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Deep Dive

Marketing and media's troubled future: Mark Ritson, LinkedIn-backed global think tank and IPA UK's Fran Cassidy have a solution

By Paul McIntyre - Executive Editor

10 February 2020 9min read

By Paul McIntyre - Executive Editor

10 February 2020 9min read

Short-term tactics have trapped marketers into just one ‘P’ – promotion – in marketing's “4P’s” lexicon of Price, Product, Place (distribution) and Promotion (communication). But even “Promotion" is in credibility decline with senior business management. In a tour de force for B2C and B2B professionals,  Mark Ritson, Jann Schwarz, global director of the New York-based B2B Institute and IPA advisor Fran Cassidy nail what needs to happen - now. 

 

You can read the abridged version below or listen to the full debate on this week's Mi3 Audio edition here. If a picture tells a thousand words, the podcast trumps it by an order of magnitude. Click here or here.

 

 

A survey conducted via the Financial Times should seriously worry marketers. It found that the vast majority of business leaders have lost faith in brand and its power to drive growth. If that’s the case, they may well be asking what is the point of marketing.

Meanwhile, B2B marketers have painted themselves into a corner by focusing on short-term sales metrics. They are so tactical they don’t even have time to think about brand, let alone long-term strategy.

Without concerted corrective action, the outcome does not look good.

“It’s time to stop rearranging the deck chairs,” says Jann Schwarz, global director at LinkedIn-funded think tank, The B2B Institute. “You have to really turn the ship around and focus on long-term growth and the drivers of long-term growth.

These are: “Brand, emotion, and aligning marketing with finance.”

Driving short-term sales will always have a place, says Schwarz. “But you don’t win the respect of the C-suite and the boardroom by being very good at tactics.  You have to have a long-term vision.  You have to build the brand.”

"The Financial Times' survey results were pretty dreadful. Only 15 per cent of non-marketer business leaders said that a strong brand was really important to future cash flow. Only 11 per cent said a strong brand was really important for margin improvement."

- Fran Cassidy, Cassidy Media Partnership

The case against marketing

Fran Cassidy is head of Cassidy Media Partnership and an advisor to the IPA in the UK, which worked with the Financial Times to gauge global business leaders’ perceptions of how a strong brand relates to financial and commercial objectives.

“The results were pretty dreadful. Only 15 per cent of non-marketers said that a strong brand was really important to future cash flow. Only 11 per cent said a strong brand was really important for margin improvement,” says Cassidy.

That collective loss of faith presents an existential crisis, she believes.  “I worry that the business community as a whole has forgotten what brands are for.”

 

Ritson: It’s not finance departments, it’s us

Even as a fully paid up cynic, Mark Ritson says he was “stunned” by the IPA/FT findings. Unsurprisingly, the former Melbourne Business School adjunct professor blames marketers for getting themselves into this mess, not finance departments. They have failed to undertake the basics of marketing and apply it to business, he suggests.

The B2B Institute’s Jann Schwarz agrees. Marketing, he says, used to encompass “the four Ps: product, price, place and promotion.” Arguably, product and price are the key aspects, yet now marketing finds its remit stripped back to promotion alone, “and even within that, effectiveness is going down,” says Schwarz.

“You would imagine with just one thing to do, we are doing a really good job here, better than in the past,” he says. “But the opposite is true. Unfortunately, I have to agree with Professor Ritson: marketers fancy themselves as amazing communicators and compelling storytellers. Well, go tell the damn story to the CFO and make sure you use the language that she actually cares about - because that’s communications 101,” says Schwarz. “It’s not about what you want to say, it’s what the other side is going to hear.”

Teaching marketers the language of business, and providing confidence to articulate the role of brand in driving growth, he says, is The B2B Institute’s purpose.

A simple example to get the CFO to take you more seriously is to say: ‘You spend billions of dollars acquiring a company because it has a great product and a great brand. Yet when marketing comes to you for money, you say 'not unless you can prove it.' Once you point out this inconsistency, it's pretty obviously a language issue."

- Jann Schwarz, global director, the B2B Institute

M&A valuations underline the power of brands

Schwarz says M&A valuations suggest boards do value brand - they just need to see it that way.

“One simple example you can communicate so that the CFO takes you more seriously is to say: ‘You spend billions of dollars acquiring a company. Then, the market’s asked you why did you do this?  And then you say, ‘Well, this company has a great product and they have a great brand and that’s why we paid the premium for it’, so you acknowledge it at the top end of the value chain.  But then when a poor old marketing person comes to you and says, ‘I need money for a brand’, you say, ‘Absolutely not unless you can prove it.’

“Once you point that out that inconsistency, it’s pretty obvious there’s a language issue here,” says Schwarz.  “There’s a framing issue.”

"Ten years ago the finance function was focused on the past - counting revenue accrued. But automation has changed all that. Now their job is about future revenue - and that is what marketing should be about. So marketing and finance should be on the same page, because they are both about business value creation."

- Fran Cassidy

How the machines can save marketing

The rise of automation, however, might just save marketing. Fran Cassidy says it is pushing marketing and finance functions closer together: They are both now in the futures business.

“The finance function has changed. Ten years ago, it was very much focused on the past. They were ‘spreadsheet jockeys’ just focused on past performance,” says Cassidy.

“But all of that side of their business is now automated. Their job is now looking at future revenue streams and future value – and that is what marketing should be about. So really [marketing and finance] should be on the same page, because they are both about business value creation.”

The challenge is to start speaking the same language – and it is marketing that has to make the first move.

 

THE PULSE

Quick question: Does your finance department 'get' the need to invest in brand as a growth driver?

Choices
Learn to talk money

“The continual use of marketing metrics and jargon by the marketing team doesn’t do them any favours and it doesn’t make them look more important. It just makes them irrelevant. It means that their peers cannot assess whether they’re contributing to what really matters, because they don’t understand what they’re talking about,” suggests Cassidy.

“So, in my view, we should be not saying things like, ‘We’re having three campaigns this year.  Why couldn’t we say something like, ‘Our strategic program has three phases’? Instead of saying, ‘We want to put 50 per cent of our money into brand activity’, we should be saying something like, ‘To reach 5 per cent margin objective, we need to widen our customer base’,” Cassidy explains. 

“We need to convert all of our marketing phrases into commercial benefit.”

 

Effectiveness departments

Some corporates have realised the symbiosis between finance and marketing and are now creating “effectiveness departments”, says Cassidy. Those partnerships are born of internal relationship building and Cassidy advises marketers to initiate advances.

“In the most successful companies, the marketing department doesn’t just communicate with the finance team by emailing them a monthly report,” says Cassidy.

“They invite them in to understand how they came to that budget and very often, as a result of that strengthened relationship, it means the marketing team can get more money - because the finance team understands what it will do for the company.”

“You can be extremely efficient at being useless as a marketing organisation. You can be incredibly effective as a marketing organisation without being very efficient. Effectiveness should come first. Efficiency is a nice thing and you should continue to strive for it. But efficiency for the sake of efficiency is a terrible, terrible way to live.”

- Jann Schwarz

Diageo, effectiveness and the rise of consultants

The natural progression from effectiveness departments is to systemise effectiveness. Diageo’s “magnificent” Catalyst system is a standout example, says Cassidy, which has “transformed its capability and market effectiveness globally”.

Diageo built the platform with marketing and finance working together, plus help from Boston Consulting, says Cassidy. It has now been rolled out globally and enables “objective decisions about where they’re putting their money - and Diageo has had fantastic results from implementing this.”

Mark Ritson points out that Diageo built its Catalyst platform with the help of a consultancy, not an agency. He suggests media agencies shot their feet clean off by chasing “murky” margin, “when they could have been at the top table doing the kind of thing that Diageo had to invent for itself.”

The B2B Institute's Schwarz, a former WPP exec before joining LinkedIn, defends agencies, but thinks both brands and agencies have confused efficiency with effectiveness.

“They tend to conflate those two concepts in a way that is extremely unhelpful,” suggests Schwarz.

“You can be extremely efficient at being useless as a marketing organisation.  You can be incredibly effective as a marketing organisation without being very efficient.  Effectiveness should come first.  Efficiency is a nice thing and you should continue to strive for it.  But efficiency for the sake of efficiency is a terrible, terrible way to live.”

“I would go into starting a creative B2B agency if I wasn’t doing this. Because I think there’s just so much opportunity on the table.”

- Jann Schwarz

It’s the creative, stupid

Chasing efficiency has hollowed out creative – because marketers have focused on the medium over the message. A mistake, says Fran Cassidy, because targeting and efficiency “is really low down on the list” when it comes to driving results.

“It is about what you are saying to your audience - and how you are saying it - that has a lot more power.”

Corporates, however are risk averse. Emotional creativity can scare them. But Jann Schwarz suggests trying to de-risk creative is fool’s gold.

“We are mostly dealing with humans, not robots. The humans are still making the decisions. Yet marketers don’t want to be the ones having to tell their boss ‘I tried to do some magical thing and it failed,’” says Schwarz.

“You want to be able to say, ‘We had hundreds of spreadsheets and that’s how we made this decision.’ But people don’t make decisions that way. They make decisions based on instinct and gut feelings and based on their subconscious. Unless we acknowledge that, we miss out on 80 per cent of our ability to persuade and influence.”

Schwarz thinks B2B marketers could make major gains from even small improvements to their creative - because right now, “you don’t have to be that good at creative and emotional messaging to win”.

He suggests the upside warrants further investigation.

“I would go into starting a creative B2B agency if I wasn’t doing this. Because I think there’s just so much opportunity on the table.”

“This excess share of voice [ESOV] calculation is phenomenally interesting.  I’m not a big believer in science and laws in marketing.  I think we oversell it a bit. But this is one that actually does hold up incredibly well.”

- Mark Ritson

Go excessively large to win

If B2B marketers are looking for metrics to escape the tactical corner Schwarz says they have painted themselves into, excess share of voice, or ESOV, is a good place to start.

CFOs he says, immediately grasp the concept of spending more than your marketshare to enable growth.

“If you do that long enough, your market share will rise to the level of share of voice you’re spending at and that’s a very powerful, very simple concept … if you have a long enough horizon, that is definitely a very impactful metric.”

Mark Ritson agrees.

“This excess share of voice calculation is phenomenally interesting.  I’m not a big believer in science and laws in marketing.  I think we oversell it a bit. But this is one that actually does hold up incredibly well.”

Julie Hutchinson, GM marketing at Volvo, recently told Mi3 that she has unlocked additional budget by pitching ESOV to her board. Ritson says more marketers should take a punt – because they have nothing to lose and everything to gain.

“When you go to CFOs with a logical, quantitative data-based argument, you don’t necessarily get what you want. But what I’ve seen is that the response is very positive. Almost: ‘Thank God, we finally have someone that’s making a coherent pitch to us.’”

 

Perfection is the enemy of progress

Many marketers understand the need to drive evidenced-based marketing, says Fran Cassidy, but there is a risk that the quest for perfection becomes the enemy of progress.

“It [the evidence base] doesn’t need to be perfect,” she suggests. “Marketers just have to demonstrate that they are looking for the evidence that their marketing is working.”

Ritson believes that is a key point: Nobody can precisely predict the future.

“Yet the thing I see more than anything else is a decent marketer kind of hiding their numbers because they are aware they have assumptions there,” he says. “But the first thing you ever learn in management consulting is: declare your assumptions. Put them on the table.”

That provides both transparency and “wiggle room”, says Ritson. “You’re saying to them, ‘Within those parameters, that is where I think it is going to land.’”

Marketers need to be confident enough to take that approach, says Ritson, but are too worried about flunking it in the boardroom and exposing their lack of financial fluency.

Schwarz says that is the reason for launching The B2B Institute: To enable marketers to speak the language of business and start reclaiming that seat at the boardroom table; to break the tactical death spiral.

"We want marketing winners and we want marketing losers. If everybody got really good at this then we would be back to base level again. You want dumb competitors."

- Mark Ritson

Market outside the box

Many marketers are highly educated, says Schwarz, but increasingly within deep, technology-focused niches.

“It is so complex that not enough people are educated to have a strategic point of view and to be able to go toe-to-toe with someone in another department,” says Schwarz.

“That leads to people becoming even more ‘inside baseball’ as they say in the US.  Which means you talk this language that no one else understands that you use to impress your marketing peers - but you’re too scared to have a conversation with someone who’s not in marketing.”

Ritson suggests the challenge is more fundamental: to ensure digital marketers actually understand marketing.

“Remember, we’ve got this generation of digital marketers who are wonderful and marvellous and now in their thirties, but have virtually no clue about marketing and are very much attached to the digital and communication side of it,” says Ritson.

“Unless we get them out of that box and into the rest of marketing - and then to the rest of the business functions - it’s probably going to get worse, not better.”

 

Marketing's Darwin awards

Ritson, as even the most tactical marketers have grasped, is not a natural optimist. Fran Cassidy, however, thinks the B2B Institute and the broader push toward effective marketing suggests a brighter future.

“I think the opportunity is great enough for the really talented and clever marketers to get with the programme,” she says.

Ritson hopes that some marketers don’t get with the programme.

“We want winners and we want losers. If everybody got really good at this then we would be back to base level again,” he says.  “You want dumb competitors.”

Schwarz, in launching The B2B Institute, says he is “hugely optimistic” because of the scale of the opportunity for marketers.

“The beauty of capitalism, despite all of its serious flaws, is that it finds a way to give opportunity to those people who figure stuff out before everyone else.”

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