Marketing & Sales Practice

Modern marketing:
What it is, what it isn’t,
and how to do it
To drive growth in the digital age, marketing needs to modernize a
specific set of capabilities and mindsets.

by Sarah Armstrong, Dianne Esber, Jason Heller, and Björn Timelin

© Getty Images

March 2020
 What does “modern marketing” mean to you? does and more about transforming how the work is
We can all probably think of a clever digital done. Based on successful cases we’ve seen, we
campaign, an innovative app, or some inspired estimate that making this change can unlock 5 to
creative work shared across multiple channels. 15 percent of additional growth and trim 10 to 30
percent of marketing costs.
While these examples contain some of the
hallmarks of modern marketing, in our view it
is much bigger than that. Modern marketing is Where to start
the ability to harness the full capabilities of the In our experience, most senior leaders understand
business to provide the best experience for the that marketing has to modernize, but they are less
customer and thereby drive growth. In a recent sure what specifically that means. Too often, they
McKinsey survey, 83 percent of global CEOs said focus on a handful of initiatives or capabilities and
they look to marketing to be a major driver for then grow frustrated when the promised value
most or all of a company’s growth agenda.¹ doesn’t appear.

Delivering on this promise requires a whole new For this reason, it’s crucial to have a clear view of
way of operating. Marketing departments need to what constitutes a model for modern marketing
be rewired for speed, collaboration, and customer (Exhibit 1). While each of these components is
focus. It’s less about changing what marketing familiar, we have found that the clarity of seeing

1
Julien Boudet, Biljana Cvetanovski, Brian Gregg, Jason Heller, and Jesko Perrey, “Marketing’s moment is now: The C-suite partnership to
Web 2019
deliver on growth,”
Marketing June 2019, [Link].
2020 compendium
Exhibit 4 of 7

To deliver
Exhibit 1 on growth, modern marketing requires updated capabilities and
enablers.
To deliver on growth, modern marketing requires updated capabilities
and enablers.

Strategy & Organizational

insights design &
Capabilities culture Enablers
Which How do we
capabilities Creative & Agile way leverage talent
are needed content of working inside and
to deliver outside the
marketing organization
work? Media & Modern Talent & to deliver
channel marketing agency marketing
activation model management work?

Customer
Data &
experience
technology
& person-
alization
Measure-
ment & Product
marketing & pricing¹
ROI

1 Capability may not fall directly under marketing organization, depending on organizational structure.
Note: Variations to the modern marketing model may exist for consumer-packaged-goods and B2B sectors.

2 Modern marketing: What it is, what it isn’t, and how to do it

them organized into a cohesive model gives leaders marketing organization has systems that allow
a better sense of how to track all the elements and for large volumes of messages and content to be
how they should work together. constantly created, monitored by performance
analytics, and then adjusted as needed. Take
That clarity is crucial as leaders develop plans and personalization. It used to mean broad offerings
programs to modernize each of the capabilities and and experiences across large consumer segments.
enablers (Exhibit 2). The traditional way to create Today, the goal is to leverage data from all
content, for instance, is to roll out periodic, one- consumer interactions to creatively deliver as much
size-fits-all campaigns that can be modified only relevant one-to-one marketing as possible.
to a limited extent. On the other hand, a modern

Web 2019
Exhibit 2
Marketing 2020 compendium
Exhibit 5 of 7
Modern marketing requires revamped capabilities to meet marketing’s new
Modern marketing
rhythms requires revamped capabilities to meet marketing’s new
and demands.
rhythms and demands.
Capabilities Enablers
Key elements From To
Strategy & Limited insights and Brand vision and strategy informed by real-time
insights lagging indicators insights that are integrated into operations and the
front lines

Creative & content Periodic and intuition- Always-on content driven by analytics and data,
driven campaigns dynamically curated, and augmented by AI tools

Media & channel Channel-activation Rapidly iterated activity utilizing unique attributes
activation plans managed in of each channel, tied to a 360-degree view of the
silos and optimized customer journey
episodically

Customer Several broad offerings Customer experience that is data driven and personal-
experience & across large customer ized, leveraging unified customer data across all
personalization segments interactions to allow for purposeful communications

Measurement & Limited ability to Holistic, customer-level ability to measure all or most
marketing ROI measure impact components of marketing investments

Product & pricing Marketing Working hand-in-hand with product to activate

disconnected consumers by building a cohesive experience and
from product using analytically driven pricing

Organizational Business- and Organization designed around customer-centricity and

design & culture product-centric expanded breadth of marketing’s role in driving growth;
advanced operations in place to execute

Agile way of Annual planning and Highly empowered, cross-functional agile teams
working multiple handoffs focused on rapid test and learn

Talent & agency Overreliance on Strategy to attract, retain, train, and upskill talent, and
management agencies and organic to manage an interconnected agency ecosystem with
talent development best-in-class expertise

Data & technology Sparse data, and 360-degree customer data at the absolute core of a
technology and seamless customer journey, across which an integrated
marketing managed marketing-technology stack connects “signalized” data
separately

Modern marketing: What it is, what it isn’t, and how to do it 3

 While most CMOs we know have made dependencies. Without that understanding,
progress toward developing modern marketing we find that teams tend to naturally gravitate
organizations, many are discouraged by a lack to working on things they know best or are
of progress. We have found that the core issues most excited about, ignoring other elements.
are the absence of a commitment to the full suite This creates blind spots in the transformation
of changes necessary and a lack of clarity about process that lead to delays, frustration, and,

Sidebar

Modern marketer: Rebecca Messina

Rebecca Messina, former CMO of Uber and internal cross-functional teams with and what you expect of them in terms of
and Beam Suntory, discusses what it the clarity they need to do their best, capability development.
means to be a modern marketer. most differentiated work. If they are weak
or not aligned with business strategy, the What is most exciting to you about the
What should CMOs keep in mind as teams will burn resources in changing transition to the modern marketing
they think through their modern mar- direction often. model?
keting model?
2. Talent management. As leaders, we This is a very exciting time to be a mar-
CMOs should keep in mind that they are must create the conditions for others keter. We can do things we have never
leading a journey and that this evolution to thrive and ensure that our teams are done before, faster than ever, and we
will continue. Help your organization well selected, motivated, rewarded, and can measure and understand more than
see milestones big and small, and help developed. That will help us put the best ever about the effectiveness of our plans.
people get comfortable with the idea that teams in place and empower them to do Above all, we are privileged to have a new
they may never be “done.” For marketers, their best work every day. level of potential consumer understand-
being modern is about being current ing. It’s our duty to respect it and use it to
and relevant, and the organizations we 3. Data and technology. Whether your bring empathy to our work.
are building, like our brands, have both a team is best in its class or at the start of
timeless and timely nature. its journey, you have to stay sharp about What pitfalls should CMOs watch out
data and technology. Playing catch-up for as they move into the modern mar-
What are the two or three essential here is very hard. keting world?
capabilities for CMOs to focus on?
What advice do you have for CMOs The pitfall is falling in love with data and
The capability focus for each CMO will making the transition to modern automation and letting that replace
differ by business and/or industry. That marketing? our creativity, our imagination, and our
said, there are three critical capabilities empathy. Those are some of the most
that I believe should transcend industry No marketer, I hope, wants to “sit still,” unique attributes that a marketing team
and be a focal point for CMOs to become but change or evolution toward the can bring to the business. We can fall
modern marketers: unknown can be daunting for teams that into the trap of being so excited about all
have operated with a certain model for a that we can now measure and automate
1. Strategy and insights. Strategic direc- long time. Start somewhere and keep the that we can easily lose sight of that core
tion and insights are the fuel the team team grounded in what is familiar, while capability of marketing. The magic is in
needs. They provide partners, agencies, showing them the path to what is new bringing these worlds together.

4 Modern marketing: What it is, what it isn’t, and how to do it

ultimately, a loss of value. Modernizing marketing customer-journey analytics; the measurement
capabilities, for example, requires an upgrade of of everything consumers see and engage with;
four key operational enablers. But a successful and the hiring and development of talented
transformation won’t succeed without three people who know how to translate insights about
mindset shifts that provide a foundation for customers into experiences that resonate with
change. customers.

The first step is to realize that customer

Mindsets: Thinking like a modern segmentation goes deeper than you think. The
marketer best marketers are developing capabilities
Before embarking on a modern marketing for efficient engagement across numerous
transformation, there are three mindset shifts that microsegments. By doing this, marketing
are necessary to enable change. organizations can better understand the
motivations and behaviors of their most valuable
1. Unifier mindset customers. They can also organize their efforts
To drive growth, marketing leaders must work around acquiring more of them and creating
collaboratively with diverse areas of the company, greater loyalty.
from sales and product innovation to finance,
technology, and HR. In fact, our research has 3. Return on investment (ROI) mindset
shown that CMOs (or those in a similar role, such Digital channels and improvements in analytics
as chief growth officer or chief customer officer) and data science now make it both possible and
who function as “unifiers,” leaders who work necessary for marketers to be accountable for
with C-suite peers as an equal partner, drive delivering value across all channels. To operate
greater growth than those who don’t. Unifier with an ROI mindset, everyone needs to operate
CMOs adopt the language and mindset of other as if the money they are spending is their own.
C-suite executives, articulate how marketing This means closely monitoring investments,
can help meet their needs, and ensure that putting in place standards to identify those
they understand marketing’s clearly defined not generating value, and creating a culture
role. Moreover, this creation of productive, of accountability in which underperforming
collaborative relationships doesn’t end at the investments are scrapped. Such financial rigor
C-suite. Marketing leaders should role model— will not only help marketing fulfill its mandate
and set expectations for—how each member of as a growth driver; it will also build credibility
the marketing team should collaborate seamlessly with the CFO, unlock additional investment, and
with colleagues in other functions. demonstrate marketing’s value to the entire
company. One streaming company, for example,
2. Customer-centric mindset has built into the core of its culture continuous
Putting customers first is not a new idea, of A/B testing of hundreds of variants of its website
course. What’s different today is that marketers and apps and measuring their impact on viewing
have unequivocal evidence that meeting hours and retention. To support this, each
customers’ needs creates value and delivers product team has its own embedded analytics
competitive advantage. Modern marketers must talent.
also be aware of the challenges of complexity
and scale they must meet to achieve customer-
centricity. They involve commitments to several Enablers: Operating like a modern
elements: a design-thinking approach to solving marketer
customer pain points and unmet needs; a To modernize marketing’s capabilities, marketing
centralized data platform with a unified view of organizations need to upgrade four key underlying
customers, culled from every possible touchpoint; operational enablers.
the continuous generation of insights from

Modern marketing: What it is, what it isn’t, and how to do it 5

 To operate with an ROI mindset, everyone
needs to operate as if the money they are
spending is their own.

1. Organizational design and culture: Turning —— Turbocharge marketing operations. Marketing

mindsets into behavior operations is a backbone function, essential
for a modern marketing organization to move
To support modern marketing behavior, with speed and flexibility. To make sure that
companies can take a number of practical actions, marketing spending, technology, and processes
including the following: are all managed to deliver maximum impact and
efficiency, the best companies have installed
—— Incentivize group success. Since delivering a marketing operations lead, also reporting to
value to the company is a cross-functional the CMO. In some cases, marketing operations
team sport, marketing organizations need will exist as a shared service or central function
a culture focused not just on individual across marketing. In other cases, it will be
achievement but on shared goals, team distributed across numerous operating units
performance, and accountability. This means to provide autonomous execution capabilities.
changing how marketing organizations reward, We’ve seen marketing operations provide a
acknowledge, and evaluate talent, such as 15 to 25 percent improvement in marketing
the inclusion of cross-functional team key effectiveness, as measured by return on
performance indicators (KPIs) tied to individual investment and customer-engagement metrics.²
compensation. Top talent should also feel One global financial-services company, for
a sense of purpose and motivation, derived example, figured out that by accelerating the
from an environment that delivers energy and delivery of IT-dependent functions to marketing,
enthusiasm. None of this happens by chance. it was able to generate an extra 25 percent of
revenue. That was worth $100 million per year.³
—— Elevate consumer insights and analytics.
Because customer-centricity and ROI 2. Agile marketing at scale: Getting serious about
mindsets are critical for modern marketers, moving beyond pilots
customer insights and analytics can’t be By far the biggest change to marketing’s
support functions within marketing. In a organizational design is the shift to agile.
modern marketing organization, they will have
a prominent and visible role and a leader who As a decentralized, cross-functional model, agile
reports directly to the CMO. This serves as a is critical for operating with speed. Even the most
reminder that the voice and behavior of the digitally savvy marketing organizations have
customer must be at the center of everything experienced revenue uplift of 20 to 40 percent
and that no marketing activities should be by shifting to agile marketing.⁴ Small teams of
executed without the backing of relevant people, called squads, work in the same place and
insights and the ability to measure performance. have decision-making authority to execute highly

2
David Edelman and Jason Heller, “How digital marketing operations can transform business,” July 2015, [Link].
3
Jason Heller and Kelsey Robinson, “Meet your new MOM (Marketing Operating Model),” March 2017, [Link].
4
David Edelman, Jason Heller, and Steven Spittaels, “Agile marketing: A step-by-step guide,” November 2016, [Link].

6 Modern marketing: What it is, what it isn’t, and how to do it

 focused tasks. Organizing squads around specific the speed to market and allow for the constant
customer objectives ensures that everyone on the creation, testing, and revision of campaigns.
Sidebar team is connected to the customer. Giving squads
clear KPIs, such as a volume of new customers or —— Hire “whole-brained” talent. Today’s in-house
specific revenue goals, ensures that everything is roles require a broader skill set, with a
Where are you onmeasuredyour journey to modern marketing?
and evaluated. Marketing organizations balanced mix of left- and right-brain skills. This
that adopt agile have moved anywhere between means, for instance, content producers and
Answer options below define the most advanced (Level 5) and least advanced (Level 1) marketing activities.
50 and 70 percent of their work to this more experience designers who are comfortable
streamlined and accountable approach, quickly using data, and data-driven marketers who are
Question Level 1 Level 5
cutting loose anything that isn’t creating value. willing to think outside the box and move closer
Strategy & insights What is your approach We refresh our brand strategyto consumers. We refineMcKinsey
our brandresearch
strategy shows
at that
Scaling agile marketing,
to brand strategy and however,
everyentails
two tomore companies
three years. Primary leastable to successfully
annually, integrate data
and all marketers
than flattening out an organization chart or
customer insights, and research and focus groups are and creativity grow their revenues
fully understand how to activate at twice the
establishing cross-functional
how has it changed collaboration.
used to generate insights that average rate of S&P 500 companies.⁵
traditional approaches plus advanced Most
Squads need to have supportive
over the past several participation importantly, modern marketing
are loosely translated by frontline analytics and real-time sources of organizations
from departments
years? such as legal, IT, finance,
marketers. don’t need managers to manage people; they
insights.
and often agency partners as well. Without this need people to manage output and track
broader organizational support, agile teams are performance.
Creative & content How do you manage We focus on creating several We have an effective content supply
confined to small pilots with limited impact. At
creative and content core campaigns. We do not have chain, are able to create versioning
one bank, for instance, the legal department and —— Foster an ROI-focused management style.
strategy, production, extensive variations of creative or and transcreation. We use AI tools to
controller’s office were resistant to providing staff In an environment where autonomous teams
and optimization? content, in part because we have augment our content production and
to agile marketing teams because of competing are given the ball and asked to run with it,
not figured out an efficient way to optimization.
priorities. Marketing leadership knew their managers need to be comfortable setting
do so.
agile approach wouldn’t work without the other KPIs, overseeing output, and tracking the
functions, so they invested sufficient time with performance of agile teams.
Media & channel each How are you
function’s delivering
leader Each media
to articulate how the channel
agile is planned We plan and execute omnichannel
activation team your
would messages
work, whatto value would
and managed independently
be generated, by andwith
4. Data defined strategies
technology: of howfor
An obsession
customers across specialized
and how it would support the business’s overall teams, sometimes
looking aheadchannels work together; we also
[Link]-, owned-,
This effort withleaders
gave functional little to no [Link] generate
enough metrics have and traditionally
amplify earned media
looked
and earned-media
confidence in the process that they agreed to backward to through
unearth paid and owned
insights aboutactivities.
past
channels?
provide people to the agile squads. behavior and measure the effectiveness
of current campaigns. Modern marketing
3. Talent and
Customer experience How are you agency management: A constant
We deliver several broad organizations use data analytics
Experiences to look ahead.
are customer-centric
& personalization balancing act
delivering relevant experiences across large They anticipate unmet consumer
and personalized across needs, identify
channels
Givenand
thepersonalized
complexity of marketing today and the opportunities
customer segments, with limited they didn’t know existed,
and the customer life cycle, steeped and
rangeexperiences
of capabilities needed, personalization.
to various marketers need a reveal subtlein aand
deepaddressable customer
understanding pain
of customer
new talent strategy
customer segments?built around three elements: points. Data analytics can also
needs and pain points. predict the
next best actions to take, including the right
—— Insource mission-critical roles. While there is mix of commercial messages (for cross-selling,
Measurement & How are you We don’t measure holistically, We use customer-level omnichannel
no single model for the functions a marketing upselling, or retention) and engagement actions
marketing ROI measuring and periodically running media- MROI analytics, enhanced with third-
organization should handle itself, insourcing (content, education, or relationship deepening).
optimizing your mix models, and for digital, we party data, and we optimize campaign
usually makes sense when there is a desire
marketing activities measure last-touch attribution parameters on a weekly basis.
for ownership of data and technology; when To do this, data must be centralized and easily
and media spend? and reallocate media dollars We have automated dashboards
companies seek strong capabilities in a certain accessible so that activity in one channel can
approximately quarterly. Each at various levels of granularity for
area; or when insourcing will greatly accelerate immediately support real time, or near-real-
campaign has clearly defined different stakeholders.
KPIs.

Modern marketing: What it is, what it isn’t, and how to do it 7

 Sidebar

Where are you on your journey to modern marketing?

Question Level 1 Level 5

Product & pricing How have the voice We are a product-centric Our product portfolio is evolving
of the customer and organization, and our products based on active consumer insights
advanced analytics and pricing decisions are largely and analytics. Pricing is driven
influenced product isolated from our key consumer by a combination of research
development and insights and go-to-market and analytics within operational
pricing strategies? capabilities. constraints.

Organizational design How are the culture Our marketing organization Our culture has changed significantly
& culture and organization and culture have not changed to nurture modern marketing talent,
model evolving significantly beyond adding new and our organization model elevates
to support the digital capabilities. and emphasizes functions such as
modernization of analytics, consumer insights, and
your marketing marketing operations.
capabilities?

Agile way of working How have your day- Our teams are structured by Our teams employ agile principles to
to-day marketing function with managers who operate cross-functional teams that
processes changed ensure key processes and quality have relative autonomy and are able
to drive speed, control are followed. It often takes to execute and scale tests in weeks or
experimentation, and many weeks, sometimes months, even days.
measurable results? to get campaigns out the door.

Talent & agency Do you have a clear We have not reviewed our talent/ We have a clearly defined model for
management point of view on which agency resource model in the which capabilities are insourced,
marketing capabilities past two years and do not match and we reevaluate this often. All
should be in-house marketing resources to business resources, internal and agency, are
versus outsourced outcomes (eg, revenue, customer held to the expectation of specific
and how they should growth, customer lifetime value, business outcomes.
be managed and etc.).
incentivized?

Data & technology How are you Marketing technology is Marketing defines the use cases and
managing and owned and managed by IT, and works closely with IT to architect
integrating marketing core advertising-technology and manage the martech stack and
and advertising capabilities are owned and unified customer-data platform.
technology to drive managed by the agency. There
marketing outcomes? are gaps and sometimes a lack of
transparency.

8 Modern marketing: What it is, what it isn’t, and how to do it

time, engagement in another. Instead of the Because the pace of change in the marketplace
traditional approach, where IT takes the lead in continues to accelerate, becoming a modern
data management, marketing leaders should work marketing organization must be a “now” priority.
with IT leaders to develop a shared vision for how Leaders unsure about the need to move
data will be accessed and used. This starts with aggressively toward this new model might bear in
the CMO and CTO/CIO collaborating closely on a mind a character in Ernest Hemmingway’s novel
business case and road map and then rallying the The Sun Also Rises, who is asked how he went
needed support from across the organization. bankrupt. “Two ways,” he answers. “Gradually,
then suddenly.”

Sarah Armstrong is a partner in McKinsey’s Atlanta office, Dianne Esber is a partner in the San Francisco office, Jason Heller
is a former partner in the New York office, and Björn Timelin is a senior partner in the London office.

Copyright © 2020 McKinsey & Company. All rights reserved.

5
Brian Gregg, Jason Heller, Jesko Perrey, and Jenny Tsai, “The most perfect union: Unlocking the next wave of growth by unifying creativity and
analytics,” June 2018, [Link].

Modern marketing: What it is, what it isn’t, and how to do it 9