Marketing Maestros

In-House Agencies – Fast, Cheap, & Good!

By Bill Duggan, Group EVP, ANA
Posted: Jun 13, 2012 12:00am ET

ANA In-House Agency Day, just held at the offices of Charles Schwab in San Francisco, attracted a crowd of over fifty marketers.  When we surveyed members a few years ago, we found that 42% had an in-house agency of some type.  And speculation is that the percentage has grown further as the primary benefits of in-house agencies – speed and cost savings – are more important than ever.  But in-house agencies can also offer terrific strategic thinking and creative work as well.

A presentation from the In-House Agency Forum led off the day and was focused on how to shift an in-house agency from an order taker to a business partner.  Two tips from that session stood out to me:

Schwab’s in-house agency has 132 staffers in four locations – San Francisco, Austin, Richfield (OH), and Chicago.  More recently the in-house agency has had a steady evolution to doing more digital work and has focused on providing a “digital experience” with interactive display, video, and mobile.

Blue Shield of California’s philosophy is, “If it doesn’t sell, it isn’t creative.”  The in-house agency works hard to be a strategic partner with its clients and continuously measures its success.  Metrics include purchase consideration, the quality of the work, and satisfaction rate of internal partners.  The agency has had over thirty marketing excellence awards since 2010!

Franklin Templeton has a truly global model with teams in the U.S., Canada, Poland, and India.  Over 4000 projects are completed annually, and 500 are active in any given week. Work is done in over 20 languages—not just English, Spanish, French and German … but also Chinese, Estonian, Swedish and Turkish!

Many of us have been schooled on the ‘triangle’ throughout our careers – “fast, cheap, good … pick two.”  In-house agencies have always been fast and cheap. One participant noted, “We operate at 30% of what it would cost to go outside for the same services, saving millions per year.”  But more and more in-house agencies are now challenging the triangle theory by being good as well.  Expect to see the use of in-house agencies to grow and become even more important going forward. 

What? … errr … Excuse me?

By Bill Duggan, Group EVP, ANA
Posted: Jun 6, 2012 12:00am ET

My teenage daughters still need constant reminders that the reply, “What?” to a question or comment that they need repeated or didn’t fully hear/understand is rude and unacceptable.   

“Excuse me?” is better.  “Excuse me, Mrs. Jones?” is best.

While we continue to fight this battle at home, I am increasingly aware of similar behavior in the business world. In the last week alone (a) a job candidate responded, “What?” to a colleague not once, but twice in an interview; (b) a new staffer on my team did the same to me in a member meeting; and (c) a retail clerk answered, “What?” to an initial question I posed.

With employees becoming an increasingly important touch point between marketers and the customer, the marketing community needs to remind employees of this proper, incredibly basic protocol.  A Ritz Carlton employee would never reply, “What?” to a customer question.  But this happens every day at other businesses, particularly with in-person interaction.  For some reason, we have better manners on the phone!  It happens with the retail sales associate, waiter/waitress, fast food cashier, etc., etc.  You can accuse me of being a bit old fashion, but “What?” is a bit rude and disrespectful.

Customers often form opinions and make judgments about companies based on interactions with a single employee.  I had a very positive experience last week with USAA when making a change to my auto insurance policy.  The associate on the phone was courteous, respectful, and helpful.  I already had a very positive opinion about the company before the call and it was enhanced by my experience with the associate during the call.  Like Ritz Carlton, USAA has an emphasis on customer service. 

So spread the word to your employees and teenagers – it’s always “Excuse me?” and never “What??”

Industry Interest in Brand-Specific Commercial Ratings

By Bill Duggan, Group EVP, ANA
Posted: Jun 1, 2012 12:00am ET

It’s now June (can you believe it!) and I’m proud that I’ve kept up with one of my primary New Year’s resolutions – to blog once a week.  That’s over 20 blogs in 2012 at this point, all on the Marketing Maestros series of blogs.   

Of those 20+ blogs, none received more attention and industry reaction than my May 18 post titled, “C7? How about Brand-Specific Commercial Ratings?” That blog provided a reminder of advertiser interest in more granular commercial ratings—brand-specific commercial ratings that would help answer the question, “How many people actually had the opportunity to see my spot?” I was delighted with the personal emails and conversations in response to that blog.  

Bruce Goerlich is chief research officer at Rentrak.  His industry credentials are impressive and include being the former chairman of the board of ARF.  Bruce told me, “At Rentrak we believe in accountability.    We have over 8 million homes, and 20 million TVs providing us with second by second TV ratings. This large footprint allows us to provide our clients with Exact Commercial Ratings today, ratings that only count viewership in the seconds in which the commercial aired.  Our clients can see how their schedules, campaigns, and individual pieces of copy perform, as well as how their competitors did.”

The legendary Jon Mandel is now CEO of Precision Demand, and formerly was at Nielsen and before that ran Grey’s Mediacom.  Jon says, “What is interesting about this, is we already do that and more. We can do it on a predictive basis. Our solution is also a lot simpler than the way people are going out trying to deliver it sometime in the future. And we are delivering it successfully to clients currently, not in some pipedream.”

Finally, George Ivie is executive director of the well-respected Media Rating Council.  George says, “Nielsen's meters are being consistently improved and they are getting closer to being fit for this purpose.  They need to make some fixes; the most important fix is a new Watermarks system (primarily to combat compression issues).  These fixes need to be implemented and validated by MRC.”

Those comments from Bruce, Jon, and George are very encouraging and ANA looks forward to the industry dialogue on brand-specific commercial ratings continuing and real progress made.

P.S. – ANA supports audited measurement and encourages all companies that provide television ratings and brand-specific commercial ratings to be audited by the MRC.

Marketing to Asian Americans and Insights from the 3AF Conference

By Bill Duggan, Group EVP, ANA
Posted: May 21, 2012 12:00am ET

I just attended the 3AF (Asian American Advertising Federation) Asian Marketing Summit in Las Vegas and came away with some terrific insights.

Dramatic Growth
The Asian American population is approximately 17 million and in the past ten years grew by double-digits in forty-nine of fifty states.  The Asian population was 5.6% of the total U.S. population in 2010 and is expected to reach 9% in 2050. Asian population growth is fueled by immigration, resulting in millions of new Americans that have not yet been marketed to here.

California currently has the highest Asian population at 5.5 million followed by New York at 1.5 million.  Other top states are Texas and New Jersey.

Asians are Extremely Active Online
This theme came up continually throughout the conference—Asian Americans are more active than any other group online.  Interestingly, because Asian Americans feel under-represented in mainstream media, they are going online for relevant content. 

Importance of “Heavy Voices”
In the opening keynote of the conference, Rishad Tobaccowala declared that “we are at the crossroads of the future” as the future is going Asian, digital, and different than what it was before.  According to Rishad, most companies focus disproportionately on their heavy users – often 20% of users and 80% of volume. When a customer is happy, he smiles.  When a customer is angry, he yells. So it’s also very important that a company focus on distractors too.  It’s not just heavy users, it’s heavy users and heavy voices.

Shopping Preferences for Asian Americans
Nielsen discussed the shopping preferences of Asian Americans and offered these insights.

  1. Asian Americans spend less per trip but shop more often, with total spending above average.
  2. They are more likely to buy on deal or with coupons.
  3.  They are more likely to compare prices and shop online.
  4. They shop less in supercenters, dollar stores or convenience stores; they like Costco.
  5. Asian Americans spend more on fruits, juices, baby items, and personal care.

Ad Drivers
Interesting insights on the ad drivers for multicultural segments, again from Nielsen.

Yahoo also offered good perspective for marketing to Asian Americans.

Twenty-seven percent of Asian Americans feel that many ads targeted to them are offensive.  Marketers need to avoid the stereotypes of the nerdy Asian guy who’s unattractive to women and the butt of the joke as well as someone “fresh off the boat.”

Toyota Case Study
A highlight of the conference was a presentation from Toyota, who at the 2011 3AF conference was named “3AF Marketer of the Year.”  Toyota actively targets Hispanics (started that in the 1980s), African Americans, and Asian Americans. Toyota’s Asian American program began in 2003, behind the Sienna mini-van.  Sienna is now the number one mini-van among Asian Americans and Toyota now markets the Camry (since 2005), Corolla (since 2006) and also the Highlander, Prius, and Rav4 to Asians. Toyota actively involves multicultural insights upfront in the process for product research and general market messaging.

The Rise of Mommy Bloggers
The conference offered a panel of “mommy bloggers” who started their blogs because they felt their experiences were not being heard in more mainstream media (a point offered by others at the conference as well). The bloggers offered these insights on how companies and agencies can work with mommy bloggers:

There were about 150 attendees at the conference – a mix of media companies, agencies, and clients. Client side marketers included Brown-Forman, Coca-Cola, Kellogg, McDonald’s, State Farm, Toyota, Verizon Wireless, and Western Union.

Verizon Wireless was named 3AF’s 2012 Marketer of the Year.  Congrats!

On the second day of the conference, USA Today’s primary front page headline was, “Minorities are now a majority of births.”  How perfect! And I will quote, “More than half of all babies born last year were members of minority groups, the first time in U.S. history.  It’s a sign of how swiftly the USA is becoming a nation of younger minorities and older whites. Hispanics, blacks, Asians and other minorities in 2011 accounted for 50.4% of all births.”


C7? How about Brand-Specific Commercial Ratings?

By Bill Duggan, Group EVP, ANA
Posted: May 18, 2012 12:00am ET

The network upfronts were this past week.  Leadership of at least two major networks used that opportunity to advocate for a shift of currency from C3 to C7 ratings – meaning ratings based on the average commercial minutes in a program with three (or seven) days of commercial viewing in DVR playback.   As the trade association representing client-side marketers, I want to remind the network executives of advertiser interest in more granular commercial ratings. 

With C3, commercial viewing was finally recognized in discussions between buyers and sellers.  But C3 is based on average commercials, not specific commercials.  For more than five years ANA has been advocating for brand-specific commercial ratings as that would help answer the question, “How many people actually had the opportunity to see my spot?"

We’ve surveyed our members many times over the years on this issue, last doing so in 2011 when 82% of marketers expressed interest in having ratings available for individual commercials. That’s a landslide!

There is the need for greater accountability in television advertising, where more than $70 billion is spent annually on commercial time. Marketers require a deeper understanding of program and commercial viewership as well as the behaviors that result from consumers’ television viewing experiences.  Brand-specific commercial ratings would go a long way in better evaluating television’s contribution to the marketing mix as well as in assessing the overall ROI of television advertising expenditures.  Brand-specific commercial ratings would support the needs of marketers by:

Brand-specific commercial ratings would be an invaluable tool for campaign management, and ultimately, they would truly help marketers make better decisions.

Should they be currency? That’s up to individual buyers and sellers.  But they should be available.

And remember, ratings are about the “opportunity” to see.  They don’t take into account people leaving the room without logging out of their people meter or those multitasking and possibly distracted via a computer, tablet, or smart phone.  Maybe we should begin exploring technological solutions that equip “eyes” on a television or measurement device before we have serious conversations on C7!



Insights and Highlights from the ANA Advertising Financial Management Conference

By Bill Duggan, Group EVP, ANA
Posted: May 10, 2012 12:00am ET

I have just returned from the ANA Advertising Financial Management Conference, which drew a record 550 attendees.  The following are ten key insights and highlights that I took away.

  1. Resiliency: In the opening economic keynote, PwC advised advertisers to “over weigh resiliency and under weigh growth.”  Japan was noted as a key example of that – despite sluggish growth over the past two decades, the Japanese were very resilient following the earthquake/tsunami and the country is rebuilding as a result.
  2. People: Hans Melotte, CPO of J&J, stressed the importance of people. “Everything begins and ends with having the right people.  Superior people result in superior outcomes while mediocre people result in mediocre outcomes.” Procurement at J&J is a key player that enables growth while cost savings are of secondary emphasis.
  3. Website Video: Paul Matsen, CMO of The Cleveland Clinic is an advocate of website video, a great example of owned media.  The Cleveland Clinic has some 1500 videos on their website, which have certainly contributed to making that the #1 most visited hospital website in the U.S.   Paul said that the “… use of video can transform marketing.”
  4. Agencies as Junior Partners: The great Martin Sorrell spoke of agencies being “junior partners” to their clients—not full partners and certainly not domestic servants, saying, “Don’t treat us as a commodity; it’s depressing and confrontational.”
  5. Patent Trolls: Beware of patent trolls, says Doug Wood of Reed Smith and ANA’s outside legal counsel.  Patent trolls acquire patents that have not been utilized and are essentially worthless, target one or more industries with cease and desist letters, and then target a few companies to sue to apply pressure on the rest to settle for less than litigation costs.
  6. Accountable Compensation: Dustin Cohn, Jockey CMO and Rich Feitler, TPN president discussed their compensation arrangement built on the principles of partnership, accountability, fair and shared metrics, payment on output and not hours, and earning the entire agency profit margin based on meeting company goals. There’s so much chatter at ANA meetings about compensation and it’s great to see a client and agency doing something very different.
  7. Innovation: Kelly Mooney, CEO of Resource Interactive, emphasized the importance of a commitment to innovation.  Marketers and their agencies need ongoing monitoring of emerging trends followed by rapid application of testing ideas based on those trends.  A nominal budget should be allocated for such innovation to provide a constant stream of learning.
  8. Media Audits: The primary objective of a media audit is to improve the effectiveness of the media investment. For many marketers, media is the largest part of their marketing spend.  Media audits also shine a light on client behavior that could drive up costs.
  9. CMO Insights: IBM shared results of C-suite global studies with CMOs and CFOs.  I loved this simple insight on technology – CMOs have to use tools and technologies that their children understand better than they do.  So those CMOs better get up to speed!
  10. Corporate Trade: Corporate trade (also referred to as barter) is a financial tool that provides the opportunity to realize better returns on excess inventory or other assets than traditional liquidators can offer and “trade” those assets for media or other goods.  Active International, a leader in corporate trade, shared their perspective.

Industry Debate on State Commercial Production Incentives

By Bill Duggan, Group EVP, ANA
Posted: May 3, 2012 12:00am ET

The ANA last week issued the white paper “The Found Money of State Commercial Production Incentives.” Many states now offer production incentives for advertisers willing to shoot their commercials in their state.

These incentives are offered by the states to create jobs and attract investment. Savings, which can range from 15 percent to 30 percent of the production costs, can be achieved without sacrificing quality. The ANA's position is that the state production incentives belong exclusively to the advertiser, not the production company or the agency.

The Association of Independent Commercial Producers, the trade association representing the production community, raised this issue with its members back in November. Last week, the AICP responded with a critique of the ANA’s position. In turn, the ANA issued a response to that critique.

It is important for ANA members to be aware ofthe benefits of state commercial production incentives, as well as our position that production incentive rebates belong exclusively to the advertiser.


The Found Money of State Commercial Production Incentives

By Bill Duggan, Group EVP, ANA
Posted: Apr 23, 2012 12:00am ET

Many states now offer financial incentives to advertisers to shoot commercials in their states. Although such incentives originated about ten years ago, more recently they have expanded to additional states and have become increasingly attractive to advertisers.  The savings can be quite significant, often ranging from between 15 to 30 percent of production spending in that state.  

The film and television industries have historically benefited greatly from these state production incentives. The incentives are clearly geared to reward companies for making the decision to produce in a particular state. Incentive programs target the companies that fund productions and give final approval on the shoot location. In the feature film arena, the largest recipients of these incentives are the major motion picture studios. More recently, advertisers have been participating. Savings can be achieved without sacrificing quality, as many states have been very successful in building production crew bases and equipment suppliers required by the industry. 

States base incentives on hiring as many locals and purchasing/renting as much as possible from local vendors. Typically, all expenditures incurred in the state related to pre-production, production, and post-production qualify for state production incentives. The general rule of thumb is that the more the advertiser spends in the state, the greater the potential savings from the incentive.

The list of states that offer commercial production incentives and the specific details for each state, are continually evolving. Commercial production incentives are currently available from Alaska, Connecticut, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, New Mexico, North Carolina, Oklahoma, Pennsylvania, Puerto Rico, Texas, Washington, and West Virginia.  California and New York—two long-time commercial production centers—have active state film offices but do not offer commercial production incentives that advertisers can utilize. One resource available to help stay up to date on the various state policies is The Official Guide to United States Production Incentives at http://www.easecommercial.com/.

Production incentive rebates belong exclusively to the advertiser, not the production company or the agency—it’s the advertiser who funds the production and gives final approval on the shoot location. Importantly, contracts with agencies and production companies should be written to reflect the fact that any production incentive associated with the work covered by that contract is the sole property of the advertiser. This is a matter of protecting your corporate assets and receiving the financial benefits that accrue from your marketing expenditures.

State commercial production incentives represent a meaningful opportunity for advertisers and states. It’s a win-win situation. States have invested time and capital in creating these incentives to woo advertisers to shoot commercials in their state to help build their economies. Advertisers can use these incentives to help significantly stretch marketing budgets.

Lessons from Agency Relations Day

By Bill Duggan, Group EVP, ANA
Posted: Apr 19, 2012 12:00am ET

Earlier this week, Walgreens hosted ANA Agency Relations Day, which provided “nuggets and nuggets” of learning on client/agency partnerships, summarized below.  

Production Decoupling: In June 2011 Accenture appointed TBWA Worldwide as its global advertising agency of record and Tag Worldwide as its global production agency.  Decoupling production from creative via Tag was done to improve efficiency, drive further cost savings and improve the quality of execution.  Production decoupling (also known as centralizing or unbundling) is the separation of the business of production from creative development.  There seemed to be a general lack of awareness among Agency Relations Day attendees on this issue.  ANA has a terrific insight brief that can help -- http://www.ana.net/miccontent/show/id/ib-production-decoupling-updated.

Agency Relations in A VUCA World: VUCA stands for Volatile, Uncertain, Complex, and Ambiguous, according to Debra Giampoli of Kraft.  The world as we know it is over - it's no longer predictable, we can't rely on what's worked in the past, the speed of change is accelerating, technology is exploding and consumers are embracing it more quickly than most marketers are.  If we’re going to thrive in the VUCA world we must not be afraid, take risks, be open minded, develop new skills, and always be evolving.  Do it, try it, learn from it, and try something else.  Immerse yourself in what’s new.  Uncertainty is the new normal.  Kraft has become a better client in this new world by having clear, tight, and consistent strategies.  They have assumed responsibility for those strategies and identified internal champions with great taste.  Kraft has made it a priority to make great client-agency matches through great chemistry and to build and sustain those relationships.

Agency Evaluations:  For Walgreens, agency evaluations help incentivize agency partners to share in company goals and business objectives.  Agencies feel part of the team, with “skin in the game.”  Further, agency performance monitoring can greatly improve the effectiveness and efficiency of marketing.  ANA’s own research shows that the vast majority of marketers (82 percent) report that their companies regularly conduct formal agency performance evaluations. The top benefits derived from a formal agency evaluation process are identifying and improving under-performing agency relationships (92%) and identifying and recognizing high-performing agency relationships (85%).  ANA’s advice is to not only conduct regular agency evaluations but do so for all your agency partners (e.g., PR, multicultural, etc.).

Integration: For the United States Postal Service every communications element has a role and contributes to results. The USPS achieves integration via its strong belief in a core agency team at partner Campbell-Ewald comprising the right disciplines. There are not separate agencies and there is only one P&L.  There is cohesion of ideas through one group of people working together, rather than departments overtly selling.  Benefits include everything created together once, learning as a team, and cross pollination of skills.

Incentive Compensation: This is also called “pay for performance” or “performance incentives” and is a method where some, or all, of the agency’s compensation is tied to the achievement of performance results mutually agreed by the client and the agency.  When done well, performance incentives align agency and client on business/communications agendas and goals – the discussion shifts from just hours/FTE’s/costs to meeting performance objectives.  46% of marketers use incentives with at least one of their agencies (per ANA survey results) with a skew towards the biggest spenders.    

What Makes a Good Client: Great perspective provided by Rob Davis of Starcom who noted a client who ends every conversation with, “what can we do better?”  According to Jack Rooney of Ogilvy, empathy and respect are key. Empathy for the fact that agencies are a unique breed that is genetically disposed to making clients happy. Respect for the agency’s craft—you hired them because you want them to do something you can’t do in your organization.


Global Marketing: Reaching Consumers at a Local Level

By Ken Beaulieu, senior director of marketing and communications, ANA
Posted: Apr 17, 2012 12:00am ET

This is part three of my recent interview with Chris Burggraeve, chief marketing officer at Anheuser-Busch InBev and president of the World Federation of Advertisers. In part one, Chris explained why it’s critical to understand the strengths of your competitors in each market, and how AB In-Bev’s “Way of Marketing” creates sustainable brand health. In part two, he discussed the importance of understanding a country’s unique cultures. Here, he shares his thoughts on the inherent challenges of marketing at a local level.

Q: Is AB InBev making a big effort to reach consumers at a local level with customized messages, media, and even products? What are some of the challenges global marketers must consider?

Chris: People may perceive some of our brands globally, but they drink locally. To manage the inherent complexity of global brands like Budweiser and Stella Artois, we apply a “Freedom in a Framework” principle. The framework is very clearly prescribed globally. A global brand has one relevant positioning created based on testing in key countries, one global look and feel (from packaging to communication), one global campaign, and one centrally steered renovation and innovation pipeline. It is run by a clear global brand owner, who, of course, functionally leads a team represented by the key countries.

The degrees of freedom by local marketers to manage the global brand are limited — by choice. But they do have some flexibility to adjust to local taste and custom. Take sports, for example, and its link to Budweiser. The global number one sport passion is soccer/football. But for Canadians, it’s ice hockey, and in the U.S., baseball is the “great American pastime” that fits the Budweiser brand positioning best. Any execution within our current “Anticipation” campaign and “Grab some Buds” creative executions will take these sensitivities into account to drive relevance. All great global brands learn over time to balance global consistency with local relevance. That is a core capability to being successful in this global brand-building game.

Conversely, we are portfolio marketers. We have plenty of big local brands in each local portfolio, such as Bud Light in the U.S., Brahma and Skol in Brazil, Jupiler in Belgium, or Harbin in China. We call them our “local jewels.” The local VP of marketing is the high-level brand steward of a local jewel. He or she completely determines everything local, within the methodology of the AB InBev Way of Marketing. They have a local degree of freedom, and a completely locally designed framework. For example, Paul Chibe, VP of marketing in the U.S., stewards huge local brands like Bud Light and Michelob Ultra, and a very wide range of U.S.-centric brands. Paul, who is based in St. Louis, and his team manage the full portfolio in the U.S., including the global brands Budweiser, Stella Artois, and Becks. On the latter, though, he works closely with the team of Frank Abenante, global VP of brands and insights, who is based in New York. Frank and his team interact with all VPs of marketing around the world on these three global brands.

As a marketer, it’s great to be able to acquire different skills over time within the same company — running a local brand, running a portfolio of local and global brands in a country, running a global brand from the center, and, ultimately, running a portfolio of global and local brands from the center. All require different skills, but I would advise any marketer to start on a local brand in a country first.

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About This Blog

To complement our two leadership blogs and build dialogue on the seismic changes happening in marketing, we launched Marketing Maestros. Our in-house citizen journalists will talk about everything from marketing technology to accountability and everything in between. This blog is written for marketers by ANA's marketers whose insights are drawn from the voices of the client side marketing community.