Inflation is rising, interest rates are on the up and consumer confidence is on a knife edge, all of which means 2018 will be a difficult year for marketing. Media agency groups including GroupM and Zenith Optimedia have cut their growth forecasts, while the major agency holding groups are seeing revenue growth either slow or decline as advertisers, in particular in FMCG, tighten their belts.
Given this background, it is little surprise that companies want to better understand the return on marketing investment in terms of revenues and profit. That has led big brands increasingly to invest in marketing effectiveness. In an attempt to quantify this trend, the IPA spoke to a number of major brands – including John Lewis, Barclays, Unilever and L’Oréal – and found that three quarters have increased their marketing effectiveness resource over the past three years, with a third developing specialist units.
Although the IPA sample is self-selecting – brands willing to talk to the trade body about marketing effectiveness are likely to be those where this issue is top of the agenda – the study shows the trend towards demonstrating the impact of marketing across the business, says strategy consultant Fran Cassidy, who carried out the research.
“Effectiveness is about making an organisation stronger, not just about making effective marketing,” she explains.
Direct Line Group head of insight and marketing effectiveness Ann Constantine explains: “The bottom line is it comes down to money. There isn’t the same [amount] in the industry as there was and everybody is watching what they do, how they spend their money.
“And the media world is changing in that there are a lot of digital elements coming in. People want to be able to know what they’re getting [from their marketing investment]. What is the bang for their buck?”
Resourcing marketing effectiveness
While more brands are setting up dedicated marketing effectiveness units, where they sit within a business differs. Some have created an effectiveness unit within marketing, while others have it as part of an insight and analytics division or sitting under the commercial department.
Direct Line Group has had an effectiveness function for a number of years but it has shifted strategy over the past two years. Marketing effectiveness now sits alongside consumer, brand and comms research, and market and competitor intelligence within the insight function.
Insight is housed within marketing, reporting into group marketing director Mark Evans. The effectiveness team remains small – just four people with backgrounds in econometrics and analytics – though the broader insight function includes people with experience in market research, marketing and pricing.
“It’s quite a diverse team in terms of skill set and roles and responsibilities. We have got junior roles to quite high-level management roles,” adds Constantine.
Samsung is much earlier in its marketing effectiveness journey. Nick Milne joined the company from Telefónica in April 2017 to help set up a consumer analytics capability across Europe that encompasses marketing analytics and marketing effectiveness.
Milne says: “Samsung has a really proud history of product innovation but it’s no secret that innovations in the mobile sector are becoming incremental rather than substantial. If you aren’t creating as strong a product as perhaps you have done historically, you need to increase your consumer understanding – who are the consumers in the market, where do they shop, what do they like about their phones? – and follow that up with communications experiences that will help direct them to Samsung products.”
At Samsung, the team sits within insight, which is part of the marketing function, with Milne reporting into the vice-president of consumer market insights, who in turn reports into the CMO. Again, it is a small team, with one person looking at marketing mix modelling and econometrics and the other at digital activations and capability, but Milne is keen to improve its data capability.
“The amount of data Samsung has compared to Telefónica is completely different. And that is one of the reasons we were so far behind. Samsung needs to improve its data capability to then be able to understand what type of analytics, marketing analytics and effectiveness it can deliver. What I’m looking at is a roadmap to start delivering some of that,” he says.
[Effectiveness] is about training, coaching and really developing the rigour and measurement muscle alongside the magic and creativity.
Andrew Geoghegan, Diageo
Diageo has taken an entirely different approach again. Rather than set up an effectiveness unit, Diageo created Catalyst – a digital interface that provides instant data to help its marketers make strategic and planning decisions.
Catalyst has dual functionality. First, it pulls together different data sources to determine the right budget for each brand, based on potential profit and the performance of previous marketing programmes. Then it assesses the likely effect of planned activity, analysing short- and long-term effects and coming up with recommendations on where to shift marketing budgets on a week-by-week basis.
Andrew Geoghegan, global head of consumer planning at Diageo, says: “We saw an opportunity to use data and technology to massively increase the effectiveness of the significant marketing budget we have…. to ensure that every pound, dollar or rupee invested actually delivers the best possible outcome for the business.”
Creating an effectiveness culture
What differentiates Diageo is the scale of its ambition. Having launched the Catalyst programme 18 months ago, it had trained all its 1,200 marketers and senior executives across 55 countries in how to use Catalyst by the end of 2017, therefore instilling this focus on effectiveness across the business.
“Catalyst serves as a tool but what we’re doing is creating a culture and ways of working and thinking,” explains Geoghegan. “What we have done is enhance something that would be a core competence in every great marketer. The ability to turn strategy into execution is something that is enduring, but what is new is our ability to put micro-level analytics into that workflow and conversation.
“It has really enabled us to make small investment decisions right up to big portfolio decisions. And, of course, Catalyst is about culture, it’s about training, coaching and really developing this rigour and measurement muscle alongside the magic and creativity.”
Samsung’s Milne says that culture shift is the end game at Samsung too. While both Telefónica and Samsung started using marketing effectiveness as a means to justify investment, it is now much more about embedding effectiveness from the start.
“The business often doesn’t see [marketing effectiveness functions] as there to help but to tell them if they are doing their job wrong,” he says. “The transition we went through at Telefónica was that initially we looked back to see how things performed, but [that changed] so we were there in the process to help them out.
“It’s then about setting up the processes and the right tools and capabilities so [marketing effectiveness] should just be part of people’s roles.”
Marketing effectiveness needs to move from a justification culture to a learning culture.
Fran Cassidy, IPA
That is also the case at Direct Line. “[In the old structure], we were all about efficiency rather than effectiveness. We would evaluate our media spend and if we didn’t think it had performed in the way in which commercial said it should, then we wielded a bit of a stick,” Constantine explains.
“The way we have tried to reposition ourselves is by taking much more of a consultancy approach. What we are doing is bringing together our brand metrics, all our tracking, with our econometrics so we are really able to look through the [long- and short-term] lenses.”
Cassidy says this is key if marketing is to be taken seriously by the rest of the business as a real lever for business growth, and if marketing is really to become more effective.
“Accountability is the big issue. Being retrospective brings with it retribution if something hasn’t worked, rather than learning,” concludes Cassidy.
“Marketing effectiveness needs to move from a justification culture to a learning culture.”