Key Takeaways

  • Understanding the dynamic between Marketing & Finance in a COVID-19 ‘new normal.
  • Getting into the Finance mindset is important to building a key business ally.
  • Integrating Finance into the Marketing organization will help manage for success.
  • Wearing a bigger hat beyond marcoms will place Marketing as a business function that clearly articulates the return on investment from an overall business perspective.
  • Employing frameworks such as Zero-Based Budgeting and ERRN will help marketers zone in on activities that have a big impact at an acceptable cost which should be maintained; and highlights other activities that should be examined more closely.
  • Scenario planning will help marketers reduce risk, plan for a range of different potential future states and be in a far more confident place to take budgetary decisions.
  • Providing context via relevant case studies in analogous situations will help marketers and finance teams understand the market share state of play.

We all know the tune by now; we’ve seen the memes and overused industry headlines. COVID-19 has had and continues to have an impact across the globe, disrupting supply chains, reducing demand across many sectors and closing some down altogether. But with infection rates beginning to flatten and decline in some countries, concern is now shifting to how the economy is likely to play out over the next four quarters.

Research shows that the vast majority of CFOs view the pandemic as a major business challenge 1 and that overall business optimism 2 has dropped from 59 down to 42 in the US since March 15th 2020. On a scale of 0 to 100, that’s a big drop, but is likely to fall further. APAC, which began to suffer earlier than many other regions, has continued to see declines in CFO business confidence in April 2020.

Marketing & Finance in the COVID-19 World

The relationship between Marketing and Finance is arguably one of the most important ones in any business. The greatest success stories are from Marketing and Finance sharing the same vision for business and working together to quantify marketing investment returns.

Easier said than done in the COVID-19 world.

The topline is in jeopardy. Finance will be prioritizing spend that provides for both quick ROI while continuing to solidify the future. Pre COVID-19 marketers would have been able to answer business questions with a good degree of confidence and certainty, fueled by years of investment in analytics. Marketers had the data and knew how to translate it into business growth.

That certainty is now gone. The old rules don’t necessarily apply, and in some cases, Finance departments are taking the reins in marketing decisions. Marketing, you could say, has been ‘covid-ized’.

However, this presents an opportunity to strengthen the alliance with Finance, ensuring Marketing remains the engine of business growth.

The View from Finance

Understanding the Finance mindset is key. Inherently, Finance people are risk averse. They need marketing to prove why their investments will pay back and clearly communicate how much money will come back, and when.

And uncertainty will drive Finance to react.

“To the degree that we can mitigate some of that uncertainty and potentially shorten the ROI timeline”, says Ralph Pepino, Gain Theory CFO, “the greater success of gaining more control over budgets and potentially opening up more budget dollars.”

Get Finance into the Marketing Bed

There cannot be an ‘us vs them’ approach when you are trying to win the bigger game, Finance and Marketing need to be batting for the same team.

  • Build Cross Functional Teams: if this isn’t the case already, start now. This will ensure you are integrating finance at the heart of the process when building ROI models.
  • Encourage Curiosity: to the degree that it is possible, invite Finance into media and marketing conversations and ask them to stress test. As well as ensuring transparency, this will help build trust and lead to more integrated business outcomes.

Wear a Bigger Hat  

The CFO and executive team are making company survival decisions—and they are doing this in conditions of heightened uncertainty. Uncertainty around supply chains and around reactions from creditors and shareholders; uncertainty about current demand; and uncertainty about how a suddenly remote and fearful workforce are likely to react. Marketing plays a key role in making these decisions—but is just one element.

  • Consider Business Constraints:  identify areas of uncertainty the executive team are dealing with where marketing can help, provide clarity, and add value. These may be in product, supply chain and distribution.
  • Talk the Talk: as the old adage goes ‘cash is king’. Finance will be interested in cash flow. So, rather than focus on terms such as “brand” marketers need to link to business outcomes applicable to your organization such as increasing revenue, customer acquisition and value, cash flow and shareholder value.

Employ a Zero-Based Budgeting Framework

Like every crisis before this, cash and cash management are of central importance. Whether we’re talking about payments to suppliers, negotiating trade credit or paying employees, liquidity is key. Marketers must acknowledge this and accept that all non-essential spend will be cut. The trick is to understand exactly which elements of the marketing budget are essential in this environment.

This is where zero-based budgeting (ZBB) steps in. Adopting ZBB will help articulate the current key lines of spend—not just for the short term, but the long term too. For example:

  • Which audience do you need to reach?
  • Why are you trying to reach this audience (maintaining demand vs. growing future)?
  • Can we reach the same audience more efficiently (swapping day-parts on TV, moving from linear to OLV, increasing social)?
  • Can we reduce our reliance on Paid and get more from Owned assets?
ERRN quadrant
ERRN quadrant

At Gain Theory, we summarize this kind of discussion into an ERRN quadrant to make the visualization simple. Adopting this approach will help marketers zone in on activities that have a big impact at an acceptable cost which should be maintained; and highlights other activities which should be examined more closely.

Employing a ZBB approach will be welcomed by Finance teams as Ralph Pepino, Gain Theory’s CFO will attest to: “I am a fan of the ZBB approach because it forces marketers to re-look at their assumptions, throw rocks at them, and formulate a revised plan as to how to spend their dollars in this new climate for maximum return in the shortest amount of time.”

Run Scenarios

When uncertainty is high, the first thing we need to do is begin reducing this to more manageable risk. While no outcome is guaranteed, if we have planned for a range of different potential future states, we will be in a far more confident place to make budgetary decisions.

And marketing teams are in a strong position to lead this process. For example, how will our strategy vary if the recession recovery is “V” shaped vs “U” shaped? What do we need to put in place if key markets are more like an “L” with a prolonged deterioration? For companies operating in multiple markets, how will tax regimes change? What about trade restrictions?

Part of this programme is to identify the key signposts or lead indicators that will reveal which future is becoming more likely. These will vary sector by sector and company by company. A good place to start is to look at what is happening in similar markets in parts of the world that are further ahead on the curve.

Relevant Case Studies

Context is key, and broad industry studies that claim a steady and predictable relationship between companies that advertise during recessions and growing market share down the line are unlikely to cut much ice with the CFO.

Excess Share of Voice. Correlation does not prove causation. It is just as easy to argue that continued advertising is a sign of a well-run company with good crisis measures in place to ensure a stable cash flow while those that don’t advertise have generally high liquidity issues, with a proportion of these declaring bankruptcies, leading to an inevitable increase in market share down the line.

But we can pick case studies that make the point clearly: the reasons for the collapsed stock price at Kraft do not need to be rehearsed again and there are numerous other examples from various knowledge banks at the IPA and WARC. Two general points are:

  • We know that strong brands are correlated with strong stock prices, both from Gain Theory’s own research as well as Kantar’s.
  • Be aware of what your competition is doing—track closely, understand what its likely impact on you will be and whether you need to respond (this may include ad spend).

Marketers Can Hold the Reins

As most Marketers will know by now it’s inevitable that the marketing budgets will be placed under the COVID-19 lens, scrutinized and potentially cut. Thankfully, Marketers can play a part in controlling that process. Having the right outlook when dealing with Finance will help. Taking a step back and understanding the factors at play: supply chains; logistics; alternative ways of reaching customers and fulfilling orders; and cash management.

Be rigorous in your understanding of which KPIs are really KPIs right now, and how best to move them. For some, a ZBB approach will make sense, for others, adopting a different methodology may work best.

But if you want to make Finance your ally and have a hand to play in the marketing investment decision process during COVID-19, rigor is key.


1 PWC, April 2020

2 Duke University – CFO Global Business Outlook

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The analytics era seems to finally have arrived in marketing. 

The question is, “Are marketers actually ready?”

For example, three-quarters of brands say they are spending more on marketing technology this year, with 24% claiming to be spending significantly more, according to a recent Forrester report.

It looks like marketers are finally taking this seriously.

At the same time, just 10% of brands in that report say they have a clear picture of who their customers actually are. Not just the data, but who they are as people, and how that affects their consumption habits.

Something’s not right here. I suspect we know why.

We’ve heard more than a few stories like this. A major marketer is fixated on using advertising to drive acquisitions and wants to better manage its return on investment. So, it turns to one of the many technology partners in the market for help in building a multi-touch attribution (MTA) models.

The marketer is excited about the promise of better analytics, so they invest a significant amount of time and money along the way. Then they start getting insights back, and realize they have loads of questions they can’t answer, such as:

“Are these numbers good or bad?” 

“What is success?” 

“What should we do with this information?”

“How do we take this insights and move our budget to places that will drive more acquisitions?” 

Faced with all these fundamental questions, instead of taking the bold action they dreamed about, the marketer freezes. Eventually the company abandons the MTA tool with little to show for their investment.

Like I said, we’ve seen and heard lots of stories like this. We can help make sure this doesn’t happen to you.

Making effective marketing decisions is complicated. 

There are many considerations to determine which strategies are working and which ones aren’t, but that’s only the first piece of the puzzle. Once you figure this out, the next question is always “Why?” and then “What can we do about it?” 

That’s why so many marketers are investing in advanced analytics tools like Multi Touch Attribution and Market Mix Modelling. These kinds of products theoretically answer those questions, helping you guide effective decision making and uncover optimization opportunities. 

Currently, marketers spend 5% to 7% of their overall budgets on data analytics. According to the CMO Survey, that number is expected to jump to 11.3% in the next three years.

Which is great, but only if these brands get a return on their analytics investment.

This is easier said than done. I’ve seen many organizations adopt advanced analytics approaches but fail to use the insight gained in an effective way. 

In almost every case, these brands want to improve ROMI (return on marketing investment). Yet as they proceed with their analysis, they often realize that different pockets of the organization have very different definitions of ROMI.

If everybody has a different measuring stick for success, as a marketer you will not be able to make many informed decisions. You probably suffer a perpetual state of indecision.

The good news is, we’ve seen this play out before, and we can help you through it. Here are five ways you can avoid letting your analytics investment languish – and turn your insights into powerful, profitable action for your organization.

Determine clear KPIs for the business and have the entire company agree upon them. This can be done by having open honest conversations about what the drivers of your business are. 

Hold everyone accountable to those KPIs. If there is no accountability, people will not take action upon results, leading to a lot of wasted resources. The Harvard Business Review has outlined five ways to hold people accountable: 

Clear expectations

Clear capability

Clear measurement

Clear feedback 

Clear consequences 

Train teams to accurately interpret the results. It’s crucial that your people must understand what the outputs are telling them in order to implement effective actions to drive business growth. For example, ROI is a simple metric that many marketers understand, but what they may not know is what is considered good/bad for an ROI. 

Bring together additional considerations to tell the full story. There is more to performance than just what the model tells us. A marketer should ask themselves why something is performing well or badly. For example, who was the target audience? Is there an opportunity to invest more into those tactics? What additional media was in market? Were there additional factors at play that could have influenced results?

Partner closely with your analytics teams. Unfortunately, I’ve seen many organizations in which these two groups work in silos, which results in marketers not always being clear on what they need, and analytics teams providing less than actionable insights. On the flip side, when the two groups come together, I’ve seen them come up with those Ah-ha! moments marketers dream about when starting their analytics journeys.

Only when all these factors come together can marketers extract the true value out of their models, as they will be empowered to make smarter business decisions. 

For example, a client of ours previously had a seasonal campaign running. Before it started, everyone, including the senior leadership team, came together to determine and agree upon the main KPIs.

We built a multi-attribution model to measure against the KPIs and trained the client and media agency on how to accurately interpret the results. Multiple stakeholders with different types of data and insights came together to discuss the results and it was determined that some creative messages weren’t resonating with their customers. 

Therefore, the company adjusted their creative in their media during their campaign. This resulted in a multi-million dollar increase in revenue, which more than paid for the models. 

In the example above, all the pieces of the puzzle came together to empower marketers to make smarter business decisions which drove more value for their organization.

It can be done – with the right help.

Originally published on The Drum

Lindsay Egan is a partner at Gain Theory

Originally published on the Marketing Society website.

Shawn O’Neal knew he should speak up but froze.

He was a junior exec and didn’t want to upset the apple cart. Plus, everyone else in the room was suddenly ‘yes-ing’ the CMO to death.

He had just spent months collating the data, analyzing, researching and focus-grouping the new Pepsi Blue can that would be the face of Pepsi for years to come. The team was armed with a strong recommendation and the facts to back it up.

Then in one swoop, no questions asked, the CMO pointed at a can and simply declared ’I like that one’. The version that hadn’t performed well in any of the research. The one that had tested poorly and didn’t represent the agreed upon goals of the project.

Yet there they all were, nodding their heads in agreement, trying to make the CMO feel smart.

O’Neal bit his tongue. He’s regretted that ever since and spent the last 20 years trying to ensure that CMOs incorporate data, facts and solid insights to help inform better decisions rather than solely going with the bias of ‘gut’ decisions.

If that incident taught him anything – it’s that marketing excellence requires conviction and bravery.

These were much discussed topics during the ‘Is Marketing Excellence Enough?’ session at Advertising Week in New York hosted by Gemma Greaves Global CEO of Marketing Society. Conversation guests – Subway CMO Roger Mader, Michelle Froah, SVP of Global Marketing Strategy & Sciences at MetLife and Shawn O’Neal NA CEO Gain Theory – debated the role of data in modern marketing, coupled with the continued need to take bold risks.

Marketers are often wrestling with when to take ‘job risking’ gambles, when to lean on data, or when to play it safe. To Mader, the idea of being brave in pursuit of excellence requires “confronting sacred cows treated as religion in the organization.” One of those ‘sacred cows’ is that marketing is limited to just marketing. Today, it’s crucial for executives to push “beyond the boundaries of marketing” – such as speaking up about whether their company is selling the right products, has the right pricing or the appropriate strategy.

“You need to be brave enough to say this is not just about marketing. This is about our customers’ experience and marketing is just a window onto that.”

Mader said he’s hopeful that in the coming years, as more marketers are able to get comfortable with and unlock the benefits of data and artificial intelligence, the more time and ammunition they’ll possess to take on some of their bolder challenges.

Of course, there’s always the worry that too much reliance on numbers can hold a major brand back from chasing big – sometimes unproven ideas.

“I think that there are organizations that set some stretching ambitions,” said Froah. “Then when it comes down to setting the goal, or the target to meet, no one wants to fall short of that.”

Froah urged brands and their agency partners to make sure they are clear on what success looks like, before simply trying to ‘chase excellence’ without a clear plan. That requires getting everyone signed off on quantitative and qualitative measures. 

“I think data is critical to making the right decisions,” she said.

“But you have to use data for good and that means using it to really listen to customers and really understand what issues you can fix. Also, you can galvanize the whole organization to set the right marketing requirements, to reset customer experience, create new solutions. There is still very much an art and a science to it. The biggest watch out is remembering that data represents people, but people aren’t data.”

True. But the panelists also noted that marketing is a long way from being as ‘scientific’ as it can be. O’Neal quoted a recent study which found most Marketers are using data to inform only 40% of their decisions. Which left him to wonder, what happens with the remaining 60% of decisions?

“We’re still a long way from call it, the perfect balance between art and science,” he said “40%! Come on! Are you telling me that 60% is guessing?! I mean what are we doing here?”

“There is still a ton of room for science to be part of this equation,” he added.

The more science backing up your ideas you have, the braver you can be.

Especially if you think your CMO is picking the wrong soda can.

Most online ad experiences still feel like a re-run of last week’s searches and purchases.

We’ve been talking about how advances in digital media and data will result in every person on the web seeing a deeply personalized ad for every occasion since the days of AOL dial-up.

Why, then, do most of our digital ad experiences still feel like a “groundhog day” of what we searched and bought in the previous week? (If you don’t agree, just take a spin around the web and let me know how customized and rewarding your ad experience feels.)

Given the immense amount of personal data at our fingertips, you’d think that by now we’d be communicating elegantly with each customer—precisely when, where, and how they would like to engage with our brands. You’d think, with programmatic buying, that we’d be able to do this and still achieve huge reach.

And you’d think, with AI, powerful ‘identity graphs’ and multi touch attribution (MTA), that it would be easy to execute and measure these sophisticated conversations.

Yet personalization remains mostly a fantasy and right now it’s just not happening between brands and people. It’s time to examine why and to ask ourselves: Is personalization even a good idea in the first place?

Reality check
In trying to achieve one-to-one marketing, we might actually be putting our brands at risk of fragmented messaging, multiple personalities and vapor for brand equity. And even if we actually pull this off, there is a ton of mythology surrounding our ability to successfully execute micro-campaigning at the kind of scale we need to move markets and competitive share.

Often this comes down to simple math. If you target a specific slice of the web population using the powerful segmenting tools at your disposal, you may start with a million prospects. But, for every attribute you apply, you end up slicing that group thinner and thinner. Very quickly, you may find that your sophisticated marketing efforts have led you to a handful of shaving cream enthusiasts in the Pacific Northwest.

And we’re not even touching on the grand delusion that MTA can measure it all.

In our experience, working with even the biggest brands, MTA exercises are extremely complicated, expensive, require a crazy amount of work and rarely pay off.

It’s natural for CMOs to want to figure out exactly how every interaction with their brand leads to a purchase over a day, a week, a month and a year—and how much they should be spending on each media touchpoint to deliver that purchase.

But, in terms of practicality, it’s as big a fantasy today as “Game of Thrones”.

And here’s the friction…
Even if it’s possible to execute messaging with such surgical precision, there’s the small matter of whether consumers actually want to connect one-on-one with brands—even the ones they love.

In a YouGov.com survey from March 2018, more than half of adult respondents reported either neutral or negative receptivity towards personalized ads and the influence of such ads on their buying decisions.

We’re at a point where consumers are more savvy, empowered (hello ad blockers) and informed than ever. They are clicking permission check boxes and they are reading about EU fines for Google/Facebook and massive data breaches around the world. We haven’t even begun to solve the privacy issues associated with General Data Protection Regulation (GDPR) in Europe, while the California Consumer Privacy Act (CCPA) will soon be upon us in the U.S. Will identity graphs even be legal in the future?

The future is uncertain, but it will be bright
What we’re left with is a whole new world of ad targeting. We think consumers will end up in a place where they have far greater control and transparency around how they are being targeted.

They may even—wait for it-—agree to get paid by brands for their attention.
That may seem a little far-fetched now, but it actually represents a huge opportunity. Imagine a world where consumers actively engage in what they see and don’t see and they are actually “bought” into the relationship? Instead of wasting billions of dollars on unwanted ads, we will invest where ads are relevant and welcomed by those willing to be compensated.

It can’t get more personal than that.

Originally published on Ad Age

Karen Kaufman, Global Chief Strategy Officer at Gain Theory speaks to AdAge in an article about the barriers keeping marketers and organizations from leveraging their data to inform decisions.

Closing the gap between marketing analytics and performance

Many marketers today have measurement systems in place to gauge the impact of their marketing campaigns. When ROI estimates reveal that a campaign is falling short of expectations, a decisive and well-informed marketer will reshuffle the media mix, change up the creative or take some other corrective action.

Unfortunately, this level of rigor is not being applied consistently to marketing investment decisions. Data and analytics are a gold mine, but marketers are not fully incorporating this intelligence into their decision-making process.

The fact is data and insights often languish inside the organization, resulting in organizations that fail to achieve the full potential of their marketing investment.

Research confirms a disparity between spending on data and analytics and a marketer’s willingness or ability to make decisions on the basis of its conclusions.

Currently, marketers spend 5 to 7% of their overall budgets on data analytics. According to the CMO Survey, that number is expected to jump to 11.3% in the next three years. And yet, in 2019, fewer than half (43.5%) of all business decisions are being made on the basis of marketing analytics—the highest level in the last six years. Moreover, when respondents were asked “To what degree does the use of marketing analytics contribute to your company’s performance?” they gave an average rating of just 4.1 on a scale from 1 (“none at all”) to 7 (“highly”).

The numbers seem remarkably low, especially considering the high levels of investment. To the casual observer, they raise the question: Why would a company commit resources to marketing analytics—or any data asset—without an obvious benefit to the business?

For starters, many marketers approach the need for data analytics as simply “checking a box”—in other words, for its own sake rather than with a clear understanding of the business question the marketer is trying to answer. There is an urgent sense of “I’ve got to do [fill in the blank] because everyone’s doing it.” That’s one sure way to get stuck in the weeds and by no means a path to marketing success.

Turn actionable insights into action

By now, it is widely accepted that one of the main goals of analytics is to produce “actionable insights.” Many successful marketers already possess the necessary insights to better engage with consumers. The issue is not so much the insights per se, but rather it is the ability to implement those insights by key decision makers across the organization that usually represents the biggest hurdles for marketers.

At Gain Theory we know this to be true from our own research findings. In one industry study, we asked marketers, “Is your company able to act on insights?” The answers we got back were mixed. Some marketers were unable to take action on key insights because they lacked a mandate from senior management while others got bogged down in a process of testing the efficacy of the findings before widely implementing the lessons to other departments. One respondent summed up, candidly, “We sometimes apply data without logic or experience.”

Design solutions for the end user

Today’s marketing technology space includes an abundance of tools powered by precise statistical models. Yet most of these tools were not designed with the marketer in mind. They can be overly technical and cumbersome to use.

We set out to correct this problem when developing our new marketing decisioning platform, Gain Theory Interactive. We conducted interviews with marketers and brand teams to fully understand how decisions are made. We learned that marketers need to be able to make critical decisions—often on the fly—and they need tools that empower them to make those decisions without requiring expertise in things like regression models.

Our main goal was to build a platform for marketers that simplifies the user experience and makes the output clear and easy to understand. The platform’s landing page, for example, immediately gets to the crux of the business question, whether it’s determining the budget required to achieve a sales target or informing the right marketing mix for a planned spend. As users go deeper into the platform, the steps and required inputs are designed to reflect how marketers tackle real-world problems.

Consider how the iPhone has revolutionized not just how we work but how we handle practically all aspects of our daily lives. Yet few if any of us ever think about the nitty-gritty details of the technology that makes our gadgets work right out of the box. With a platform that enables marketers to make informed business decisions without having to be experts in analytics—or taking the time to consult with a team of data scientists—marketing can achieve its fullest potential.

Article originally published on Adage click here.

Find out more about Gain Theory Interactive by visiting the site here 

 

 

Simply improving sales and showing you’ve done so is no longer enough, Marketing Managers must also be able to demonstrate greater value and prove the true impact of every element of their activity – from email campaigns and online banner ads, through to direct mail and TV advertising.

With marketing departments facing increasing internal pressure from their become vitally important to identify new mechanics that can meaningfully justify their spend to the Board, particularly as marketing is now being seen more as a cost that can be cut than an on-going investment.

So why not treat this spend as you would any other cost to the business, by relating it back to the bottom line and, more importantly, the share price? We all think about the bottom line, but share price isn’t normally factored in directly. Lately, I’ve started thinking that it should (and could) be.

Measuring the short-term effect of (for example) an advertising campaign is important. Among other things, it allows marketers to evaluate and amend what they are doing as the campaign progresses; however, short-term measurement doesn’t help when it comes to understanding the bigger picture. Even when long-term effects are measured under-reporting of the true financial impact is likely. Why? Because standard approaches fail to take into account the potential impact on a company’s share price. This isn’t because it’s not viewed as being important, it’s more that no one has put forward a method to measure it accurately.

Imagine the scenario; your Finance Director (FD) needs to cut back on spending. They identify the areas where they might be able to reduce costs and then stop and ask themselves, should I get the Marketing Manager to cut their budget? Now, on first reflection, it might appear to them that the risk of cutting this type of spend is comparatively low. Do this and the bottom line will instantly look a lot healthier.

But this got me thinking, is this really providing an accurate picture? Can this be properly evaluated? A simple mathematical approach reveals such measures to be a false economy.

We can add in additional detail like deleveraging and interest payments as well as the impact on investor sentiment, but these are details and don’t affect the thrust of the argument.

I think this method makes it possible to track marketing effectiveness back to the share price. If you consider that your marketing activity usually creates (for example) a 2.5 return in terms of margin, cost cutting of this type starts to look less appealing. If your annual marketing budget is £10m and you decide to halve it, that £5m cut may increase your cash flow in the short-term and win you favour with the Board. However, the long-term impact is a £12.5m drop in profit and a net loss of £7.5m.

Therefore, what seemed like a clever cost cutting mission to begin with actually costs the business money. Your business might end up losing more money than it saved.

Of-course, your FD might question the ROI calculation and on balance of risk, cut the budget anyway. However, the actual loss could turn into a much more serious mistake in the long run, having a huge impact on the profitability of the company and ultimately the share price. For this reason alone it will always be worth making the case against such measures being taken. The figures break down like this:

As the table shows, the potential loss working through a lower share price and market capitalisation is actually closer to £60m than £7.5m.

In addition, while the FD might still question the ROI calculation, the balance of risk begins to shift when you look at the numbers in this way

All other significant investments are evaluated in terms of their impact on profit, with calculated internal rates of return and the opportunity cost of the capital invested. Why don’t we look at marketing in the same way? Is this too much of a simplification?

Are there other variables to be looked at that I’ve failed to mention? I’d welcome your thoughts.

 

 

It was David Bowie who said, “you can’t stand still in one point your entire life.” And with Bowie’s words ringing posthumously in our heads, the same can still be said for marketers.

For several years now, we’ve been hearing about the so-called inevitable extinction of the CMO or how many are morphing into another alias – Chief Data Officer, Chief Customer Officer and more recently, the Chief Growth Officer.

Ever since the birth of mass advertising, arguably when the first advert popped up on Americans’ TV screen in 1941, advertising and marketing has constantly had to adapt and change to suit new mediums and an increasingly savvy audience.

Whilst it’s easy to veer into debate about a marketer’s alias, one thing remains constant: Marketing and marketers exist to drive growth.

The biggest headache for many marketers nowadays isn’t necessarily their job title or the hyperbole around it, it’s proving they are doing a great job at driving efficacy on their investments.

Brands and Marketing in 2018

We live in a world where profitable brand growth in some sectors has declined; economic and political uncertainty has kept us bracing for the worst; and there is an all-time low in trust concerning digital mediums from both advertisers and consumers. In this environment, many marketers are facing the same question:

‘What’s the single most important thing I need to think about when managing the efficacy of my marketing spend?’

With that question in mind, let’s start at the beginning…

Marketing Strategy = Business Strategy

With the foundation that marketing exists to drive business growth, we must consider our business strategy, goals and overall purpose.

Marketing strategy has to be synchronised with business strategy.

Whilst not rocket science, I believe this is why (in some instances) marketing fails to market itself and why some organisations have recently replaced the CMO with a ‘Chief Growth Officer’.. This shift is quite telling – in those cases it signals that the marketing function is not perceived as growth contributor or generating the required business outcomes by CEOs. Using the right language helps, of course, if your 2018 strategy is all about personalisation, storytelling, content or being data-centric, your CEO might think, “Great, but what does this mean to our bottom line?”.

As Manjiry Tamhane – Gain Theory’s Global CEO – recently said at the Advertising Association’s LEAD 2018 conference in London, “‘Marketing must be seen to be the engine of growth for businesses.”’.

As a senior marketer, being crystal clear on business strategy is imperative before embarking on any marketing strategy. This entails being clear on the answer to key business strategy elements such as:

  • What is our vision, mission and goal?
  • What is the five-year financial plan and where are we on that journey?
  • How are we going to get to our revenue goals – acquisitions, diversification, expansion, flotation, etc.?
  • What are the business priorities this year and next?

What are you trying to achieve?

The next question to tackle is: ‘What are our business goals, in the long- and short-term?’

Based on the purchase funnel, these can be broken down into two main areas:

  1. Demand Generation: what does your business need to achieve from an awareness and a perception point of view?
  2. Demand Conversion: following up on generation of demand, what do you need to achieve when it comes to customer intent and sales?

It’s incumbent on marketers to factor in the current state of the business. In other words, are you in growth stage like Airbnb is or do you need to maintain market position like Hertz?

How will you measure success?

Many marketers find themselves data rich but insights poor. During a CMO dinner with executives from several companies including Gain Theory and The Marketing Society, one marketer asserted, “Just because you can measure, doesn’t mean you can manage.”

To help drive the right insights, marketers must understand the metrics against which they will evaluate the success.

With measurement, there are two key considerations:

1. The ‘Right’ Metrics: Always link back to hard business data that ladder up to the business strategy and KPIs. For many companies, supporting data could point to sales revenue and profitability or a company’s share price.

2. Measure Holistically: Some marketing activity is demand generating while others are demand gathering. It’s important to understand how demand generating activity yields demand gathering activity in the future and how each channels contribution  to the path to purchase. Don’t just measure the short- term response to media – advertising seeks to change people’s tastes and preferences, and will have an impact on sales revenue for a much longer period.

Who else do you need?

Marketing is not just advertising and communications. We’ve moved on from the classic 4P model for quite some time and – there are many factors that impact growth and subsequently the Marketing Mix. In some companies, depending on the marketing organisation’s structure, some of these factors will lie outside of the marketing team’s ‘control,’ e.g. product, placement, process of delivery. So you need to think about who you will need to bring along in the journey to ensure a successful marketing strategy, that leads to business growth. Here are some thoughts to consider:

1. Organisational Alignment: It’s imperative to approach a marketing strategy consultatively, with partners who lead factors which will impact success. Smart questions to ask are: What can marketing do to help ensure success? What role can it play? Are we aligned on the same metrics that ladder up to business strategy?

2. Partner Alignment: Many CMOs and their teams lean on external partners to deliver their strategy including e.g. media agencies, PR firms, and specialists in content and , SEO. It’s incumbent on marketers to ensure full transparency on the goals, strategy and how you will measure success.

Close the Loop

As marketers we are constantly on a journey of re-invention in the face of consumer expectations, technology or market disruption.

What remains constant is that marketing has to be seen as the engine of growth so the choices we make along that journey, need to always come back ‘home’ to the core business strategy.

And as Bowie would say ‘The truth, of course, is that there is no journey. We are arriving and departing all at the same time’.

Originally published on The Marketing Society website here.

The introduction of GDPR in May 2018 is going to cause a significant shift in how companies carry out personalised marketing.

However, for savvy marketing leaders, it represents an opportunity to significantly improve customer engagement. Those companies who are prepared, are thinking holistically, and who can demonstrate value back to their customers, are well-placed to succeed in this new world.

Restricted use of Personal Data

An increasing number of marketing channels use Personal Data, such as Programmatic Display and Addressable TV (and online identifiers such as cookies will be considered as Personal Data within GDPR). This type of targeted media does not always use personal data which is controlled by the advertiser, but still requires the use of personal data collected by a third party. The new regulations do not solely impose obligations on data controllers but also on data processors i.e. advertisers buying in personal data from a third party.

This means that advertisers will be obliged to apply much greater scrutiny to the way in which the third party has communicated to the consumers whose personal data it is now selling on. There is a real risk that the pool of available third party data will be considerably reduced.  All marketing that uses Personal Data (including third party data) should be identified, and then reviewed from the perspective of the customer.

Add Value to Customers

The increased requirements in obtaining consent for the use of personal data to direct marketing activity has the potential to lead to a much lower percentage of customers that can be marketed to. Therefore, marketing content will need to be viewed in a positive enough light by customers that choose to receive it.

In practical terms, GDPR is making us stop and think harder about marcoms, going back to basics and re-evaluating key questions such as ‘do our customers benefit from receiving our marketing?’. If the answer is ‘no’, then this type of marketing activity will no longer be viable in the post GDPR world, as why would any customer actively choose to receive marketing that does not benefit them? If the answer is ‘yes’, then the customer has a reason for choosing to receive marketing, and for many customers it will be in their best interests to do so.

So, in the run up to GDPR, marketers need to think about how their content and communications demonstrate value to customers. Consider the following points:

  • Authenticity: marketing must be clear and honest in its purpose. Content should offer customers genuine value. For example, avoid embellishing an offer which sounds good but has lots of restrictions.
  • Personalisation: demonstrate to customers that their personal information is being used for their own benefit, by providing tailored content that meets the customer’s needs.
  • Creative Execution: try to make the content stand out to ensure it is seen (but not at the expense of authenticity).
  • Frequency: as tempting as it might be to push  out as much content as possible before GDPR comes into force, this might be counterproductive. Lower frequency but high impact (authentic, personalised and valuable) is the best strategy to influence customers’ perceptions of marketing content.

Think Holistic and Cross Platform

Personalised and direct marketing needs to be viewed as part of a holistic marketing strategy, not just in isolation. Whilst non-personalised marketing such as above-the-line advertising will not be directly affected by GDPR, it still plays a key role in influencing customers’ brand and marketing perceptions. Think about the messages you are putting out in the run-up and around GDPR to help underscore value in the customer’s mind and ensure your cross-channel messages tie up. If direct marketing is not aligned to other marketing content, it will appear inauthentic regardless of the truth of the content.

Whilst it is easy to view GDPR negatively it is, in fact, driving many good practices in marketing and not only in the day-to-day stewardship of personal data itself. A truly customer focused approach to marketing has been an ambition for many companies, and will now become a necessity. By forcing marketers to think hard about how to improve the perception of their marketing amongst their customers, this regulation will help companies become more customer focussed and lead to an improvement in the overall quality of individual marketing.

GDPR AT A GLANCE

What is it?

The General Data Protection Regulation (GDPR) is the new EU-wide regulation for personal data that takes effect on 25th May 2018. This regulation will give individuals more control over how their Personal Data is collected, stored, used and deleted. Note that Personal Data includes a wider range of information than PII (Personally Identifiable Information), especially when it comes to online identifiers.

Legal compliance

The primary concern for any business should be to be operating legally within the GDPR as soon as the new regulation comes into force, as failure to do so could lead to a heavy fine. Many companies that use personal will have a Data Protection Officer who is responsible for compliance with GDPR (this is a legal requirement for some types of processing activity only). A good starting point for any marketer would be to talk to your organisation’s Data Protection Officer (if you have one).

What this means for marketers

The most important consideration for marketers is that they must have a legal basis for processing personal data.  Where they rely on consent as the legal basis the new regulation raises the bar for that consent and it must be “freely given, specific, informed” and signified by an “affirmative action”. This means individuals must actively signal their agreement to the use of their personal data (pre-checked opt-in tick boxes and offering an opt-out tick box for example, are unlikely to satisfy the regulations). It also means that clear, plain English language, must be used to explain what the individual is agreeing to and the specific use cases need to be carefully explained. Furthermore, at the same time as obtaining consent individuals must be told how they can later withdraw their consent at any time.

This will impact any marketing activity that uses personal data, so the largest impact will be on Direct Marketing (both direct mail and email). Online advertising using customer information that falls within the GDPR description of Personal Data, such as programmatic display, will also be affected. Companies must assess in respect of all customers (new and existing) what the legal basis is upon which they rely to validly use their personal information for marketing purposes – to use it without a legal basis will be unlawful.

Despite all the hype, for MTA to be useful its limitations must be clear and clearly communicated.

For many, Multi-Touch Attribution is both exciting and intimidating. The ability to track a sale back to the marketing initiatives that produced it has rightfully garnered a lot of fevered interest. If executed properly, MTA can enable prescriptive and granular media optimizations in near real-time that create significant ROI improvements.

The phrase is thrown about emphatically with terms like Big Data, User Level Analytics, and Real-Time Learnings. All that hype can create confusion, and ultimately, an expectation that can’t be met. Precious little airtime is given to the nuances and pitfalls of implementing MTA. That’s not to say it shouldn’t be activated, but that for it to be its most useful, the limitations and nuances of MTA must be clear and clearly communicated.

Understanding the desktop/mobile divide.
Industry reports and surveys suggest the average US consumer uses 2.3 internet-enabled devices. But MTA datasets usually show fewer than 1.6 devices per user. That’s a significant gap, and savvy clients will be expecting 2.3 because they’ve seen the industry reports and think their cross-device ID is weak.

To be sure, cross-service solutions are not perfect. They are a rapidly-improving component of the ad tech landscape. But in reality, the bigger culprit is that your desktop and mobile ad placements may not be as tightly aligned as you think. They target two similar (based on demographics and psychographics) yet different sets of consumers.

A simple way to dissect this is to create two user groups—Multi-Device users and Single Device users—then profile the media activity of these groups against each other. This will reveal sites that over index for Multi-Device users. These sites may represent a small percentage of the media budget that is causing the gap.

Integrating offline media is not as simple as advertised.
All MTA sales pitch decks have a slide about the integration of offline media, with a chart showing significant web traffic spikes attributed to TV’s impact. This approach is quite often naïve and breaks down in a few ways.

For brands with massive website traffic, TV airtimes do not consistently create obvious web traffic spikes; without the obvious traffic spikes TV’s impact can’t be seen. In addition, TV cannot drive immediate in-store purchases the same way it drives immediate .com visits. This is critically important for brands less concerned with online metrics and more concerned with in-store sales.

And the approach does not easily scale to other offline channels beyond TV. The other offline channels are not designed to elicit immediate response. As a result, alternative approaches for integrating offline media are often required.

Deploying MTA results via a true DSP integration is easier said than done.
Your DSP has a highly tuned and specific algorithm that adjusts bids on an ongoing basis. While MTA providers will trumpet “Partner Integrations” and delivering MTA results directly to DSPs, it is an entirely different challenge for that DSP to then incorporate those MTA results into the bidding process. If not engaged early in the process, DSPs may crudely apply up-weighting or down-weighting bids based on features of the Attribution analysis, which may not really result in optimal bids.

In general, as analytical outputs become increasingly granular, it is becoming more of challenge for downstream partners to implement them. Any ad tech partner that you’d expect to leverage the MTA outputs may require a change to their scope of work in order to undertake it.

Offline purchases may require special considerations.
E-commerce revenue, digital media ad spend and the overall percent of transactions completed via credit card are all going up over time. These shifts are major components of what makes user level MTA possible as they all generate user level data. But what about cash purchases? These are inherently anonymous and, for some verticals like QSRs, may represent 50 percent of sales. Cash purchasers may have far different media consumption habits than credit card purchasers. Tuning media via MTA outputs could be inadvertently tuning your marketing efforts towards credit card purchasers and away from cash purchasers, which could create longer term issues.

Every aspiring brand will be forced to encounter at least a couple of these issues as they tackle MTA. If you’re not prepared for them, your MTA implementation could stall and ultimately lose traction. Your best bet for success is to go in with your eyes wide open and expect that your MTA provider fully understand your business, how you sell your product and to whom and how you plan and execute your media and marketing activities.

Russell Nuzzo is Global Head of Attribution and Marketing Technologies at Gain Theory.

Gain Theory’s Claudia Sestini discusses the numbers behind marketing excellence.

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This year’s Marketing Society Excellence Awards displayed the UK’s bravest and most impactful marketing achievements. Direct Line, Mars, John Lewis, The National Lottery, ITV and many more can now be added to the marketing hall of fame providing inspiration for years to come.

Reading the case studies, you get a real sense of vision and purpose. But what about measuring impact – the numbers behind marketing excellence? What role does measurement play in the ad campaigns that steal headlines, generate sales, and win awards?

In a world where a marketer’s currency isn’t solely focused on creative anymore, the data gold rush has taken its hold. A rush to measure, validate, optimise and manage based on the insights from the data mine.

Before we marshal marketers towards the fountain of eternal data and insights, let’s stop and think about the end goal. Why we’re doing it, how and when we should do it, the impact on marketers and crucially the business.

Research carried out earlier this year, conducted impartially by an ex-CMO with senior marketers in the US representing brands with a total of $1.9bn advertising spend, confirms a number of marketing measurement pain points: Metrics overload, or analysis paralysis; short termism, organisational structure and the need for one source of truth.

With this mind, the Society and Gain Theory have been collaborating to explore these challenges and how we solve them with senior marketers across global hubs – New York, London, New Delhi & Singapore.

Over dinner, high atop the London skyline at the lofty heights of the Gherkin, the Society convened Excellence Awards judges, winners and a wider group of senior marketers to take a 30,000 foot look at the choppy marketing measurement waters. We were in good company with marketers including Jaguar Land Rover, Direct Line, Samsung, HSBC, Wiggle, Hiscox and more.

Metrics that Matter

There was broad agreement on the following fact: we have so much data we can now measure the arse out of marketing.

The increase in channels available to marketers is leading to an increase in the number of metrics used for reporting. This firehose of analytics has crippled many marketers with “analysis paralysis” whereby there’s not enough time, resource, and skillset in a day – or a month – to go through all the numbers, identify the key statistics and discern lessons from them. One marketer sagely remarked, “Just because you can measure, doesn’t mean you can manage.”

In addition, some of the metrics are not sufficiently linked to business outcomes. As one marketer said ‘We have too many metrics that are not financial’.

The consensus is to focus on the metrics that really matter. One marketer said that her view on measurement was simply, “Do they see our comms and will they buy more as a result?” Everything else, it would seem, is salad dressing.

Then, there are metrics that we need on daily basis to understand and manage business impact of marketing to the ones that help us manage stakeholder expectation. Using the right ones for the right ‘internal audience’ was another solution provided around the table.

Other marketers highlighted that in the sea of available metrics “ROI is the easiest metric – it’s a winner.”

Another view was around digital – Google, Facebook et al all were name dropped, of course. The thinking here is that yes do it, but learn from it. To quote one marketing effectiveness leader at the table ‘Go play, but please measure’.

More advice around the table included:

  • Think about the “So What?”  factor – only measure things you can do something about
  • Talk soft metrics and the board are not interested!  Focus on metrics that give you credibility
  • Define the 6 things that drive value creation
  • Where measurement is concerned, it’s incumbent on marketers to set the agenda

Is Brand Marketing Dead?

A challenge that was cited repeatedly, is the sharp pendulum swing towards short-term activation. It feels like marketers are bemoaning a lack of focus on long-term impact, and thus the demise of brand marketing and subsequent impact on long term growth. One view was that this is being caused by C-Suite and shareholders expecting instant results.

Another perspective is that digital has been a pariah to long term effectiveness with one marketer saying “Digital allows us to activate sales quickly.”…“Brand marketing is dead.” Said another “We are so short-term focused – it’s all about instant results. If our campaign isn’t generating sales after 5 hours, its pulled.”

So, marketers are left wondering: how do we highlight how brand marketing can impact growth?

One solution offered was using the right language and metrics when communicating to the business and especially the C-Suite. Marketers must be able to communicate growth via metrics that impact both top and bottom line. So, it follows that even long term brand impact must be able to show an ROI.

Ultimately, we all agreed that short term is not a bad thing but rather that it’s not a battle between short vs long but more a case of re-evaluating short term within long term.

Magic vs Logic

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There is a place for hard metrics and a place for being brave and trying things that are not measured or measurable.

There was a sense that if you’re able to walk into the board room with a great creative idea then your short term ROI worries go out the window. Big, bold executions still win hearts and minds of consumers, and after all after isn’t the goal for marketing to change human behaviour?

As one marketer said, “We all know that the number one driver of ROI is creative.” Gemma Greaves, Global CEO at the Society, cited the Cadbury’s gorilla campaign which apparently didn’t initially receive a great reaction internally – there were reservations:

Lee Rolston, Cadbury’s director of marketing at that time, is quoted to have said, “We had a pragmatic concern that it was just too far for Cadbury to go from where they were at that point; that there had to be some sort of stepping stone. But then we thought, ‘You know what? This is an opportunity; we should do what we feel is right rather than what we think they will think is right.’”

Apparently, the board were tasked to take the creative home for the weekend and show it to friends and family. Come Monday, the emotive, game changing power of the creative execution and its potential was clear: everyone loved it and the creative was given the go ahead.

The Upshot

What was truly great about the dinner in London was how open everyone was about their challenges, views and crucially how happy they were to offer a solution to each other. This is what makes the peer network of the Marketing Society so great.

There are a few key takeaways. Firstly, it’s imperative to focus only on the metrics that matter and that you can do something about. Secondly, it’s about managing a portfolio of risk both short and long term. Finally, even in a time of Big Data, there are occasions when tossing out the spreadsheet and going with your creative gut can move hearts and minds and ultimately ROI.

My final thought is that marketers are well placed to set the agenda for measurement. Not only do we have the data and resources to hand to measure top and bottom line growth but we also possess, in my mind, the biggest power of all: the ability to tell compelling stories that touch the hearts and minds of people. We must be braver and bolder in using the story telling ‘super power’ more with internal stakeholders, remembering to utilize the right language for the right audience whether C suite or across the organisations.

Read the original article here.

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