Today marks the launch of our 2023 Digital & Marketing in focus study, in partnership with Six Degrees Executive. The report which is now in its third year (formerly known as the Marketing State of Play report), has been developed to shine a light on the marketing and digital industry down under. With 230 respondents from an array of industries and organisations of all sizes, the study looks to explore an array of topics including;
The priorities and challenges facing marketing, digital and eCommerce teams
Digital transformation and what is hindering progress
The growing skills gap within teams across Australia
A closer look at how brands are training their teams and what is holding teams back
A closer look at the preparedness of teams to adapt to privacy changes
The rising demand of CDPs and the challenges that this presents for teams
A spotlight on eCommerce – a special feature delving into an array of insights on eCommerce and much more
For those who want a 10-minute snapshot, we have pulled together this article to cover off the key highlights for the report.
Priorities: there are many, but growth
The growth agenda for the organisation is one of the top priorities of digital and marketing leaders, with 78% revealing this is a key priority for the next 12 – 18 months. Growth has moved to top the priority list since last year’s report, showing the impact of challenging economic conditions. Other key priorities of leaders included: developing their first-party data strategy (55%), and brand development & embedding brand purpose (54%).
As we have seen many organisations undergo rapid digitisation over the past few years, in this year’s study we sought to understand if digital transformation remains of key importance and the barriers impacting adoption.
Our 2023 study has painted a fairly consistent picture to prior years, with marketing, experience and digital leaders reinforcing that digital transformation remains high on the priority list to address over the next 12 – 18 months. In this year’s study, 43% of leaders suggested digital transformation is one of their top priorities. However, for organisations generating over $100m, the importance of digital transformation increases, with 55% of leaders suggesting it is one of their top priorities.
Time and resources are creating challenges for teams.
Balancing short and long-term priorities is the main challenge for two-thirds of respondents, demonstrating the balancing act leaders are facing. Unfortunately for market facing functions, like marketing and digital, leaders and their teams need to contend with ensuring short-term targets are being achieved whilst simultaneously transforming the business or delivering on strategic initiatives (like roll out of customer data strategy and better utilising first party data assets). This sometimes creates an unhealthy tension between the now and the next. Teams forego building for the future as they deal with the issues they need to resolve today - because they are more time sensitive.
In addition, some 60% of respondents struggle with resourcing and a further 54% are challenged by their ability to secure additional investment in budget and resources.
One of the common themes that has surfaced throughout the research is the skill and capability gaps within teams as it pertains to data and analytics. Nearly 1 in 2 leaders stated this was a skill gap within their function and 65% stated that data literacy was not strong within their department. I highlight this because it helps to contextualise the challenges within the findings and others. If leaders and their teams don’t have well developed skills in areas of data literacy, they are more likely to be challenged by their ability to drive effective performance and measurement (as we have seen in the study). The 4th biggest challenge teams face is in the area of measuring performance & return from investment of activities. And if they find this more difficult, it of course means that securing additional investment proves challenging – as leaders need to be able to ;
Demonstrate return and value from investment to articulate the value of additional expenditure.
Connect performance outcomes to the bottom line.
For larger organisations (those above $100m), these challenges all ring true, however finding and attracting talent seems to be a more prominent issue for those within larger organisations, with 35% of leaders stating this was a key challenge.
Executive leaders are creating difficulties for leaders driving transformation.
Digital transformation is hard, its complex and often it fails for a number of reasons. Too much emphasis on technology, and a lack of willingness to stay the course are just a couple of the many factors that impact progress and outcomes.
But at the heart of transformation is people. They are usually the root cause of many digital transformation challenges BUT they are also the reason organisations break through and succeed.
In this year’s study we sought to unpack the aspects of transformation that are causing the greatest difficulties. To do so, we focussed our energy on understanding challenges across areas of strategy, investment and people (as tech always gets a lot of air time). What we have found is that the report card for leadership teams is not pretty. The biggest difficulty leaders face when it comes to digital transformation is the understanding and support of executive teams. Nearly 4 in 10 leaders cited this as one of their key difficulties. This should serve as a wakeup call for executive leaders and teams across the country. We live in the digital age, digital is pervasive, it is part of everyone's lives and that means digital shouldn’t be a department or something that one leader shoulders responsibility for. A lack of executive knowledge and understanding when it comes to digital:
makes it harder to drive alignment;
results in less investment;
increases the likelihood more leaders and teams work against the change.
For those facing into digital transformation and struggling to drive buy in and engagement – it’s important to think about the role you play to lift knowledge and understanding of the executive team, so they understand how their market is changing as a result of digital.
When difficulties like these are combined with skill and capability gaps as well as an inability to secure investment, they create clear indicators that leaders are facing an uphill battle and success is likely to be elusive.
Talent shortages are an issue - but it's not enough to prioritise the training and development agenda.
With so much changing around us, the need to continuously evolve our knowledge is more important than ever and yet despite this we see a real lack of focus and emphasis on it across the board.
Budget was identified as a key barrier to training and developing teams, but it wasn’t the main element holding teams back.
The number 1 reason cited by leaders related to what is holding them and their teams back from effectively upskilling and developing their teams was they simply don’t prioritise it enough as a team. Which means they don’t think it is important enough to do it. 41% also cited time and space as key barriers to invest in upskilling.
There is so much written about the need to continuously learn in a market like this to remain relevant, but, as an industry, consistent professional development doesn’t seem to be valued like it is in other industries (e.g.: accounting – where rules are changing). Those within organisations generating $100m+ are slightly more likely not to prioritise it as a team (49%) and/or don’t have the time and space to invest in it (43%). This is an interesting insight, whilst larger organisations have the means to invest at higher levels; their behaviours and mindsets are more likely to hold them back.
In a world where we are asking teams to tackle new challenges - to do things differently, we cannot expect that they just learn on the job. They need to be exposed to new thinking, best practice and what good looks like in order to ensure they don’t fumble their way through new initiatives and they are given the best chance to perform in their roles. Brands that invest and prioritise it are far more likely to win the talent war than those who choose not to.
Improved measurement is a focus as budgets are squeezed.
More than a third (35%) of respondents report their budgets being reduced over the past 12 months, and we feel (based on our observations about the current market) that this trend is likely accelerating. With greater budget constraints as a backdrop, it’s no surprise to find there’s a growing need to drive results and efficiencies.
FOCUS FOR DRIVING EFFICIENCY & PERFORMANCE
Just over half of respondents say better measurement and more focus on test, learn and optimisation are key focus areas in the year ahead to improve performance and drive efficiency across their operations. 41% of leaders suggested that automation is also a key focus – as team resource constraints bite and teams need to do more with less.
Marketing automation and CRM investments are still important, but CDP adoption is rapidly accelerating.
2023 is clearly the year of the CDP in Australia. This year's study has found that 40% of leaders cited it as one of the key investment priorities over the next 12 – 18 months. This has doubled since last year’s study. The case and rationale for CDP investment is rising as a series of industry trends and challenges collide and the conditions ripen for investment.
From the growing number of disparate data sources brands are contending through - to the changing privacy compliance landscape, a need to drive growth through a brand's existing customer base, and the need to build 1st party data assets to future proof against 3rd party cookie deprecation - it's easy to see why the need for CPDs are growing.
Over the past 3 years we have been tracking investment in marTech and priority areas for the year ahead. With demonstrable growth in the number of platforms available and the providers serving the industry, it is fair to say organisations are still trying to make sense of the complexity of what is out there and what is the right choice for their brand. Whilst there are promises of improved efficiency, effectiveness, relevance and automation at scale – for many the returns are still too elusive as they grapple with how to integrate and embed platforms to derive value and (to my earlier comments) invest in training - so people know how to use the systems most effectively.
More than a third of leaders point to integrating platforms (35%) as a key challenge they are facing, along with embedding and implementing platforms (34%). For organisations generating in excess of $100m – these 2 challenges are flipped - with embedding and implementing the platform taking the top spot in the list of challenges faced by larger organisations.
But why? It normally comes down to people and processes rather than the marTech itself. The study has found that within Digital and Marketing teams today, the second biggest skill gap is in marTech strategy and implementation (38% cited this as a gap). If you have teams that don’t have the skills and experience to operationalise these platforms, then it doesn’t matter what technology you have bought - the benefits won’t be realised. It’s a very expensive exercise for teams to be learning on the job when it comes to implementing platforms and if it fails you can’t necessarily ask for more funding in order to resuscitate a marTech project gone bad. So there can be many issues businesses need to be aware of once they have procured platforms of choice.
There is urgent need to address skills gap in data capabilities.
A capability gap in data and analytics skills is holding businesses back. Only 35% of leaders believe data literacy is strong within their teams.
Data and analytics is the biggest technical skill gap identified within teams, which has consistently topped the list for three consecutive years, with measuring performance and outcomes also featuring prominently in the list of skill gaps. However, more than half of leaders said customer data strategy and better utilisation of first-party data is a key priority, showing a significant gap between business priorities and capabilities.
For those who are building their eCommerce presence, the eCommerce skill gap is more pronounced within their organisation with 28% of leaders pointing to skill gaps in the eCommerce space.
Managing up and across the organisation is a challenge for nearly half of all teams.
Whilst most of the energy and attention in the industry is placed on technical skills, we took a closer look at soft skill gaps, given they can be the difference when it comes to being a highly successful team.
The study demonstrates a significant gap in critical soft skill areas that are hampering marketing and digital from being able to play their role within the organisation. The ability to manage up and across was a skill gap felt by nearly half of all leaders within their teams, with the ability to thinking critically and problem solving (42%) and the ability to influence and negotiate (40%) also featuring very prominently.
For teams that are attempting to implement big strategic initiatives, these skills are heightened and vital. Any skills development should focus on closing the gap in soft skills alongside of gaps in technical skill areas.
Brands are ill-equipped to deal with privacy.
After 3 years of government papers, reports and consultation, it feels like we are close to some very substantial changes to the Australian Privacy Act in order to make it fit for purpose for the digital age.
Consumers are demanding more control and transparency when it comes to their data and with a number of very high-profile data breaches, the government has made it clear they will take affirmative action. We believe that the final changes to the privacy act will be revealed later this year.
41% of leaders suggest they have their house in order as it pertains to privacy, with leaders suggesting they either;
have a clear path they are implementing or
are well on the way to evolving in the privacy space.
So, this means 59% don’t.
What's more – less than one in 4 suggested that improving compliance with data privacy is a key data priority in 2023.
Brands now face up to $50m in fines for non-compliance and brand reputation can be wiped out overnight from the fall out of a breach. If this isn’t on your list of priorities then you may need a re-think.
Many don't see eCommerce as a vital channel distribute products & services and engage with customers. Barriers are a-plenty.
In 2023, we added a series of questions to the report related to eCommerce in order to better understand how brands were thinking about the opportunity and managing through the challenges before them. Today, eCommerce represents 18.1% of total retail sales in Australia and it is anticipated to reach 1 in every 3 sales over the next decade - which is why we sought to unpack eCommerce within this year's study.
When it comes to the perceived importance of eCommerce within organisations now, less than 4 in 10 leaders suggest that it is perceived as an integral channel within to engage customers and distribute products and services.
When we break this data down and look at it at an industry level, we see less than 10% of leaders suggesting eCommerce is perceived as an integral channel in the world of FMCG and consumer products. Whilst in retail, the perception of eCommerce is better - with 55% suggesting it is perceived as integral.
Brands that lack the knowledge and understanding of the role eCommerce plays in their ecosystem and its importance to their overall bottom line, risk:
under-investing in the channel; and
inhibiting their ability to build capability - which results in lost sales and market-share overtime.
So where are brands channelling their energy when it comes to eCommerce?
Improving the end-to-end eCommerce experience was seen as the most important priority across all industries, followed by channel expansion.
But when we look at it from a retail vs FMCG & consumer goods perspective - it differs demonstrably, with channel expansion topping the list of priorities for consumer products and FMCG brands. Building out their DTC model in order to build a more direct relationship with their end consumer rounded out the top 3 priorities.
Whilst for retailers, improving the end-to-end experience was by far the key priority. This was followed by improving their delivery proposition and fulfilment - as retailers face pressure from marketplaces, quick commerce platforms and others to deliver more compelling propositions to market.
Want to explore more of the key findings?