The impact of Diageo’s effectiveness focus: Marketing spend is no longer first to be cut

Diageo credits its two-year focus on integrating marketing effectiveness across the business with a “profound shift” in the belief in marketing investment, but says the job is not done yet.

DiageoDiageo has described as “profound” the shift in the belief in marketing across the business, and among its stakeholders, after embedding its effectiveness platform Catalyst throughout its marketing teams.

Catalyst was launched two years ago with the aim of providing marketers with instant data that would help them make planning and strategic decisions on how and where to invest. The plan, as Diageo’s global marketing effectiveness director Adam Ben-Yousef highlights, was to create an “army” of effectiveness ambassadors across the business.

How Diageo is proving marketing effectiveness

“Diageo has not hired an army of marketing effectiveness analysts; instead we have upskilled our teams and created a powerful army of marketing effectiveness ambassadors,” he said, speaking at the IPA’s Effectiveness conference today (15 October).

Reframing marketing effectiveness at Diageo came in the context of a £500m productivity drive. Marketing promised to deliver £100m in productivity improvements, but wanted to do so not by cost-cutting but by eliminating inefficient spend and improving profits by shifting money.

“This was an important philosophical leap. In most organisations at the time, productivity was synonymous with cost-cutting,” said Diageo’s global planning director Andrew Geoghegan.

“By making the case that marketing productivity could mean a combination of eliminating ineffective spend and generating more profit by shifting money to more attractive brands and activities, we were able to make a case for the kind of productivity that in theory could also deliver long-term growth.”

This, in turn, has created a “powerful shift” across the business. Diageo had the aim of driving more profit from its existing marketing investment, targeting an eight-times increase in gross profit ROI. It actually delivered a 16-times increase, unlocking improved performance everywhere it was applied across 60 countries and 350 country brand teams.

However, Ben-Yousef called the improved confidence in marketing across the wider business the “biggest and most powerful shift”. It has meant that rather than the marketing effectiveness focus leading to reduced spend, Diageo has increased its global marketing investment by more than 30%, while at the same time its operating profit growth and share price have increased.

“We set out to drive more profit from our existing marketing investment. But we’ve achieved something greater and unexpected – a more profound shift at the highest level in the belief in marketing investment. Marketing is no longer the first spend to be cut when a market wants to deliver its annual plan,” he explained.

“We’ve [increased spend] because we know great marketing delivers for us financially in the long-term and we’ve been able to speak the same language as our exec committee and board to give them confidence in our marketing and grow our brands and business.”

We’ve achieved a more profound shift at the highest level in the belief in marketing investment. Marketing is no longer the first spend to be cut.

Adam Ben-Yousef, Diageo

Despite this success, Ben-Yousef describes the work on marketing effectiveness so far as “just the first step”. It is now bringing its strategic marketing capabilities together in a single hub, so marketers can adopt it in their everyday jobs.

That includes a global performance suite that brings in all the internal and external data marketers need in one place. KPIs have also been standardised so there are “no arguments about definitions” and it is launching ‘Digital Catalyst’ to better understand its digital media spend by monitoring live campaigns, tracking them in real-time against a set of rules and suggesting “course corrections” if needed.

“This is all about building and reinforcing a culture where effectiveness is a core part of everyone’s job, and where we embrace developments and technology that help perform better,” said Ben-Yousef.

A focus on creativity

As well as using data to improve marketing effectiveness, Diageo has also focused on creativity. As previously reported by Marketing Week, Diageo has launched a programme, called ‘Creative Sparks’, that aims to “inspire and raise standards” by looking at the best tools and ways of working, explained Geoghegan.

Diageo introduces creativity training to ‘inspire and challenge’ marketers

Diageo has also introduced a creativity champion in every market and runs an ‘Inspiration’ programme that invites interesting brands, planners and creatives in to share case studies.

“[People] claim data and creativity are in opposition to each other,” said Geoghegan. “When we deployed Catalyst we established a different paradigm of effective creative excellence. Catalyst helps us understand which channels and brands to invest most in, creativity has the potential to boost this.

“No one disputes the evidence of the impact of creativity. We want to create the conditions to more frequently deliver great work.”

While the investment and resource Diageo has put into marketing effectiveness might be out of the range of many businesses, Geoghegan is keen to show that an effectiveness culture is “not about fancy software”.

“[Marketers] don’t need this solution to be successful. But they do need the right KPIs; to be honest, transparent, consistent and have the right measurement tools; and a no-fault culture. Marketing effectiveness needs to inform and not lead judgement and create the right conditions for success,” he concluded.