forrester Research, was the lead author on a paper released this week that explored this phenomenon in fine detail.

It concluded with something radical: that companies actually need to make themselves useful to the audience instead of simply bombarding them with ads based on their personal attributes.  And it proscribed four main competencies needed to build that sense of utility.

CMSWire had a chat with Parrish at last week's Forrester Forum for Marketing Leaders, digging deeper into the themes of her noteworthy paper.

Murphy: I wanted to start by asking about the "always addressable" consumer. The more affluent the consumer, the more devices they seem to have. Is that a fair read of the situation?

Parrish: At the moment, it is. Household income is an indicator, one of the inputs that would predict addressability. But what we see is that as the price of ownership of devices decreases, and as the proliferation of connected devices increases, those income barriers are starting to go away, or at least become less important. Of course we do highlight that for marketers, because marketers are always looking for those consumers who have more buying power. The majority of always addressable customers today do have more buying power, so that is good news for them.

Murphy: With the Internet of Things coming, we're going to see a whole lot more connected devices. Will that follow the same pattern? Will it start in wealthier homes where you have more connected devices vs. a poorer person who may not be connected as much?

Parrish: I do think so, but I think it's because of the cost of the data services required to take advantage of the Internet of Things as opposed to the cost of the sensor-laden devices, which in some cases are not much more expensive than anything else. But I do think we will see that.

There's a commodity thing that has to happen. It's not just that the sensor-laden devices have to be cheaper to manufacture and cheaper to acquire. It's the ISPs, it's the Internet connectivity, it's the networks.

Murphy: For example, home security systems that let you check on whether your kids got home from school? That sounds like an upper-middle-classy kind of thing to me.

Parrish: It absolutely does. I think right now it is largely that, not least of all because it's comparatively expensive to install, it's a higher cost of ownership -- the services that go along with it are more expensive. And, in order to install it, you have to have a certain kind of connectivity to your home, and a certain kind of house. I live in a 100-year-old house. We're not getting home automation any time soon.

Murphy: Let's talk about generations. One of the things you found in your study was that the younger the person is, the more they are seen as "always-addressable" consumers, which is basically to say they're always on the grid. The pressure on companies to respond to that is only going to grow as time passes. Is that a fair reading?

Parrish: It's definitely a fair reading. If you, as a company, are targeting Gen Y or Gen Z, the majority of your customers have been always addressable for about two years. With Gen X, my generation, about half of us became always addressable at the end of 2012. But even with the more mature demographics, you see numbers that are smaller -- a quarter of the Golden Generation -- but that's twice as many as 18 months ago. So it is growing very, very quickly. It's only a question of how long it will take for the majority of your customers, or the customers who are most valuable to you, to be always addressable. Right now, youth is a key indicator.

Murphy: I also wanted to ask about a company's readiness in the four key elements. Would you explain these a little?

Parrish: What we say is companies have to move towards offering useful experiences. There are a couple of ways to do that. You can do something totally transformative that completely demonstrates your brand promise and completely transforms your business, or you can add utility in a more organic way by improving programs that are already in the market. If you really want to do something transformative, you must be very mature across four elements:

  • Customer addressability -- if you don't have a lot of addressable customers, you don't have the opportunity to be transformative;
  • Data maturity -- in order to be really useful, you have to know what your customers need, not what you want them to need. And that means you have to use data in intelligent ways to glean insights and put them into action. So you have to have a high degree of data maturity;
  • You have to have an ecosystem of partners that have a similar innovation mindset. So if you've got technology partners and agency partners who are still very traditionally minded, they're simply not going to be able to help you explore those transformative opportunities;
  • Finally, there's something we call digital commitment. My colleagues, Martin Gill and Nigel Fenwick, published a report about digital business transformation. They have this idea of 'digital dinosaurs' -- companies that really aren't digital, and 'digital masters' -- companies that have truly embraced digital to transform their businesses. The closer you are to a 'digital master,' the more likely you are to take advantage of these transformative opportunities.

Murphy: Listening to those four points, I realize a lot of companies may be strong on one or two but not all four. I think what you're saying is that we're going to migrate towards all four on a broad level. From that, I take away that we're going to see a lot of tumult in the industry over the next four to six years as people change agencies, channels, marketing techniques, staffs, the technologies they're using and so much more.

Parrish: I think that's incredibly fair to say. In the end, there's going to be that kind of tumult on the vendor side, too, as the vendors try to figure out the services and technologies they need to offer to be able to serve their marketing clients. I think we're in an incredible era of experimentation. I don't think it's slowing down, only getting faster. You heard from Xerox (at the Forum) on throwing out a product-centric B2B marketing approach and creating all this content about getting optimistic. I think we're going to see a lot more of that kind of thing as this trend matures.