Planning for the Springback, and the "Freedom" Budget

Yet as MediaVillage founder Jack Myers saw far ahead of the rest of us marketing has been in a recession for the whole century so far not growing in line with the rest of the economyWhy is thatThe founders of the great brands all knew the importance of marketing As Peter Drucker the father of managerial thinking said quotBecause the purpose of business is to create a customer the business enterprise has two amp8212 and only two amp8212 basic functions marketing and innovation Marketing and innovation produce results all the rest are costs Marketing is the distinguishing unique function of the businessquot The great brands39 founders knew thisApparently too many of today39s CEOs do not know this Enslaved by the quarterly analyst call no other yardstick counts it would seem other than avoiding black eyes in the press Not only is this shortterm thinking only about the metrics that matter to the analysts but it39s also thinking unbefitting of the inheritors of the top executive positions of the founders The inheritors ought to learn how their founder thought that made the company great and at least use that as a foundation on which to express their own creativityThe analysts themselves are enslaved to a system that the entire world depends on which is actually a legal gambling system where the winners are the ones who can most accurately guess the next waves of sentiment from the herd whether people will be bullish or depressed All investment markets rise or fall based on thisIt39s truly ironic that marketing amp8212 the function which is most focused on understanding the consumer amp8212 is largely ignored when it comes to making forecasts of the economic environmentGetting back to Peter Drucker39s dictum the two functions he identifies as most important marketing and innovation both depend on creativity And yet perhaps causally related to the 20year recession marketing has suffered CEOs also about 20 years ago began to assign advertising and media to procurement departments They did this as if buying creative marketing was the same quotminimize costquot game as buying ball bearings as if creativity were a commodity though the opposite is trueEven before procurement the advertising industry had been too focused on minimizing the cost of a media unit as if that were the only thing that mattered as if that ad would deliver the same emotional persuasion per impression wherever it was putUntil a dozen years ago when the first of insights agency TRA39s ROI findings started to reach general attention it was also generally believed that or so actions would reveal among brand marketers the only quottargetingquot one needed to do was by sex and age TRA empirically demonstrated that sex and age have approximately zero predictivity of ROI while the density of convertible quotheavy swingquot purchaser audience targets reached is a splendid predictor of ROI Today the purchaser targeting message has gotten across and the context is just beginning to dawnAt the 2019 ARF Annual Conference TVdata company 605 presented a study for a major advertiser showing strong evidence that a single ad exposure in a context aligned psychologically with the ad lifts the most used branding metrics by double digits Media people should be placing the greatest emphasis on media selection based on the intensity of the impression given by the context congruence plus targeting the convertibles not people who will buy anyway They have to keep reach and efficiency in mindIn contrast to today when efficiency is the main focus targeting is too often aimed at consumers who will buy anyway or to lookalikes almost as fluffy as sexage and context is given blatant lip service All of this can be different when we return from quarantineAll of this should be different when life resumes in its fullest and the world is everyone39s oyster like it hasn39t been since the original Roaring 3920s We will have gotten our rest and will be at our best for a fresh start What better time to cast out the malpractices that have diminished not only in marketing but also far beyond As Peter Drucker told us marketing is what gets new customers and business exists to get new customers The markets have been kept artificially high in the absence of real growth in new customers for mature brands but we can cause the markets to be truly high without the eventual boomerangpaythepipereffect that artificial manipulation risksHow By making marketing what it should be and has been in the past until it all slipped into treating media as an expense and not an investment By not using media mostly to make quarterly earnings reports look good without regard for longterm brand equity And by shifting most of the money out of branding and into activation media Consider of the 22 largest advertisers in auto CPG and QSR only four grew market share since 2014The most important thing we can do to fix marketing when we emerge from this dark tunnel is to change the way advertisers write agency contracts Right now advertisers unwittingly paint themselves into a corner by getting guarantees on sex and age reach and GRP Then when the CMO wants to buy some other way the agency points to the contract and says quotNo we39re not going to reach into our own pockets to pay you back if we don39t deliver contracted impressionsquot I39ve witnessed CMOs39 public embarrassment when they said they were going to go right and then the agency said quotNope we39re going leftquot The CMOs because of the contract had to back downThe recommended way out in the better future we are all planning now is to have two budgets one with the guarantee but on convertible targets not sex and age the other called perhaps the freedom budget for the CMO to direct as they see fitThe contracts should also provide a specified metric and thirdparty measurement supplier that CMOs can use to determine their agency39s performance bonusWith these simple changes in place in a year Jack Myers will be predicting that we are coming out of the marketing recession And he39ll be rightDon39t stop now Stay in the know on advertising trends and ROI strategies with more from Bill HarveyClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

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Planning for the Springback, and the "Freedom" Budget

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Planning for the Springback, and the "Freedom" Budget

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