The Silo Construction Business is Booming

Is there any more constant complaint in marketing than that businesses create marketing and data silos that make them less efficient and add expense? And is there anything more certain that given the development of a new marketing channel, a new silo will be built?

I classify silos into three types:

• Strategy silos, in which novel strategies are implemented in the belief that the new channel is radically different from anything that has come before;
• Data silos, in which different channels create data assets that are managed independently and are not used across channels; and
• Organizational silos, in which new teams are created to manage marketing through the channel.

I’ll start with organizational silos, since they almost always lead to the building of the other two. A great example arose over a decade ago, when companies formed email marketing teams completely divorced from their other direct marketing efforts. The result was higher expense and reduced efficiency for companies that created these internal barriers. For example, how many companies have sent both snail- and e-mail communications that are totally disconnected from each other? And what about their customers, who were now being spammed from all quarters? Fortunately, many companies have collapsed these silos, and the trend for the new kid on the block  – mobile marketing – does not seem to be as pervasive as in the early days of email.

Strategic silos are still being formed pell-mell. Take interactive acquisition programs: we commonly see different, and in some cases competing, strategies for banner advertising, paid search, affiliate marketing, and, now, social marketing. Non-integrated media buys in banner, search, and affiliates may create real inefficiency, since these independent strategies may end up bidding for some of the same real estate. Even if they are not in competition and are not leading to increased CPMs, there is often no thought put into how they might support each other to increase the efficiency and effectiveness of acquisition programs. Could we coordinate, for example, all of these activities in order to maximize response at the lowest possible CPM? In almost all cases, the answer will be yes.

And finally on to data silos…Even if the organization and strategy is rationalized, different channels require and generate different data. But how many organizations could put together an integrated view of what they spend on broadcast, print, direct, merchandising, banner, search, and any other medium they use and then analyze that information relative to sales? Probably a handful. If that goal is too ambitious, then how many companies could do the same for just related channels? For example, direct mail, email, and mobile? Or general and banner advertising? Or banner and search?

I admit it is easy to take potshots at the lack of integration. To be fair, it is difficult and painful to integrate, something we know quite well, since that’s what our clients hire us to do.  But it is “do-able” and it is worth doing.  While John Wanamaker’s famous quip about 50% of advertising being wasted is not necessarily true, in our experience, there is at least 15 – 20% of a company’s marketing spend that could be made to produce higher results, if data and strategies were integrated. And for companies that have built very impressive silos, Wanamaker’s 50% mark might be pretty close. (By the way, my mention of John Wanamaker made me remember Randall Rothenberg’s article, The Advertising Century. Well worth a read).

Got any silo horror stories? Or examples of integration done right? Leave a comment below.

Comments are closed.