Marketing’s Inconvenient Truth

Posted 22 March 2018.

By Paul Head, CEO Commercial Communications Council

I’ve been thinking a lot about climate change lately. For the record, I’m a believer. Mankind is responsible for global warming and we’re putting our future at risk. We’ve ignored the science for too long. As Al Gore said, it’s an inconvenient truth.

What’s that got to do with marketing, you ask? In my view, as a profession we too often ignore the science. And that’s doing irreparable damage to the ecosystem we’re responsible for: specifically, our brands and their value to the businesses we work in. And we’re doing this through placing too much focus on the short-term.

That’s not surprising, given how quickly technology is evolving and the rapid change this is driving for all of us. It’s bloody hard to be a marketer these days, whether you work in a marketing organisation or an agency.

But I’d like to pose what I think is the fundamental marketing question we need to ask ourselves for 2018 and beyond: “How do we think about our business? Short-term or long-term?” Of course, everyone will answer “long-term”. But the marketing evidence doesn’t support that, either in New Zealand or internationally.

As a marketing community we’ve become very focused on data driven short-term sales activation to drive business results. And this is problematic at the very least.

We’re seeing evidence of this in entries to major effectiveness awards programmes around the world. In the UK, the IPA Effectiveness Awards have seen short-term campaign entries (campaigns of less than six months) go from less than 10% of entries a decade ago to almost 50% in 2017. Entries to the Effie Awards In New Zealand show a similar trend, as they do in other Effie programmes around the world. These short-term campaigns tend to be highly targeted, data driven, digital in nature and activation focused.

The unfortunate corollary of this trend is that at exactly the same time that we’ve become obsessed with short-termism, work by marketing expert Peter Field and others proves conclusively that marketing effectiveness has actually declined and that this is directly linked to the short-term focus. Clearly, as a marketing community, we’ve got something wrong.

But some clients are starting to rethink their focus as a result of their own experiences and the latest evidence from industry experts such as Peter Field and Mark Ritson.

Procter & Gamble’s CMO Marc Pritchard admitted publicly that: “We targeted too much and we went too narrow”. The result was a significant hit to P&G’s top and bottom lines. They’ve since shifted the balance back to a more brand-focused strategy (whilst continuing to do lots of activation) and are seeing the results.

Conversely, a brand like John Lewis in the UK has had a very strong brand-led strategy for the last decade, albeit underpinned by a strong retail activation component. But it’s the brand campaigns that have driven brand fame, emotional engagement, market share and profit growth for them. Their market share has gone from just over 22% in 2008 at the start of their current brand-led approach to just under 30% in 2016. That’s billions of pounds worth of incremental sales and profit in a tough retail environment and a prevailing wisdom that department stores are dead.

The body of evidence from Peter Field, Mark Ritson, Byron Sharp and others, that ironically has been enabled in part by big data, is compelling. To ignore the science is akin to denying climate change, which has its own significant body of evidence attesting to its effects. And in the case of marketing, the evidence says that the things we do to generate short-term success are almost the opposite of the things we need to do to drive long-term brand success and business profitability.

So, if we choose to acknowledge the new science that shows our short-term focus is creating marketing climate change and actually destroying value, we need to start doing things differently; we need to have the important conversations internally about long-term brand building and investment; we need to build enduring brands that deliver increased profit and we need to be braver in the face of compelling science.

It’s an inconvenient truth, I know.