Cut the jargon, lets just call it growth

If recent studies by the Fournaise Marketing Group is to be believed, marketers are in big trouble. Its research of senior management and marketing executives concluded that the marketing profession has a serious issue with the concept of ‘return on investment’. Incredibly, two-thirds of those interviewed did not think ROI required a financial result.

How is marketing as a profession to be taken seriously as a driver of business performance if we are unable to show the effects we drive?

Understanding effectiveness – and the factors that drive it – is a major challenge for marketers. One of the biggest issues is that effectiveness has been confused with efficiency and this has meant marketers are chasing the wrong goals, and failing to get the most out of their marketing budgets and their agency partners.

We are seeing a slow decline of our industry because marketers are downgrading creativity and in doing so – I believe - undermining their best chance to deliver breakthrough results for businesses. This may, in fact, diminish the influence of the marketing department and potentially their personal influence as well.

At the heart of this vicious circle lies the quest for efficiency. At a time when budgets are under pressure, efficiency has become the driving force in the industry. Efficiency starts and ends with media. Marketers ask how they can eliminate waste; how they can reach their target audiences as cheaply as possible. The assumption is that the creative work or even worse, the actual ad agency, is basically interchangeable. Agency A or Agency B – either will do, as long as they follow the media plan.

Increasingly, this is the norm for creative agencies. They are handed a media plan to work to. Forget the ‘big idea’ – the media plan calls for a 30-second spot and a radio ad. It’s happening so much it is becoming the norm - media drives how to best deliver a customer connection, based on a plan that is efficiency-based.

It’s an easy trap to fall into if you’re a young client eager to deliver quick savings. In the short term, showing improved reach and frequency for the same, or even less, investment looks like good news. This is a common approach - the Fournaise Group survey found that 31% of marketers use a measure of the audience they reach as their ROI metric.

But efficiency is only half the story. There is a big difference between efficiency and effectiveness. If efficiency is about minimising the cash leaving the business, effectiveness should be about maximising the cash coming into it.

When has a media agency ever told you to spend less?

In fact, perhaps we should rename effectiveness. Let’s just call it ‘growth’. Rolls off the tongue better, and speaks more directly to the CEO and CFO vernacular. Growth is what makes CEOs sit up and take notice. It’s the people within an organisation who deliver growth that are the ones who get attention.

And the best way to deliver growth – profitable growth, delivered over the long term – is an investment in creativity. And I don’t just mean advertising creativity, business creativity can also play a big role in achieving growth.

This might sound like special pleading from a creative agency boss, but when did the media agency ever recommend cutting the media plan to achieve growth? There is a growing body of evidence to support creativity is a martketer’s best weapon, and the key to a long term business growth agenda.

The Institute of Practitioners in Advertising (IPA) in the UK has released a series of studies into its database of effectiveness case studies. The studies draw some important conclusions, such as:

• Emotional appeals, rather than ‘rational’, fact-based ad strategies, tend to be far more effective in terms of delivering hard business results.
• The most effective campaigns pursue ‘brand fame’ rather than metrics such as awareness. In layman’s terms, they get people talking.
• Creativity ‘works’ – not least because creative advertising is more likely to get people talking and sharing. There’s a lot to be said about the first impression, impact and favourability of great work which resonates with viewers.

The bottom line from these studies is that creativity is the key to effective marketing. When effectiveness case studies were matched against creative award results, it became apparent that creative award winners were far more effective. In fact, they were 12 times as effective - they worked 12 times as hard at delivering growth in market share for a given rise in media ‘share of voice’.

And creativity becomes more powerful over time. A great piece of creative work is most effective the first time it is viewed and passed on. If it’s not noticed the first time, it definitely isn’t going to be noticed the second time. The link between ‘talkability’ or ‘buzz’ and hard business results is strengthening as social media offers new ways to influence and harness word-of-mouth.

The IPA study’s conclusions regarding emotion dovetail with the findings from neuroscience and behavioural psychology, which emphasise consumers’ emotional responses to stimuli such as advertising.

And the conclusion that creativity is key is backed by recent research on McDonald’s advertising in the US. The study, by Ameritest, compared the quality of McDonald’s advertising over time with its sales results. The conclusion was that the creative quality of the brand’s advertising was a major influence on the sales response, and the most important factor that the brand can actually control. For example, DDB Sydney’s McDonald’s Australia Day campaign won a Gold Lion at Cannes in the Creative Effectiveness category this year.

In an interview on Cannes Lion TV Matt Biespiel, Senior Director Global Brand Development at McDonald’s, claims award winning work has a 54% higher return rate of investment than non-award winning work, “more awards is better for business” and that McDonald’s made a decision five years ago to put creativity at the centre of the brand. McDonald’s is currently Cannes Advertising Festival Global Marketer of the Year.

It’s also worth referencing the work of the late economist Andrew Ehrenberg, and more recent writers such as Professor Byron Sharp of the Ehrenberg-Bass Institute. They focus on the ‘science’ of marketing, and the ‘laws of growth’. Some of their theories include:

• Penetration should be a brand’s goal. Success is most likely to come from persuading the mass of infrequent buyers of a brand to buy it slightly more often. Reaching this mass of light buyers is key.
• Brand loyalty is rare. Consumers switch between brands, and tend to have a repertoire of brands they choose from.
• It is important to pursue ‘salience’ rather than ‘differentiation’. This means the role of advertising is to remind consumers that a brand exists and to get the brand into the consumers’ ‘repertoire’. It is about nudging more than persuading.

The theories are complex, but compelling. On the surface, a focus on reach and ‘salience’ seems to favour a numbers-driven, media-led approach. But actually a better understanding of the ‘science’ of marketing supports the case for creativity. As Andrew Ehrenberg wrote 10 years ago in the Journal of Advertising Research, it elevates brand storytelling above concerns such as brand differentiation and selling propositions:

How does all this work in practice? Mars Wrigley is one major brand profitably pursuing some of Ehrenberg’s principles. It has tested the theories, and found they fit the markets. It has re-trained its marketing teams around the theory of ‘laws of growth’, and is seeing business grow as a result. Snickers, through the global ‘You’re not you when you’re hungry’ campaign is one of the brands that has benefited.

The result? A more effective marketing department. “One of the great benefits of applying the laws of growth across the business has been the increase in credibility of the marketing function,” wrote Bruce McColl of Mars and Rachel Kennedy of the Ehrenberg Bass Institute in 2012. “When marketing becomes fact-based, it is dramatically more compelling for general managers and chief financial officers to “trust” the marketing recommendations.”

The modern quest for efficiency flies in the face of this experience. The prudent marketer with the goal to achieve efficiencies and reduce wastage is potentially harming the power of their brands to tell compelling stories. The commoditisation of creativity is making it harder for brands to drive emotional connection, or build ‘talkability and sharability’ around their campaigns.

And it has led us to some crazy situations. Let’s say a client has a budget of $10 million. Roughly $1 million of that budget will go on creative development, with the rest going on media. The client will fight tooth and nail to gain a 10% saving across the budget – a saving of $900,000 on the media via efficiency savings, then $100,000 on the creative by squeezing fees.

But we now know that investment in award winning creativity can deliver far greater effectiveness (growth) than ‘standard’ advertising. That $100,000 saving is potentially jeopardising tens of millions of dollars of returns.

It is the difference between marketing as a cost (to be minimised) and marketing as an investment (to be optimised).

No one is necessarily to blame here; it’s just that the process of marketing within client organisations has lost context with what is really critical to business growth and what delivers best results.

We are in the business of making money

I believe this will change, and there are signs that other clients are now looking to drive more creativity at the strategic level. But how do they do this? At what point will the marketing world regain enough credibility to be able to access and leverage real creativity? And can the agency business help rectify the situation and make a better case for creativity?

We also need to look at ways to make successful creativity easier to spot. It is widely argued that methods of pre-testing ads fail to capture the all-important emotional responses. Too often, the wrong things are being measured, and marketers begin to view creativity as a risk. But new techniques such as facial coding and eye-tracking promise to deliver better insights into the emotional or implicit responses creative work can stimulate. Many major advertisers are already experimenting with these.

Next, we should keep talking about growth. Growth - not efficiency - is the key business success determinant as we enter a less differentiated world. The sole purpose of creativity should be to stimulate growth and success against competitors’ direct and or indirect offerings. Not just awareness, or likes.

We should also be opening our eyes to new forms of creativity suitable for a world of connectivity and customer-centricity. There are more ways now to act creatively and the industry’s better understanding of how to do this is critical.

This thinking is a model for industry recovery which we have started to develop. I call it ECG – Engaging Creativity for Growth.

As an industry, that means we need to be proactive and engage clients, emphasising the value of creativity. We need to present ourselves as creative business experts – not just the creativity of a 30-second spot. And we need to talk about growth – how to grow brands in competitive markets, and how to maximise growth from a marketing investment. Most importantly how to agree on growth goals that are measurable.

Correctly reframed, agencies can make this change and make the case to clients. My bet is that the clients who listen will be outperforming those who don’t.