ANA Marketing Musings

Results, Growth A Winning Formula

In this day and age, it’s fun, sexy, and exciting to talk about social networking, mobile technology, IPTV, blogging, podcasting, satellite communications, public relations, event marketing, shopper marketing, and multicultural marketing. The same can be said about innovation, transformation, and creativity. And let’s not overlook behavioral targeting, audience segmentation, and the millennial generation.

But in the end, what it all boils down to is results. And growth. In the past few years we have seen some terrific marketplace examples of companies that have reinvented and transformed their marketing to achieve tangible and substantial results and growth:

• McDonalds leveraged brand journalism, in-store quality, and a “Lovin’ It” campaign to reinvigorate same-store sales and increase fast food restaurant share of market.
• Hewlett Packard’s focus on creative marketing and outstanding quality catapulted it to a leadership position in personal computers and spurred business-to-business sales and growth in the printer market.
• American Express shifted its marketing focus from building brand awareness to creating “relationships,” resulting in double-digit income growth over the past decade.
• Zappos.com developed one of the fastest growing businesses in America by eliminating online sales barriers and focusing on customer care.

In these cases (and many more), creative marketing generated unit volume gains, total revenue growth, profitability expansion, and real advances in shareholder equity. That is the language of the CEO. Aligning the CMO to hear that language, listen to the agenda, and translate it into a motivated, focused organization is the tough challenge. Perhaps the difficulty of completing this challenge is a contributing factor to the relatively short tenure of the CMO.

There is another important challenge that CMOs face – “brand growth.” Brand growth should be the cornerstone objective for the CMO and the marketing organization. But what does that mean? How do you measure it? Is it important to the CEO? Who is accountable for it? The lack of uniform metrics and the inability of the accounting community to put our most important asset on the balance sheet is the subject of more conversation to come. Clearly, we have more work to do.

Essentials for Integrated Marketing

The following appears in the June 16, 2008 issue of Advertising Age, in the CMO Strategy section.

Integrated marketing communications isn't new, but it's gaining momentum as power shifts from the marketer to the consumer and as marketers recognize the power and efficiency of taking a holistic approach to engaging consumers.

Several studies, including one recently conducted by the Association of National Advertisers, indicate that achieving effective IMC campaigns is marketers' primary concern. But there is considerable uncertainty about how to staff, design, manage and measure the success of such programs.

Although 74% of firms we've surveyed say they are using IMC approaches for most or all of their brands, only 25% rated the quality of their IMC programs "excellent" or "very good" -- underscoring the need to identify best practices and address the barriers that can impede IMC efforts, including a lack of strategic consistency across communications disciplines; the absence of a common IMC measurement process; the existence of entrenched functional silos inside marketing organizations, as well as within their agency partners; and the dearth of cross-discipline skill sets among marketing staff.

So what it will take to overcome these obstacles? Four imperatives:

The Hottest Button – Integrated Marketing Communications

Recently, ANA released its annual survey of senior marketers’ “hot buttons” – areas that marketers wanted or needed to spend increasing amounts of time and attention in the coming year. At the top of the list – for the second consecutive year – was “Integrated Marketing Communications”.

It’s not like this subject is new. We’ve been talking IMC for decades – kicked off by the groundbreaking book on the subject co-authored by Don Schultz and Bob Lauterborn. What has people fascinated is that “integration” has become exponentially complex – yet infinitely more effective. The complexity is born of the wider array of emerging media vehicles available to marketers and the rapidly changing demographic profile of consumers. With agencies and marketers relatively “inexperienced” with what works / what doesn’t, the sands for effective IMC shift very quickly.

· In the short term, the broader array of media gives marketers a broader portfolio of tools to reach and target most, if not all, audiences – and to do so with increasing frequency. Additionally, the cost of some new media are a fraction of what marketers pay for “mass marketing” vehicles. That provides marketers with an increasing level of “media productivity” – that, when effectively “integrated”, can be a more powerful, focused, efficient arsenal than has ever been available.

· In the long term, an integrated platform of wide ranging media gives marketers the opportunity to build brands, grow revenues consistently, develop consumer loyalty and keep competitors minimized. Brand building is the ultimate goal for marketers. However, to do so, requires a consistent, effective connection between marketer and the ultimate consumer / customer.

But getting to such “nirvana” is the ultimate challenge for marketers and agencies. It will always be a never ending challenge and here are some of the key areas of focus that are at the top of their lists:

· Experience and Experimentation. All “players” need to be able to “play” and experiment to insure there is a sufficient experiential base with emerging media – before committing it to the marketing mix

· Evaluation and Measurement. Marketers need to understand how they will assess the effectiveness of the media in this age of accountability

· Budgeting and Allocation. Ahhh, the real hard part is determining the cost parameters and the amount of spending that is allocated to each media vehicle

· Integration. Marketers must then weave all of the new media learning into the fabric of traditional advertising and marketing support.

With such challenges, it’s no wonder that Integrated Marketing Communications is at the top of senior marketers’ list.

The Marketing Organization – Can we manage it?

A recent ANA survey – completed jointly with our research partner, Guideline, Inc. --found that only 13 percent of senior marketers are very satisfied with their company’s marketing structure. Further, only 21 percent say that marketing interacts at the C-level of the company. Yuk!!

While I do not have benchmark data, my sense is that the marketing function compares unfavorably with other functions inside the corporation. The implications are serious:

·         The CMO carries far too little influence inside the company. Strategic direction and brand investment may not be optimized – and may be the reason the average CMO tenure is less than two years.

·         The marketing function underperforms across a number of cornerstone disciplines – disciplines designed to optimize consumer / customer satisfaction and deliver on growth and financial objectives.

While there are many opinions on managing the marketing organization, the CMO needs to “structure” to support four primary objectives:

·         Strategic Direction

The CMO must work jointly with the CEO and CFO to insure that the strategic blueprint for products and services reflects input from consumers and customers. Marketing must be the fulcrum to insure that appropriate financial resources are available to exceed consumer / customer expectations for product quality and satisfaction.

·         Brand Stewardship

Empirical evidence supports the axiom that “strong brands lead to strong results”. Unless brand championship begins in the C-Suite, brands will not perform to their potential. This sub-optimizes corporate performance. Agencies can play an important role by to creating aligned investment strategies that leverage new media to effectively reach and influence consumer and customer targets.

·         Integrated Marketing Communications

The CMO has to get close to new, digital media. Creating a sound, productive integrated marketing investment strategy is critically important to develop confidence in the C-suite that the marketing function is in control and can positive influence brand performance at budgeted levels of marketing investment. Since so few people have the skill sets to manage new media, CMO’s must increase their investments in experimentation and in skill set upgrades for marketing staffs.

·         Marketing Accountability

CMO’s have to seriously upgrade their credibility. As a function, marketing must continue to push for increasing levels of accountability across the entire marketing supply chain. Marketers are often disappointed due to a lack of credible metrics and measurements throughout the entire chain. A well-oiled accountability machine – that includes partnerships with Finance and an Analytics group – can provide increasing confidence that marketing does what it says it will do.

Trends to Watch in 2008

By Bob Liodice

MARKETERS HIT A ROUGH PATCH 2008 will be about the economy and politics. Growth is slowing, fuel prices are high and credit is tight. That's a difficult mix for marketers to face as consumers will continue to pull in the reins as disposable income tightens dramatically. With caution flags waving, marketers will keep expectations and spending plans modest. Combined with lots of political "tax-raising" rhetoric , there will be plenty of room for nervousness. But political ad spending will more than make up for sluggish brand-marketing investments.

INNOVATION AND CREATIVITY RULE Marketers' ingenuity will continue to expand as the competitive marketplace challenges brands to devise ways to reach their audiences online and via other "out-of-the-box" avenues. Targeting consumers using unconventional methods in creative places will be the gold standard for outstanding creative. Marketers won't run away from traditional media -- but will leverage technology and new media to accentuate message delivery to consumers and customers. There is no turning back -- and creativity will rule.

GET SERIOUS ABOUT ACCOUNTABILITY In ANA's 2007 marketing accountability study, it was startling to find that, despite enormous efforts, 42% of marketers were dissatisfied with ROI measurements and metrics. In about half of the companies, marketing and finance don't speak with one voice or share common metrics. Enough! Recognizing the critical importance of accountability, companies will appoint a czar -- the chief accountability officer -- to lead a disciplined, internally consistent approach to marketing measurements, metrics and productivity.

DIGITAL, DIGITAL, DIGITAL (AND PORTABLE TOO) As Steve Ballmer proclaimed at the 2007 ANA Annual Conference, all media ultimately will be created and delivered digitally. Can anyone legitimately argue with that? Naahhh. And the beat goes on in 2008. Digital offers richness in information management, communication delivery, metrics -- and portability. Simply look at the iPhone and similar devices to know consumers will have all forms of media at their fingertips 24/7. The challenge: Are marketers skilled enough to take advantage of this rapidly changing landscape?

THE 'BRAND SWARM' Marketers will move decidedly in the direction of DDB CEO Chuck Brymer's "swarm theory" -- the notion that people and their opinions coalesce to form critical forces that massively influence marketplace ideas and concepts. "Swarm theory" will elevate social networking to new levels, confirming the immense impact that consumers have on each another. Marketers that embrace this trend can form consumer brand "advocates" and drive brand loyalty and trust to new heights -- if done responsibly.

GETTING COMPENSATION RIGHT (PLEASE) Compensation models will evolve in 2008. Agencies and clients will work together to create mutually fair value- and incentive-based approaches. The ANA 2007 Trends in Agency Compensation study showed that only 25% of respondents were very satisfied with their compensation models. Marketers will pay well for great ideas and superb media management. The key is to get expectations right between agency and client. Perhaps Procter & Gamble's just-announced compensation model is a blueprint of things to come.

NEUROLOGICAL MARKET RESEARCH Going beyond traditional focus groups and consumer surveys, market research will embrace scientific approaches that literally tap consumers' brains to learn how they neurologically respond to commercial messages and make brand choices. The Four A's and ARF have begun researching this topic in earnest with an intensive study, "On the Road to a New Effectiveness Model." In 2008 we will start to see practical applications of these insights as advertisers and shops begin to truly understand engagement.

EMERGENCE OF THE 'RENAISSANCE MARKETER' A new breed of marketing professional is emerging -- individuals with a holistic view of the world and extraordinary observational powers. These "renaissance marketers" will be part humanist, part psychologist, part anthropologist and part technologist. Cookie-cutter marketing will no longer survive as marketers must take a broader view of the consumer and customer. This includes the need to be socially responsible and to embrace key trends such as green.

THE POWER OF STRATEGIC ALIGNMENT Marketers succeed when brand messages are fully integrated and synchronized across all media channels. That requires strategic alignment -- leadership that ties everything together -- particularly when the forces of change can potentially pull them apart. Strategic alignment is one of the most important roles of the chief marketing officer, and In 2008 more CMOs will ensure organizations are strategically aligned. Lead agencies will be appointed to make sure all supporting agencies carry out the same brand message.

PRIVACY, PRIVACY, PRIVACY

In 2008, marketers will become increasingly sensitive to privacy issues. With "digital-intrusion" and identity-theft issues as paramount consumer concerns, marketers must be extraordinarily careful to respect worries of access to private information. This tug of war between consumer privacy and information access will require marketers to work hard to explain and justify the lifestyle benefits of highly individualized, personalized commercial communications.

(Content originally published in the December 17, 2007 issue of Advertising Age)

Annual Conference Q&A with Wendy Clark

The ANA Annual conference is here. Please find my final Q&A conversation with AT&T's Senior Vice President of Advertising, Wendy Clark below on AT&T's transformation. Please be sure to check out Marketing Maestros for up to date blogging during the conference. See you in Phoenix!!!

1. The theme of this year’s ANA Annual conference is ‘Transforming the Marketing Landscape.’ What have you done this year to transform your own brand’s landscape? This year 2007 has been one of transformation for the new AT&T. With the close of the BellSouth merger in late-December 2006, the new AT&T began its transformation into a company with mobility at its core. Our transformation has been so significant and so pervasive that we often refer to ourselves as a young company with a 100-year heritage – put simply, we aren’t the same company we were a year ago. In early 2007, we launched a multifaceted communications initiative that included advertising, customer communications, sponsorships and earned media outreach that would not only rename BellSouth and Cingular, but ultimately reposition the new AT&T in the communications marketplace.

Q&A with ANA Board of Directors Chairman Steve Sullivan, SVP of Communications Liberty Mutual

As I continue my conversations with ANA Annual Conference Speakers, please find ANA Board Chairman Steve Sullivan's (SVP of Communications) comments below on the transformation of the Liberty Mutual Brand.

1. The theme of this year's ANA Annual Conference is "Transforming the Marketing Landscape." What have you done this year to transform your own brand's landscape?

This was a big year for Liberty Mutual in evolving our brand. Certainly, you could look at what we did and focus on the tactics - we rolled out a new T.V., print and online campaign; we introduced some new consumer promotions that created a lot of engagement; and we benefited from the power of social networking - but those activities were just the spear point of our efforts.

The significant change in our brand approach was our decision to distance ourselves from the frenetic insurance environment of competing claims and prices. Instead, we evolve our positioning based on a sociological phenomenon we discovered in the course of our research. It surprised us with its strength and we've been delighted with the response to our communications.

Annual Conference Q&A with Bob Lachky

As we begin our countdown to the 2007 Annual Conference, I wanted to continue the tradition (which I began last year) of blogging my conversations with some of the key conference speakers. These virtual Q&A sessions will highlight some thoughts from their conference presentations as well as provide their ideas on this year’s theme – Transforming the Marketing Landscape.

My first guest this year is Bob Lachky, evp and chief creative officer of Anheuser-Busch. Below, please find our conversation on how the marketing landscape has changed as well as how Anheuser Busch created a culture that embraces taking risks to gain rewards.

1. The theme of this year's ANA Annual conference is 'Transforming the Marketing Landscape.' What have you done this year to transform your own brand's landscape?

We are in the midst of a major landscape transformation as we have doubled the size of our brand portfolio over the past year.  Through acquisitions, distribution agreements, and new brand development we have set ourselves and our distributors up for future growth, especially with new high-margin products.  It is requiring an in-depth look at brand roles and zero-based marketing allocation, but we'll be better off in the long run because we'll have competitive brands for every segment of our industry. 

So, How Are We Doin'?

 

For the past few years, we’ve spent a lot of time standing on a soap box railing the industry about the lack of accountability in marketing. No regrets about that. And we have appropriately encouraged a more disciplined, metric based approach to marketing management.

 

So, let’s put our money where our mouths are and ask “so how are we doin’”?

 

First, the good news.

 

In a study released today, conducted jointly by the ANA, MMA and Guideline, formal marketing accountability programs are becoming an accepted business practice among marketers. Almost all companies (92%) have created and institutionalized marketing accountability processes. That’s a terrific showing. It appears that the industry woke up and recognized the need for greater accountability for the half trillion dollars that are spent across all marketing platforms. Excellent, right?

 

Not so fast -- now the bad news. The study found that dissatisfaction about marketing measurement and internal marketing accountability processes is rampant. Frustration levels among marketing executives are rising. Some specific issues of note:

 

• Dissatisfaction with marketing ROI measurements      (42%, +7pp vs. y/a), 
• Lack of marketing ROI definitions (45%, +20 pp      vs. y/a) 
• Poor organizational response to marketing ROI      data (48%,  +16 pp vs. y/a)

 

The study found that the relationship between marketing and finance lacks strength and consistency – particularly when attempting to establish metrics and methodologies for measuring marketing ROI. Most marketers (61 percent) indicated “some” cooperation between marketing and finance, while only 22 percent indicated full cooperation. In about one-half of the companies, respondents said that the marketing and finance departments don’t speak with one voice or share common metrics. 

 

Perhaps the most disturbing fact was that only 55 percent indicated that their marketing ROI goals were closely aligned with their company’s overall corporate goals while half (51 percent) said there were no written goals for marketing ROI in their organizations.

 

Ok – so should we feel bad about this? Definitely not!! We certainly wish the industry could have made more progress. But, being the eternal optimist that I am, I see “the glass half full”.. Five years ago, we didn’t even know what marketing accountability was or what to do about it. We do now. There is no doubt that we have a long way to go. But we are moving down the right path and we are headed in the right direction. The study may have dampened our enthusiasm. But it should also serve to strengthen our resolve and our determination to put marketing accountability right at the top of Chief Marketing Officer’s objectives for 2008 and beyond.

Continuous Marketing Reinvention

My final top-10 expectation for 2007 – continuous marketing reinvention – wraps the previous nine with a big red bow. Continuous marketing reinvention is the theme that’s driving all components of the marketing process towards greater efficiency, consumer-relevance and, most importantly, business performance.

I believe it must become the mantra of marketing executives and the cornerstone philosophy for a new kind of strategic platform that totally reinvents:

• The way brands are built

• The methods for integrating all marketing disciplines

• The approach to marketing accountability

• The structure of the marketing organization

In reinventing the discipline of marketing, senior marketing executives will need to address all nine transformations about which I have previously blogged. They must:

• Realize that the consumer is in control – and act on this new fact

• Create a new agenda for agencies

• Connect the CMO with the CEO’s agenda

• Include unconventional outreach in all marketing programs

• Transform media buying and selling

• Find common ground with government policymakers and consumer advocacy groups

• Renew the traditional research function as the foundation of marketing accountability

• Modify business systems and back office operations

By embracing these changes, marketers will ultimately create a more innovative, flexible, powerful and accountable marketing organization.