In 2010, tobacco, the public sector, accountancy, law and financial services were singled out as the most difficult industries to market in a survey commissioned by Marketing Week. Six years on much has changed, so what is now considered the toughest sell?
Societal concerns have evolved, technology has created a plethora of new opportunities for marketers – along with a new set of rules and regulations – and a fresh wave of scandals have affected consumer confidence.
The biggest concerns are around sugar, energy prices, payday loan companies and – just as in 2010 – the tobacco industry. The way consumers discover news about these areas and share grievances has also changed. The rise of social media means there is nowhere for corporations to hide as information can be seen by millions of people around the world 24/7.
How brands choose to deal with issues speaks volumes, however. They can either put their hands up or keep their heads down, but the steps they take to address concerns will have a lasting effect on brand image.
Opportunity for change
Clued-up brands operating in these sectors are striving to turn these challenges into opportunities by improving practices and resetting the status quo. Marketing professionals, particularly those in highly regulated sectors, are instead shifting their focus to innovation so they can face existing reputational issues head-on.
The payday loans industry has been criticised for its sky-high interest rates that have not always been clearly advertised, causing some customers to end up in huge debt.
Lauren Darby, vice-president of marketing at Elevate Credit International, the provider of payday loan company Sunny, admits: “There were a lot of confusing terms and hidden fees for the consumer in the short-term loans industry.” The lender therefore worked with advice from the Office of Fair Trading, which was subsumed by the FCA in April 2014, to design a product that was fair, straightforward and easy to explain.
“We often struggle to get the balance of having a clear message, explaining the key differentiators of Sunny, while walking the tightrope of multiple regulatory bodies,” says Darby.
“The vast majority of our customers use the product responsibly and are very happy with their experience,” she claims. “So the challenge for marketing is really to make responsible use of our product more widely [understood] and to champion the consumer and their right to choice.”
The Financial Conduct Authority (FCA) has now authorised all existing lenders, so short-term loans are a “credible” part of the financial services landscape, and “public perception is slowly changing”, according to Darby, but her current and future challenge as a marketer will continue to be to “cut through the negative perceptions of the industry”.
The energy sector also faces media scrutiny over high prices and issue associated with switching provider. The challenge for E.ON is trying to break away from “the media’s perpetuation of the ‘big six'” and differentiate as providers are too often “lumped together”, according to head of marketing Daren Carter.
“We often struggle to balance having a clear message, while walking the tightrope of multiple regulatory bodies.”
Lauren Darby, marketing VP, Elevate Credit International
The brand launched a programme called ‘reset’ almost five years ago, which has been dedicated to switching the focus onto customers and making small but ongoing improvements to increase its net promoter score.
Carter says: “We know in the UK we live in a world where the media environment can be very challenging at times. [To] weather that [we] try to focus on doing the right things for customers all the time, but accept that it’s inevitable from time-to-time there will be some of those storms – you have to try and be consistent.”
He believes “it’s not possible” to react to all of these issues because it “can knock you off course and become quite a distraction” but the brand aims to consistently treat customers fairly in the propositions it develops.
The roll-out of smart meters to enable consumers to clearly see their usage is an opportunity for the industry to build trust and help customers but there has to be an incentive for customers to be willing to share their data in the first place.
Carter says: “There’s a real opportunity with the smart roll-out for us to help our customers. It’s about the value exchange, if customers trust us with their data, we have to give them value back.”
The clamour around sugar
A sugar tax will be introduced on the soft drinks industry by the end of 2018, following consistent calls by health lobbyists and politicians to take steps towards solving the nation’s obesity problem.
“There’s a lot of clamour around it, which tends to ignore the fact that we already have very tight restrictions on the advertising of those products,” says Dan Smith, director and head of UK advertising law at international legal firm Gowling WLG.
He says: “There is a view from the Advertising Standards Authority (ASA) to tighten [regulation] up in certain areas and align rules applicable to TV to other media. The ASA applies its code in spirit, as well as letter, and it is susceptible to pressure and responds to issues of societal concern.”
Smith adds: “The concern around sugar will lead to more complaints and perhaps to the ASA taking a tougher line in considering those [grievances].”
As a result, many brands are making a considered effort to address the level of sugar in their products.
“Soft drinks have been singled out by pressure groups and government in particular – some would argue unfairly so – but the interesting thing is that the industry has responded incredibly well,” says Jon Evans, marketing director at Lucozade Ribena Suntory (LRS).
The issue is that it “wouldn’t make a big headline” if the media reported on the successful ways the soft drinks industry is moving to respond to the sugar debate, according to Evans.
LRS products have been going through a reformulation process to reduce sugar since the introduction of a purpose-built lab in 2014, which has resulted in the addition of low-sugar variants of its classic products.
Lucozade Zero launched earlier this year in response to the growing consumer appetite for healthier drinks and delivered £11m in retail sales in its first four months. To put that into perspective, Evans claims only 2% of all new products achieve £10m in sales during their first year.
The business has also put renewed focus on its existing Ribena Light product, with communications, sampling and in-store activity helping the brand increase the rate of sale by 45% since the campaign started.
The sugar debate means LRS’s low- and zero-sugar products have stolen the limelight from the originals. Evans says: “We over-invest in Zero and Light [variants] relative to their size, in terms of dedicated sampling campaigns and outdoor advertising. On Ribena Light we have made that the hero of our advertising, so when we have a generic brand campaign we feature light as the hero within the TV spot or outdoor.”
Shaking off past associations
The financial crisis highlighted the need for transparency to build trust within the financial sector. This can still be a tough job for marketers in an often-turbulent market, particularly post-Brexit, and is pushing brands to continually evaluate and reassess their approach.
RBS Group CMO recently admitted it had to make a bold change in its marketing as the old way was “fucking up” its brands. David Wheldon told Marketing Week about its new strategy for RBS brand NatWest that prioritises taking accountability for its own actions, whether good or bad.
This open approach is refreshing and perhaps indicative that the sector is learning from past mistakes.
Habito, a UK digital mortgage broker that aims to use technology to modernise the mortgage application process, is one such brand. It is doing so by taking a “humble” and human approach to finance.
In addition to having to deal with issues of mistrust stemming from the 2008 financial crash, the current state of the UK housing market means many young people, particularly those in London, are unable to get on the property ladder, which is affecting Habito’s business. Post-Brexit uncertainty is creating further unrest, according to vice-president of marketing, Scott Williams.
“The weight of restrictions coming down the line in a short period of time is quite tough to manage.”
Rory Cotter, head of trade, British American Tobacco UK
He says: “There are certain things [that are] out of our control, things that have happened and things that we have to acknowledge and be humble about. If you want to create a brand in a space where nothing good has ever come of it, we need to be very transparent and humble because [trust] is something you have to earn.”
Williams believes changing finance from the inside is the best approach. “If we change the way people find and interact with mortgages, we think there [will be] more growth [in the market] – we can change the market from within,” he asserts.
“We can’t do anything about Brexit, but what is in our control is user experience and building a brand that calls out people’s relationships with mortgages.”
For Sunny, the brand sees an opportunity to innovate in the sector so it can provide people with more limited choice a credit solution. The brand’s mission, according to Darby is “bridging the gap between short-term and mainstream borrowing” and it will “focus continued efforts on how to progress them”.
Adapt and reimagine
For many brands facing controversy, adapting elements of the product or image that are in the brand’s control can be the best option. For example, dating site Ashley Madison is shifting its communications to focus on open relationships rather than enabling adultery to appeal to more consumers in the wake of its hacking scandal last year.
The way in which controversial categories or brands facing pressure deal with challenges can be a lesson to mainstream brands, according to Simon Burton, a partner at agency Headland and visiting lecturer in reputation management at Cass and Manchester Business Schools.
Burton believes too many CMOs focus on content over context, which is an error as the latter can help marketing perform better.
He says: “With the toughest jobs in marketing it’s all in the context of the external environment. What you find in sectors with heavy regulation – such as tobacco and payday loans – is that there is already a lot of join-up between the PR, regulatory team and marketing because they recognise that you can’t just market anything. There is a process.
“There’s more alignment and integration,” he says, something that other brands can learn from.
Brands are entitled to advertise
Many of the brands that operate in a tough environment are already heavily regulated, such as, tobacco, alcohol, gambling and foods high in salt, fat and sugar – particularly when marketing to children.
Although marketers operating in these sectors are in a “difficult position”, with the exception of tobacco they are still entitled to advertise and are to “a large extent compliant and responsible in their advertising” according to Smith at Gowling WLG. But these industries will continue to face complaints and lobbying for even greater restriction, he adds.
Creativity can also be stunted by the rules. There are examples of compliant ads being complained about as they spark a negative emotional reaction among consumers, says Smith. Advertisers face further challenges as some of the wording in the rules can be subjective.
He says: “The rules around the advertising of sugary drinks or foods are already very tough and a lot of the calls for bans and watersheds simply ignore that. They are not evidence-based calls for greater controls, it’s very much an emotional response.”
Businesses, therefore, have the difficult job of ensuring ads comply with regulation but at the same time avoid causing undue negativity from the public.
Pernod Ricard, which owns Malibu and Absolut Vodka, has an internal control panel that signs off on anything that is “close to the line” or “not in the spirit of the regulation”.
Conor McQuaid, chief marketing officer at Pernod Ricard, says: “Clearly we see situations where competitors have pushed that boundary and have gone closer to the line than we would be generally comfortable in doing.”
He adds: “Our clear objective is to stay on the right side of the law on each occasion but it is difficult because you feel you are competitively disadvantaged by respecting the law when a competitor has tried something closer to the line.”
McQuaid believes it can often come down to trial and error. He says: “In good faith, you put something out there that you believe is on the right side of the line and you get called out for pushing it too far.” In those instances, the company would “go back and do it in a different way”.
“It is a minefield,” says Smith because the rules can be “very subjective”, which “makes it difficult to be certain you are complying with them”. He recalls the adjudication from the ASA about associations with toughness and daring behaviour in the advertising of alcohol. Captain Morgan was pulled up for the overuse of its pirate character because it can be associated with being daring.
Marketing today is tough for all brands, but those in sectors that are – or will soon be – heavily regulated do have an additional layer of difficulty to deal with. However, those which innovate and improve standards within their industry are ultimately going to be winners.
Marketing tobacco brands
The revised EU Tobacco Product Directive, which came into effect in May this year, added new rules to the way tobacco is manufactured, packed and sold, giving the already heavily regulated industry a year to comply.
It introduced plain packaging and included a ban on flavoured products such as menthol and packs of 10 or pouches of less than 30 grams. All packs must also dedicate 65% of that surface to pictorial health warnings.
Dealing with an existing retail display ban and phasing in the new rules has been a challenge, according to Rory Cotter, head of trade at British American Tobacco (BAT) UK, which owns brands including Lucky Strike and Rothmans.
He says: “We are up against it from a marketing point of view and the weight of restrictions coming down the line in a short period of time is quite tough to manage.”
But Cotter’s focus is to understand from a trade perspective what can still be done in a marketing context. For example, the name of a brand on a packet is still permitted under the regulation, as well as price lists, so there’s a role for BAT in advising independent retailers on how they can act within the regulations.
Cotter says: “We have a modest market share in the UK but we position ourselves as an honest broker in relation to our materials and the trade marketing we put out there.”
BAT has developed an app that is linked to independent retailers, where they can get information, seek advice and see the current regulation.
There are also opportunities in the e-cigarette or vaping category. Cotter says the new restrictions are effective in relation to print media and TV, however “there are still opportunities to deliver marketing to trade” in the vaping category. BAT’s vaping brand, called Vype, is therefore focused on innovation in e-liquids and the devices it brings to market online and in-store.