The growing influence of corporate reputation
A movement that began with a group of activists in 2011 claimed its first major victory in the twilight of 2012. Starbucks’ decision to pay £20m in corporation tax after all but avoiding paying anything to now was not a decision borne solely from pressure generated by the likes of UK Uncut, however. The coffee chain was reacting through fear of leaving an irreparable stain on its brand. Starbucks found, we’d wager, that ordinary Joe consumers were voting with their feet and popping into Costa instead. A defining moment and one which the marketing world should take note of. In 2012, corporate behaviour became as important to consumers as the quality of their products and services.
Starbucks was one of several brands to be forced into react mode to stop the bleeding in 2012. Barclays was another that saw its reputation as a consumer facing brand suffer because of the actions of its corporate leadership. Inter-bank lending rates are impenetrable to consumers, rightly. For many consumers, however, rigging them was symptomatic of the culture of greed pervasive in the banking industry. Barclays recognised this and has been falling over itself to listen and learn ever since.
Recognition of the impact of corporate reputation on brand building grew in 2012. Brands such as AOL, Nintendo and Topshop all hired communication professionals to manage their brands. Cases such as Starbucks and Barclays mean this trend is only likely to accelerate in 2013.
The battle of wills over price promotion
The bristling of retailers and the marketers behind the brands they sell over the level of price promotion became more voluble as the year progressed. Retailers such as Tesco and Morrisons bemoaned the impact on profit margins while brands cried foul about the damage to brand equity. Despite the hint of green shoots, economic growth remained sluggish in 2012 and with it the appetite for discounts and so the spiral of promotion-based growth for retailers and brands continued.
The fight back, however, has begun. For FMCG giants such as Heinz and P&G, product innovation became key to the counter attack, while retailers such as Morrisons and Sainsbury’s developed targeted promotions designed to lessen the impact on the bottom line.
The importance of data to marketers was apparent in 2012 – the oil in the marketing engine – a phrase often heard uttered. To the consternation of many industry bodies that ostensibly protect the interests of marketers, 2012 was also the year law makers shone their spotlight on the use of data by marketers.
The so-called Cookie Law came into force in May. The law, which requires brands to obtain implicit user permission to collect data, was one of two European Union-wide directives introduced in 2012 that will have a profound effect on marketing. Although years from being national law, the data protection directive made the cookie law seem like a walk in the park.
The directive, if implemented in full, would require marketers to gain explicit consent from consumers to use their personal data for campaigns, a decision slammed by the advertising industry as “a brake on innovation, competitiveness and growth” when it was unveiled in January.
Industry bodies such as IAB and DMA and online media owners Facebook have lined up throughout the year to to argue agianst what they see as an affront to the very nature of their business. Arguments that will continue to rage in the corridors of power well into the new year.
The UK Government also acknowledged the importance of data in 2012. After introducing the midata initiative in 2011, which aimed to encourage companies to provide consumers instant digital access to data collected for marketing purposes, ministers grew frustrated with the lack of progress made and decided to force companies’ hands. The Department of Business, Innovation and Skills put brands on notice in November promising legislative action by 2014 if they do not provide consumers with transaction and consumption data in a machine readable format. Another initiative that will see an £8m data investment fund was launched this week. Expect a slew of initiatives in 2013 as brands wake up to the reputational risks that come with statuary action.
Selling brand marketing
The most startling statistic we reported in 2012 was as damning a number for the industry as any could be. A November report by the Fournaise Group found the majority (70 per cent) of CEOs have lost trust in marketers’ ability to deliver growth after becoming frustrated by what they see as an inability to prove ROI on campaigns. The report prompted a slew of comments from marketers, interestingly, as many in agreement as those that dismissed the findings as evidence of a lack of understanding of the worth of marketing and marketers by their c-suite paymasters.
The year offered little respite for marketers. Confidence in their brands and industries waned as economic growth remained anemic. The cross industry initiative to raise the profile of marketing in the boardroom was unveiled soon after the Fournaise report.
Marketing, like any other operational unit in an organisation, has to justify its slice of the budget, to position itself as a growth driver and not a burdensome operational cost. Efforts will continue into 2013 and beyond.