A Tech-Driven Transformation Payoff In The Face Of Food Quality Issues
Chipotle is in the midst of a food quality turnaround and a digital business transformation payoff. The company has invested in technology-driven innovation and an adaptive model leveraging point-of-service store systems, mobile ordering, food delivery (via DoorDash), and loyalty (a few months old and already 3 million strong). The payoff showed up in the recent earnings announcement: huge increases in digital ordering, now 30% of sales in some stores. This is digital business transformation — harnessing technology as a business asset to reinvent a company’s experiences and operations. We’ll explore technology-led innovation stories like this at our Digital Transformation & Innovation 2019 Forum in Chicago on May 14 and 15.
The Secret Of P&G’s Latest Growth Is More Advertising Spending, Not Less
Procter & Gamble beat estimates for its Q3 2019, garnering $16.46B in revenues with increases in its beauty products, healthcare, fabric, and home care divisions. The consumer package goods giant’s performance comes amid reports of consistent cuts to its advertising budget, most notably reductions to agency and ad production fees. While the notion of spending less on advertising and marketing to generate higher returns is music to the ears of any marketer, the reality is that cuts in fees usually translate to reinvestments into working media dollars. While P&G’s overall media spend has decreased from $8.2B in 2013 to $7.1 in 2018, the reinvestment of approximately $100–$150 million of quarterly cuts to agency fees back to media is helping to drive performance.
And On Cue . . . Increasing Social Ad Spend Signals New Opportunities And Costs For Brands
Brands are increasing their media spend on social, so when the big networks announce quarterly earnings, leaders in charge of media and social tech budgets should take note. Q1 2019 ad spend was up year over year for all social networks. Facebook alone brought in $15.08B in Q1, up 26% year over year. On the plus side, increased ad spend could be the result of new opportunities to investigate, such as more inventory (e.g., Stories ads in Facebook, Inc.), more formats (e.g., Snapchat’s case), and more relevant targeting. Or it could result from more advertisers buying, which creates price competition that could negatively impact your planning. Get the most from your investment in social using the best practices we lay out in our updated research on measuring social media programs.
The One Where The CIO Leads Change
State Street Corporation, a 227-year-old company, has embarked on a mission for culture change, and the person leading the charge is none other than the CIO. A recent The Wall Street Journal article on State Street’s CIO, Antoine Shagoury, highlights the need for adaptability in the financial services industry by utilizing techniques such as design thinking to help the CIO organization at State Street become more innovative. However, the urgency to innovate and become an agile company is now simply the status quo. Forrester finds that in order for firms to truly create impactful culture change, they must first recognize the needs of the customer and then transition beyond agile and move to adaptiveness. Gordon Barnett highlights the need for adaptability in a recent report, which demonstrates that a company’s IT operating model must anticipate and enable the firm’s wider transformation. State Street brought this concept to life when it kept the focus of its design thinking sessions on the client experience and what that means for future innovation efforts as it continues to invest in emerging technologies such as AI and distributed ledger technology.
Introducing The Era Of The Billion-Dollar FTC Fine
Facebook is setting aside $3B (yes, billion) for a possible FTC fine related to an inquiry into Facebook’s user data practices. The fine could reach $5B and in any case would be the largest ever against a US tech company. The size of the fine indicates a shift away from the FTC’s leniency toward tech for all but the very largest companies, for whom $3B is chump change (like Facebook, whose shares were up as of 1 p.m. Friday.) If a billion-dollar fine would set you back, be sure you’ve reassessed your own data privacy practices.