Reviews of the year, even the marketing year, are so prevalent around this time they border on cliché. So how do I do one that is a bit different? I know – how about I enlist the help of about six hundred marketers to co-author the review?
Last week I presented a tentative list of the biggest marketing moments of 2016 to a room full of marketers at Regent’s University in London and then at the Sydney Opera House in, well, Sydney. They gave me some sound feedback, so here it is: our definitive list, in reverse order.
10. The Marriott-Starwood merger
Hotel operator Starwood decided this year to put itself up for sale and Marriott found the £10bn necessary to buy it. But that leaves the mother of all brand consolidation challenges. The newly newly-merged group has 30 gigantic global brands such as Westin, Sheraton, Ritz-Carlton and W hotels.
As usual the finance team finished the deal, congratulated themselves and fucked off to cause mayhem elsewhere in the world leaving the marketers to sort things out. A major brand architecture project must be underway. Prepare yourself for some big announcements in the new year.
9. Unilever’s move to zero-based budgeting
It’s a growing trend across the big global FMCG giants. We could just as easily have talked about Kraft Heinz, Kellogg’s or Coca-Cola. Every major marketing department is moving fast to zero-based budgeting (ZBB), a method that rewards marketers that have a plan and can show demonstrable results year after year.
Despite what you might have heard, ZBB does not necessarily mean you will get less money for your marketing but it does mean you will have to work harder to justify the investment in the first place. Unilever is merely at the vanguard of the approach; expect it to arrive in your office in the next three years. If you know what you’re doing everything will be fine. If you don’t, best to look for a company still using the old ‘percentage of sales’ nonsense approach to budgeting.
8. Kevin Roberts’ career suicide
It’s hard to know which of the various quotes Roberts gave to ex-Marketing Week reporter Lara O’Reilly best captures the degree of self-immolation that his interview resulted in. Was it the bit where he suggested women have very different career aspirations than men? Or the part where he noted he does nothing about sexual discrimination at Saatchi & Saatchi because it has never been an issue. Perhaps it’s the bit where he accuses Cindy Gallop of making up a lot of stuff about gender to make herself famous.
It was remarkable stuff and it inevitably resulted in Roberts losing his job and much of the industry respect that he had built up assiduously over the last twenty years. Female marketers continue to earn 17% less than their male peers as we enter 2017. Firing Roberts will not fix that.
7. McDonald’s new ad agency
After a four-month review McDonald’s consolidated its almost $1bn ad spend in the US into a single new agency called We Are Unlimited. The agency is a dedicated specialist one, made up of Omnicom staffers drawn from across the group’s various agencies and a significant number of external employees from digital giants Facebook and Google.
But it isn’t the unique structure of the new agency or its ludicrous name that makes it number seven in our list, it’s the payment terms the new agency is rumoured to be working from. All services, including media, are being supplied at cost and all agency remuneration will be based on a series of performance-related objectives related to brand awareness, traffic and sales results.
The news that one of the biggest single agency contracts in the world is essentially 100% performance-based pay was met with deep cynicism and foreboding by agency people and general support and appreciation by clients. Go figure.
6. P&G changes its Facebook strategy
Widely misreported at the time as Procter & Gamble withdrawing from Facebook advertising, the truth was a little more complex and also a lot more interesting. While P&G will very much continue to use Facebook for its brand campaigns it has stepped back from the super-granular targeting techniques that Facebook enables.
P&G found that a more simple, demographic approach provided more reach and better return on investment than the ‘home owners over the age of 35 with a dog and a fussy partner who have one eye on selling their property next year and two vibrators in their top shelf behind their underwear’ approach that had previously been attempted. Fingers immediately pointed towards marketing professor Byron ‘they call me sophisticated’ Sharp and his strong arguments in favour of targeting everyone in a category, rather than micro-segmentation.
The world of targeting has never been more complex than it is right now, with marketers being told to target a tiny few, a single segment and everyone, all at the same time, by equally persuasive people.
5. Coke’s brand architecture
So far – and this is about to change – no-one has worked out just how fucked Coca-Cola is. With 70% of their profits derived from carbonated beverages and the world turning to very different tastes to refresh their collective thirst, it was only a matter of time before something had to give. In the end it was the brand architecture of Coca-Cola, which, in a major move, shifted from sub-brands to branded house on the brand relationship spectrum.
So rather than being Coke Zero with its own ad campaign, it was just a different product variant of the Coca-Cola master brand and part of a glitzy and very outdated global ad campaign. The move was touted as a major attempt to revitalise sales at Coke, but that was never the actual rationale. The shift in brand architecture is a clever cost-saving move and enables Coke to triage their rapidly declining profits for a few years. Worse, much worse, to come.
4. Facebook keeps making mistakes
Even I don’t know how many actual errors Facebook have now made. All I can tell you is that it’s quite a lot and I would not be betting against more appearing in the new year. The reason for all this is quite simple. Facebook doesn’t actually know what it is doing. It has been fast-tracked into the big leagues of advertising with barely enough time to comb its hair and it’s beginning to show.
Facebook currently has something like 220 “key” metrics. Which is about 215 too many. At some point it will work this out and start reducing the number of metrics it uses. Someone should Facebook that the average advertiser never got their head properly around reach and frequency so a final tally of about five metrics will prove more than enough to enable the dark arts of digital video to be sold to millions of gullible and entirely naïve advertising clients.
Expect more announcements of more errors that “are not important for billing” in the new year. Expect those announcements to do nothing to the meteoric rise in Facebook’s advertising revenues next year. Expect me to keep writing about it and saying “fuck” a lot.
The story of Brexit is one of absolute failure on the part of marketers to stay market-oriented. The final pre-voting estimates were sat at 49% for Brexit and 51% for Remain so it was pretty much a coin toss which way the country would go on that fateful day in June. But because the average marketer is a young, university-educated, immigration-loving, optimistic woman who hangs around with like-minded souls, the final result shook the marketing community to its core.
In reality working men and women who were entirely sick of London, professional politicians and university-educated wankers like you and me had the final say. The fact that marketers still seem surprised at the result and that the aforementioned wankers are still trying to squirm out of the democratically mandated move tells you all you need to know about modern Britain. If only those marketers had read Marketing Week two weeks before Brexit where I helpfully predicted the result and explained why it was going to happen.
2. The ANA report slams media buying
The big American body responsible for representing advertisers conducted a massive investigation into irregularities in media buying and found evidence of endemic non-transparent business practices across the industry. This is fancy lawyer talk for agencies ripping off clients, who don’t know what’s going on at the best of times but especially now in the labyrinthine modern world of media rebates and programmatic.
The response of the big media agencies was to essentially tell the ANA to go fuck itself and business went quickly back to dodgy normal. But the arrival of the big four accounting firms into this space and the growing strength of Google and Facebook, which need media agencies like they a second windpipe, has many wondering about the long-term prospects of media agencies – an industry that appears tin-eared to the new beat of marketing and determined to blame all of its ills on its clients.
1. The emergence of the digital duopoly
Less a news story and more the fulfillment of a giant portent of media doom, 2016 saw three data points that should worry even the most steadfast marketer.
First, it is clear that we have already reached a place where digital advertising accounts for significantly more than half the total advertising spend in this country. Second, Google and Facebook already take more than half of that digital spend. Third, it’s already becoming apparent that most of the new digital spending, around 85% of it according to Morgan Stanley, is going to these two companies.
Strategy firm OC&C estimates that by 2020 Google and Facebook will enjoy more than 70% of all digital advertising spend in this country, but their numbers are way off. It will be more than that. The implications of the digital duopoly and their walled gardens are as ominous as they are enormous. Whatever happens in 2017, I can tell you right now that this will be my number one issue for next year too.
The other nine will have to wait another 12 months – for them to happen and for me to write about them and for you to read them. It’s been a tremendous honour to be your columnist this year. I wish you and yours the very best for the festive season. There has never been a better time to be a marketer or to be a reader of Marketing Week.
As I am drinking, heavily, in the days to come I will raise a glass in your general direction and wish you all the best. See you in 2017 for the first Marketing Week of the year.