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Why CMOs should commit to an innovation budget

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Johan Walters, head of C2C Labs, says chief marketing officers (CMOs) are always looking for new ways to differentiate their brands. Newer technologies such as AR and VR offer huge opportunity to position a brand. But unless innovation is properly managed, measured and monetised, the real benefits will never be fully realised.
When we speak to CMOs, many of them express an interest in trying something new. International use cases for augmented reality and virtual reality (AR and VR) are really showing how new technologies can add to the customer journey and are differentiating brands beautifully in the eyes of customers. But often this experimental approach is done in isolation of other marketing initiatives and has no bearing on the greater brand strategy.
This piecemeal approach gives a skewed view of how effective a new technology or solution could be.
We believe there is real merit in creating an innovation line item in the marketing budget to allow for experimentation in a safe way that still delivers results. Here are a few reasons why, and some advice when doing it:
* An innovation line item means spend is made available upfront so you don’t have to beg borrow and steal from other parts of the budget when you want to try something new. You can test new ideas and opportunities thoroughly. Having a dedicated innovation line item also forces you to take some time making sure any new project aligns with your brand values, is not done in isolation, and can be motivated for in relation to the overall spend.
* Innovation is often a KPI measurement for CMOs (or certainly should be). Having an innovation line item allows CMOs to not only show what they are doing to drive innovation, but they also have a financial target against which they can measure their performance.
* Many CMOs don’t realise that their customers have a brand expectation and it might just be innovation that sets their company apart from their competitors. Customers may support certain companies based on the perception that the brand is innovative, connected to their digital lifestyle and always trying something new.
* An innovation budget gives you a safe space to try new things without compromising your delivery in other, more traditional spaces. A dedicated budget, with well thought through projects, gives you the freedom to test and learn. Once this is done, you can take your learnings and aggressively upscale what works.
* Be sure to incorporate measurement tools within your innovation budget. Tools such as DoubleClick allow you to, not only measure the new AR or VR projects, but to connect your online to your offline initiatives. Having a multi-channel view across your budget will also allow you to make informed decisions about your next budget. When you can see the results of all your efforts such as display, search and social in one view, you can critically assess how each has been performing in relation to the customer journey. Measurement is the glue that binds your above-the-line to below-the-line efforts.
* Beware of trying to be innovative for the sake of it. Understand that you need a particular business problem that AR or other tech will solve. In our experience, many brands spend millions of rands developing brand narratives that speak to innovation and being tech savvy, but if this is not aligned with actual delivery in how they communicate with the customer, this will never be sustainable.
* Finally, having an innovation budget does not equate to a throw-away spend. By creating smart content for your AR and VR projects you can mitigate financial risk. Good content is re-usable across many of your platforms and has intrinsic value and that is never a wasted spend.
We have worked with some of the most forward thinking global brands. The truly outstanding CMOs are those who are bold enough to experiment with new ideas and new technologies. But they are also the ones who are smart enough to know how to innovate in a way that augments their brand narrative, creating long-terms opportunities, without exposing them to unnecessary risk.