Cammie Dunaway explains how she is preparing for the future by shifting the company’s marketing dollars to vehicles whose returns can be measured and by fostering intellectual curiosity.
Since Yahoo!’s initial public offering, in 1996, the company has been a headline maker. Its share price gyrations over the past decade epitomized the dot-com boom, bust, and revival. More recently, Yahoo! has garnered attention while grappling with the gathering strength of Google in the online search and advertising business.
Beneath the headlines, Yahoo! is also part of a fascinating marketing story. The company’s Web site, an important port of call for advertisers shifting their spending online, represents one aspect of the increasingly complex environment facing marketers today. Meanwhile, as Yahoo! seeks to reach and serve 500 million users, it must confront the complexity it helped create.
In this interview with McKinsey’s Tom French, Yahoo!’s chief marketing officer Cammie Dunaway describes how the company is coping with the challenge of marketing to multitasking consumers who have an unprecedented wealth of choice. By shifting marketing expenditures toward vehicles whose returns can be measured and by increasing the intensity of Yahoo!’s engagement with users, the company hopes to cut through today’s confusion and clutter.
Dunaway, who joined Yahoo! in 2003 after spending much of her career as a marketer with Frito-Lay, also discusses the similarities and differences between marketing packaged goods and Internet services, as well as the steps Yahoo! is taking to build the muscle of its marketing organization. To thrive, Dunaway believes, marketers of all stripes need intellectual curiosity and the confidence to admit that they don’t have all the answers.
The Quarterly: You came to Yahoo! from Frito-Lay. What are some of the differences you see between marketing at the two companies? Are there any similarities?
Cammie Dunaway: I went from a packaged-goods environment, where the role of marketing is very clearly understood, to a more entrepreneurial, technology-based, fast-moving environment, at a company that’s only ten years old. I had to spend a lot of time helping to educate people about what marketing can actually do. Marketing can be about much more than creating ads or doing brand guidelines.
That education goes both ways. For example, the way we use consumer insights at Yahoo! is somewhat different from what I was used to at Frito-Lay. I think that’s a function both of how dynamic our environment is and of the fact that in technology you are going after a lot of unarticulated needs. The old focus group paradigm simply doesn’t serve you well in this environment.
We do a lot of ethnographic work, where we get out and observe consumers in their environment—at home, at work. What we’re looking for are pain points: what are they struggling with? Sometimes that’s the most fertile area for real, breakthrough innovation. Consumer-packaged-goods companies are doing that too. But we also conduct a lot of what we call digital salons, where we prototype a product. We’ll reach out to the consumers who, we feel, are most likely to respond. For example, when we redid the front page of Yahoo! we reached out to our heaviest users. We engaged them in a dialogue about prototypes of a new front page. What did they like? What did they not like? We did this all online through these digital salons. It was tremendously important both for getting us insights and for creating some evangelists when we made changes to the product. They felt, like, “Wow, we had an impact on this.”
The other thing I’ve started doing a lot more than I did in my packaged-goods days is using behavioral data—really mining the wealth of transactional data we have about how people are spending their time online and trying to marry that data with attitudinal data obtained from ethnographic studies or consumer interviews. This is pretty new. It’s hard to find people who are very good at it. But I think that’s where the most powerful insights can really come from.
Interestingly, consumer-packaged-goods companies also are starting to build databases of their loyal consumers—through promotions that they do and through people opting in at a Web site to obtain more information. Being able to mine that data and truly develop more one-on-one marketing communications is going to be a real area of opportunity for consumer-packaged-goods companies. This will create a need for some more direct-marketing discipline and for some folks who are really comfortable with database marketing, which typically just hasn’t been within the purview of brand management at a consumer-packaged-goods company.
CAMMIE DUNAWAY
Vital statistics
Born in 1962, in Winston-Salem, NC
Married with 1 child
EducationGraduated in 1984 with BS in business administration from University of Richmond, Virginia
Earned MBA in 1990 from Harvard Business School
Career highlightsYahoo! (2003–present)
- CMO, head of customer experience division
Frito-Lay (1990–2003)
- Vice president and general manager, kids and teens brands (1990–2003)
- Chief customer officer (1999–2001)
- Region vice president (1996–98)
Fast facts
Provided leadership that enabled Yahoo! to be named 2006 Marketer of the Year by Direct Marketing Association (DMA) and to earn industry recognition that included Clio, Obie, and Promo PRO awards
Serves on board of directors of Brunswick and of Junior Achievement of Silicon Valley & Monterey Bay
Actively involved with the Tech Museum of Innovation, San Jose, CA
The Quarterly: How would you characterize today’s marketing environment?
Cammie Dunaway: It’s a fascinating time to be a marketer. The consumer has more choices of media, more access to information, and more control than at any time in history. This changes the role of marketing dramatically. Previously, you could understand a consumer archetype and push information about your brand out to that archetype through, say, three 30-second commercials that would reach 80 percent of adults aged 18 to 49. Now you must really understand each consumer as an individual. Yahoo! has 500 million consumers, and I have to understand what each of those 500 million individuals needs from the Yahoo! brand, as well as how and when to best reach them.
One thing that’s fascinating about media proliferation is that it seems to be less about shifting share of time among the media and more about growth in overall media consumption. For example, we’ve studied media consumption habits in homes that have dial-up, broadband, or wireless. In a wireless home, consumption of media grows by about three hours a week because people are consuming multiple forms of media at the same time. People who are watching television are also instant messaging with a friend or looking up stories on their laptops about what they’re watching. Or after they read a newspaper story, they’re going online to understand various points of view about the story and maybe to see alternative photographs from a citizen journalist.
The Quarterly: How does your brand-building approach change when people are using multiple media at the same time?
Cammie Dunaway: This “hypertasking” makes the need for integrated marketing communications much more significant because the consumer is going to see your message from many different angles. When we’re launching a new product I put my advertising and public-relations agencies, plus my internal folks who do promotions work, in a room with a brief and say, “I want you guys all working together because all of these touch points need to connect. I don’t want a PR idea that’s over here and an advertising idea that’s over there and my customer contact strategy off doing something different.” This is the challenge—and the opportunity—that the proliferation of media provides: the ability to really get to the right consumer at the right time with the right message in ways that you couldn’t in the past.
The Quarterly: How do you do it?
Cammie Dunaway: You cut through the confusion and the clutter with a deep understanding of your business objectives and of who your target is. Who are your best consumers for this message? How do they spend their time during the day? What are the touch points where you can make your message most relevant to them? And using this great buffet of media choices that we have, how do you address that market in the most relevant way?
For example, a few years ago we were launching Yahoo! Local. Our business objective was to increase our share of searches for local businesses like florists, banks, and restaurants by making it apparent that Yahoo! really understands local environments. So for that we chose to use local, independent newspapers. We used a lot of outdoor promotions. We used very geographically targeted online messaging. And we made the creative elements of the advertising very relevant to exactly where people were in their neighborhoods.
That’s very different from the objective we had when launching Yahoo! Music: we wanted to reach 18- to 24-year-olds who were passionate about music and to interest them in a music subscription service. We launched it by using television, with MTV’s Video Music Awards, and by using a lot of online advertising because that audience spends a tremendous amount of time online.
The Quarterly: If you compare your marketing budget two years ago with your budget today and with your likely budget in the future, where are the big shifts in spending occurring?
Cammie Dunaway: We’re spending more money on what we call performance marketing. For us, performance marketing uses channels like search engine marketing and e-mail. Search engine marketing is such an addressable market. You’re getting people when they are raising their hands saying, “Talk to me about a product. I am searching for personal sites. I am searching for a place to get a domain name. I am searching for fantasy sports.” We’re moving to the point where we don’t even think about it as a marketing expense. It’s almost a cost of goods because it is so easy to predict what we’ll get back from a given level of spending. I always make online media a big part of my media plans; I believe in eating my own dog food.
In terms of where I see us going in the next five years, one area that is increasingly important to me is customer care operations. I’m fortunate that customer care reports up through me, which is a bit unusual. Maybe it’s something that will happen more in the future with marketing organizations because customer care is a critical part of the brand experience. If you have a poor experience with a call center, then all of the advertising messages in the world are not going to make up for that. So making sure we are investing in great brand experiences when people have concerns or questions is increasingly important.
We saw a great example of the importance of customer care when we rolled out our new Yahoo! home page. We launched it with a promotion where we gave everybody who came to the front page of Yahoo! and set Yahoo! as their home page a coupon for a free iced coffee—a fun promotion that I was very excited about. We had really thought a lot about the customer experience and how to make sure it was very easy to get and redeem the coupon.
Later that afternoon, somebody sent me a video that some kids in their 20s had done of themselves seeing this offer on the front page of Yahoo! and being skeptical about whether it could actually be valid, printing out the coupon, complimenting us on the fact that it was so easy, then getting in their car, driving to the store and redeeming the coupon. Fortunately, it was a great experience for them. But it could have been a really poor one. And that video of their experience could have had much more impact than any of the marketing messages that I was controlling. The lesson for me was, “Wow, I’ve really got to think about the full customer experience, which may mean spending money against parts of the experience that I have not thought much about in the past.”
The Quarterly: Could you say a little more about your efforts to measure returns on your marketing investments?
Cammie Dunaway: One of the ways marketing has been able to gain credibility and stature within Yahoo! is by becoming very clear about the metrics we’re driving. We have a “dashboard” of metrics that goes up to the executive team and shows how marketing activities are focused on driving the business.
User engagement is very important to us. So we look at metrics like the share of time spent online with Yahoo! and the average number of media properties that a Yahoo! user consumes; we work on growing that. Then we choose quarterly initiatives that we want everybody in the marketing organization to focus on. Recently, it’s been driving searches from throughout the Yahoo! site, not just from the front page. So we’ll put together various share metrics and cross-utilization metrics to track that. Finally, to balance short-term actions with the long-term health of the brand, we estimate and track the lifetime customer value that we’re generating with our marketing programs in the various channels that each business unit spends in. We also track the long-term health of our brand by looking at changes—for various demographic segments—in our brand’s level of differentiation, its relevance to consumers, and the degree to which they know it and hold it in high esteem.
The Quarterly: Could you talk more broadly about the role you see for marketing and for the chief marketing officer today?
Cammie Dunaway: The way I describe the role of marketing is that it’s about driving profitable growth by unlocking customer insights. Marketing’s responsibility is to help develop products that truly delight the consumer and then to create communications programs that inspire—which sometimes means inspiring an emotion and in other cases might mean actually inspiring a subscription or some kind of a sale. Finally, I talk about the role of marketing in driving results: signing up for the numbers you agree to be accountable for and then tracking and reporting on them.
I think the role of the CMO is very much about being a catalyst for change and being a voice of the consumer. That means making sure that you’re staying in touch with changing consumer behavior. There’s just so much going on today: things like the growth of user-generated content, the shift from being a consumer to being a creator. It’s really important for CMOs to understand that and to be an advocate within the company for how to embrace these changes in order to continue growing profitably.
The Quarterly: How do you build a marketing organization able to play that role?
Cammie Dunaway: I put a lot of my focus in the first year on recruiting and developing the right type of talent: bringing in people who think like marketers but have a general manager’s field of vision and who are very passionate about driving results. I’ve been building my organization around those people. I found early on that you can put all of the role and responsibility documentation together that you want, but if you don’t have the right people in the right jobs you’re really not going to make an impact.
I’ve recruited out of business schools, which really wasn’t being done when I first got here, except on a very ad hoc basis. Now we bring in a class of people exactly the way consumer-packaged-goods companies do. Then we build the talent by rotating people through various positions. We’re now starting to recruit out of undergraduate programs because as a technology company in the middle of all this very dynamic consumer behavior, we need the voice of youth in a big way. If you’re 30 and a new Harvard MBA, you aren’t that voice! So I’m looking for people in their early 20s who really can help us understand the changing role of technology, the Internet, and the mobile phone in the lives of young folks.
The Quarterly: Are there any skills or traits you think are particularly important for marketers?
Cammie Dunaway: Intellectual curiosity is critical because the world of marketing is changing so rapidly. I remember four or five years ago, when I was at Frito-Lay, I was at a conference with a group of people from leading companies who were at the cutting edge of interactive advertising. A speaker asked how many people were using search engine marketing, and I think maybe 15 percent of the people in the room raised their hands. Today if you’re a marketer and you don’t understand search engine marketing, you’re not doing your job—yet it didn’t really exist five years ago! It’s the same with word-of-mouth marketing, which is something that I’m really passionate about right now. It’s always existed, of course. But some of the things that we’re doing to reach out to influencers, to understand social-network effects—nobody was really talking about that just 18 months ago.
So it’s less about finding people who have deep functional excellence within various aspects of the marketing discipline and more about finding people who are on a lifelong journey to learn and stay up on the new tools and techniques that can really help to build the brand. To some extent, intellectual curiosity is a personality trait that you can’t teach. But you can stimulate it. For example, each month I have a different outside speaker come in and present to my marketing team. This injects ideas from other industries and helps us see what other people are doing. We’ve hosted Michael Francis, Target’s senior vice president of marketing; the folks from Current TV, Al Gore’s youth cable network; and various futurists. We’re creating a stimulating environment where people feel that part of their job as a marketer is to stay up on what’s new.
The Quarterly: Any final words of advice for senior marketers in today’s dynamic environment?
Cammie Dunaway: Leverage your partners. That’s what I had to do when I wanted to learn about online marketing, back in 2001, after I had moved from a role as chief customer officer with Frito-Lay into a role managing kids and teens brands. The media plan was all network television. My facetious reaction was, “I don’t know much about this thing called the Internet, but I hear that it’s pretty relevant to teens.” So I started asking, “Who are good digital-marketing agencies?” I’d just call them and say, “I’m head of kids and teens brands for Frito-Lay. Would you come in and teach me about digital marketing?” You wouldn’t believe how fast people got on a plane.
The same thing could apply in any evolving marketing discipline. There are lots of people with good information to share. You just have to ask. I was very impressed recently that Coca-Cola brought 150 marketers from around the world out to Silicon Valley, just so they could learn. They spent a day with Google; they spent a day with Yahoo! What I’m saying is that marketers need the confidence to ask questions. It’s OK to acknowledge that this world is changing pretty rapidly and that you as a CMO may not have all the answers. 
Confronting proliferation
This interview is part of a series of conversations between the Quarterly and senior marketers about the challenges and opportunities created by marketing proliferation. Read how these other executives are navigating today's complex, rapidly changing marketing environment.
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