What lessons can the 2020 IPA Effectiveness Awards teach us about the future of advertising? In the latest of our chapters from Advertising Works 25 – The Definitive Guide to Effective Advertising, Heather Alderson examines how company culture and leadership drive effectiveness.
Over the last few decades, the IPA Effectiveness Awards Databank has been populated by more and more evidence that advertising to make brands stronger makes businesses more prosperous. Yet, according to a June 2019 study conducted by the FT and the IPA, over half of business leaders, including 30% of senior-level marketers, rate their knowledge of brand building as average to very poor, in spite of being responsible for setting marketing objectives across both the short and long term. This knowledge gap was referred to as the 'board–brand rift'.
Compared with the end of the twentieth century, today’s marketing world is a very fast one. The latest US data shows that the average tenure of a CMO in the largest companies continued to slip to just 3.5 years in 2019. CMOs are shorter in post than CEOs (6.9 years) and finance leaders (4.7 years). Many brand marketers have become addicted to the sugar rush of short-term, results-on-my-watch, communication. In recent years, short-term campaigns have drawn the prizes in creative award programmes such as Cannes. Looking across all IPA Effectiveness Awards case studies by year, we see brand building is down from 85% of entries in 2002 to 62% in 2018. A change in focus has meant an increasing perceived need for short-term sales bursts and communications that carry immediate calls to action.
Similarly, the board–brand rift study shows that the channels that tend to be most associated with fast culture, such as social media, are believed to be strong brand builders when, empirically, other channels perform better.
However, even against this backdrop, there are some encouraging signs in 2020 IPA Effectiveness Awards entries that the rift between the brand and the boardroom is beginning to close.
The IPA Effectiveness Awards Databank contains many strong multi-market case studies, including those for brands originating in the big global corporations such as Axe, Dove, Johnnie Walker, and Heineken.
However, as anyone who has tried to develop an international campaign or write an international effectiveness case knows, being able to build in the effective outcome everywhere from the outset is challenging. And that is even before you attempt to put the right measures in place and gather the data. Proving marketing effectiveness is especially difficult in big multinational companies. They are frequently structured in a way that separates the, often global, brand builders from the, often local, sales builders. Media is frequently separated from creative production and brand-building activity can be distanced from activation and day-to-day social.
Diageo is, of course, a major multinational and one of a small group of companies that puts its intangible assets on the consolidated balance sheet (£11,300m in 2020). Because of the proportion of the company’s intangible assets they account for, brands have had a seat at Diageo’s financial top table for many years. However, in 2016, Diageo made a commitment to deliver £500m of increased productivity. As part of that, £100m of incremental gross margin was to be delivered by marketing and the brands. The commitment started and was accepted in the boardroom.
It is easy to hear the words 'increase productivity' and translate that to 'cut costs' or 'improve efficiency'. To date, more than double that £100m target has been delivered back to the Diageo boardroom, but it was delivered by improved effectiveness rather than cuts. It is unlikely that such a target could have been met by individual effort or a statement of intent. Rather, Diageo embarked on a company-wide effectiveness programme touching all levels of people, all continents and all brands.
Not every company or every brand will be able to match Diageo’s resources in terms of the time, finance and infrastructural investment required to build a Marketing Catalyst platform for making more effective spending decisions on marketing. However, there are three simple commitments at the heart of Diageo’s programme that can be widely adopted. The first is to use robust data to facilitate decision-making and reduce the impact of cognitive bias. In Diageo’s case, this is where the comprehensive Marketing Catalyst platform came into its own. The second is to make a sound commitment to creativity as the proven accelerant of effectiveness. The third is a cultural commitment to ensure that everyone – in all roles, from investors to marketers, and all levels, from the boardroom to new joiners – knows what effective brand marketing is, the benefits it brings and what they personally need to do to bring it about.
A similar cultural commitment, albeit in just one country and without access to a data-driven platform like Marketing Catalyst, was made by Cotswold Co. to lift collective heads away from, in its words, 'the fetishisation of optimisation' towards being able to make a leap towards creativity and hence towards the longer-term brand building that leads to greater effectiveness. Just like in the Diageo case, the step change began in the boardroom when Cotswold Co.’s private equity investors demanded a doubling of revenue from £50m to £100m in five years. In this instance, Cotswold Co.’s target was to be achieved with no increase in marketing spend. Faced with simultaneous demand and constraint, the only way forward was to break the cultural reliance on short-term micro-management and replace it with a commitment to brand creativity. Furthermore, the data was examined and presented in a way that clearly argued the case for creativity. Therefore, the three tenets of rift-reduction of data, creativity, and culture were put to good effect.
As methods to close the rift between the brand and the boardroom, whether a brand is big or small, we can learn from those that have successfully used the three-pronged approach of deploying data, commitment to creativity and addressing the culture of effectiveness in their organisations.
This is an abridged version of Heather Alderson’s chapter from Advertising Works 25 – The Definitive Guide to Effective Advertising.Purchase Advertising Works 25