by John Little (@litjohn2) Not a day goes by without somebody, somewhere, writing an article about slow (if not stagnant) growth, pressure on marketing budgets and the need for marketing to demonstrate real business success to meet the relentless pressure from the C-suite.
A recent example comes from the US Association of National Advertisers’ Masters of Marketing Annual Conference. ANA president, Bob Liodice, revealed that over half of the companies on the Fortune 500 list had declining revenues in 2016. He went on to remark. “the decline in business sales, over the last two years, is a sad reflection on the effectiveness of US marketing.”
More recently, an article in Forbes magazine put it succinctly: “CMOs On The Hook To Prove ROI In 2018”.
Strategies to deliver ROI
In today’s complex marketing ecosystem, there is no shortage of strategies designed to address the ROI challenge:
- Customer-centricity
- Purpose-driven marketing
- Digital transformation
- Innovation
- Agility
- The list goes on….
Many of these so-called strategies are not new. They just have new names. The truth is that. if marketers just focused on doing the marketing ‘basics’ better — much better — the returns would follow.
Order your 2018 copy now!
‘Best work’ delivers best business results
There is a growing body of research-based evidence that the best ideas, however they may be taken to market, deliver superior results. For example, research from the UK’s IPA (Institute of Practioners in Advertising) and Thinkbox, in conjunction with the Gunn Report, revealed the direct correlation between strong advertising creativity and business success. The study showed that the most creatively awarded advertising campaigns were 11 times more efficient at delivering business success.
Further, an event report, presented by McKinsey, at the 2017 Cannes Lions, revealed that “enterprises which flourish in the creative realm, as a rule, witness equally impressive outcomes on the fiscal measures favored by the C-suite and Wall Street: namely organic revenue growth, total return to shareholders and net enterprise value. On each of these indices, firms receiving a high ‘Awards Creativity Score’ doubled the ratings posted by their low-ranking competitors.”
In a study released in 2018, Kantar Millward Brown used 12 years’ worth of BrandZ data to analyse 3.6m consumer interviews comparing perceptions of 122 000 brands in 51 markets. The results demonstrated that brands that are perceived to be creative and disruptive generated an average brand value growth of 154%. But add ‘great advertising’ and brands have the opportunity to achieve growth of 265%.
‘Great relationship/great work’ correlation
In the first study of its kind, debuted at the Cannes Lions Festival of Creativity 2016, Razorfish and Contagious analysed 15 years of entries and awards from the industry’s most-prestigious festival of international creativity to reveal the patterns, attributes and secrets behind the world’s top creative performers. Amongst the findings, they stated: “Agency/client relationships that last past the 10-year mark have win rates twice the average.”
Their recommendations included: “Invest in long-term relationships — it’s the long-established creative relationships that are proven [by data science] to be the highest performing over time.”
Perhaps not unexpectedly, time-starved marketers are finding it increasingly difficult to allocate time to the ‘softer’ functions such as external performance evaluation and feedback. However, despite the 24/7 ‘pressure’ experienced by marketers, most would agree that applying the discipline of management by objectives is key to improving marketer/external partner relationships, the corresponding output and, most crucially, marketing ROI.
Return on relationship (ROR)
Marla Kaplowitz, appointed president of the American Association of Advertising Agencies (4As) in 2017, had this to say: “People are at their best and most creative when they feel trusted and valued. Trust is the cornerstone of any good relationship. We must foster it through candid collaboration and conversations.”
On the other side of the Atlantic, the UK’s IPA put it this way: “Better client agency relationships lead to better commercial creativity and only the fittest survive and thrive, so it is in our best interest to put energy and effort into making them better.”
These opinions, combined with published data, should be enough to convince us that the best marketer/agency relationships, usually enduring ones, produce the best work. And the best work gets the best business results (ROI). Or, better still, one might call it return on relationship (ROR).
But there is no ‘return’ without ‘investment’. Marketers (and their external partners) need to invest in initiatives designed to improve the quality, efficiency and effectiveness of their relationships.
Performance management
That is where performance management/measurement comes in. It is the ‘tool’ that generates the right ‘conversations’ and identifies the need for ‘corrective action’. This might include:
- Realignment on goals or objectives
- Revisiting ‘rules of engagement’
- Fine tuning team make-up
- Improving skills sets
- Refining process
- Reengineering structure
From a practical standpoint, we need an approach that is time-efficient and cost-effective but is capable of generating the ‘right’ feedback that will lead to meaningful conversations between the parties. Any successful ocean racer, worth his or her (sea) salt, will tell you that constant ‘course correction’ is the key to success. Managing marketing’s key communications partner relationships is no different.
Appropriate frequency in performance measurement is important as relationships can get ‘off course’ very rapidly in today’s ‘always-on’ marketer/consumer dialogue. Best practice, these days, would likely include quarterly ‘light-touch’ interventions, followed by an annual ‘deep-dive’ survey.
Postscript: Payment by results
Globally, fueled by C-suite pressure and the rise of marketing procurement, there has been an increasing adoption of payment by results (PBR) mechanisms in external partner compensation arrangements. This is borne out by data from the 4As that indicates that, of its member agencies with 500+ employees (handling the larger, more-sophisticated marketers), over 90% are engaged in PBR schemes.
Incorporated Society of British Advertisers (ISBA) have been tracking the adoption of PBR incentive schemes, in the UK and Europe, since 1997. The latest data shows that an incentive scheme is used by 60% of advertisers.
Performance measurement will, inevitably, be a key requirement in assessing specific external partner performance metrics or key performance indicators (KPIs), as a part of a broader PBR ‘scorecard’.
John Little (@litjohn2) has close to 40 years’ advertising and marketing industry experience, gained in the UK, Canada and South Africa. Between 1981 and 2009, he held the positions of MD of Ogilvy Joburg, group MD of Leo Burnett, MD of Ogilvy Africa and CEO of WPP’s media arm, GroupM Africa. He served on the board of the Association of Advertising Agencies (today the ACA) for 16 years and was chairman in 1997 and 1998. He co-founded the Marketing Industry Trust in 1997, was its first chair and again chaired the body 2000–2003. He chaired the Advertising Standards Authority, and served on the ASA Appeal Committee. He launched The Observatory International in SA in 2009.
The article first appeared in the 2018 edition of Brands & Branding in South Africa, an annual review from Affinity Publishing of all aspects of brand marketing — consisting of case-studies, profiles, articles and research — also accessible at Brands.MarkLives.com. Order your copy of the 2018 edition now!
— One subscription form, three newsletters: sign up now for the MarkLives newsletter, including Ramify headlines; The Interlocker, our new monthly comms-focused mailer; and Brands & Branding, launching soon!