In the first part of this two-part series on marketing effectiveness and efficiency, we explored where short-term performance-only marketing stems from and the problems that arise with this strategy. We learned that successful brands also utilize an audience-first approach that focuses on brand building and that this is integral to their success.
This second part of the series provides senior marketing executives with three tangible steps to accelerate growth in the short and long term for their brands despite the significant challenges that lie ahead.
1. It is not performance marketing vs. brand marketing. Instead, it should be performance and brand marketing. Uncovering the optimum balance is the hard part.
Growth planning requires marketers to strike a balance between encouraging short-term sales and building the brand long term. Finding the right ratio is not easy.
Consideration needs to be given to the myriad dynamics of your brand through a marketing lens. Collaborating with your strategy and analytics teams to uncover scenarios for testing is a good start. The only certainty is that there is not a one-size-fits-all answer. Gear up for a healthy debate and rigorous ongoing analysis.
This perspective is supported by industry thought leaders Les Binet and Peter Field. They say the previous all-context 60:40 (brand to activation) rule has been adjusted to 62:38. But the optimum balance between brand building and activation expenditure varies by context. In their report Effectiveness In/Context: A Manual for Brand Building, Binet and Field reveal 6 major factors that influence effectiveness and drive variations to the rule, including:
- How people choose brands
- How people buy brands
- Brand pricing
- Category development
- Brand development
The report, presented as a “self-help manual for brands to guide strategy depending on the contexts that the brand operates in,” firmly rebuts the assumption that general learning can be automatically applied in all situations. More specifically, “brand building and sales activation are not choices or alternatives—they are mutually inter-dependent, and both are essential to long-term success.” In some sectors, brand building is easier than in others (because of overall consideration levels), while activation may be easier in others (because of greater rational consideration, research or online sales).
In sum, a balance of brand marketing and performance marketing is critical when seeking to drive both short- and long-term growth. But the optimum ratio across these two dimensions is not one size fits all. Considerable thought needs to be given to the array of variables that impact effectiveness. The updated Binet and Field report is worth a read.
2. Create a holistic analytics framework that evaluates brand and performance.
Expanding your approach to measurement to make decisions on what is really driving the business versus what you can count through performance marketing is critical. Focusing efforts solely on the easy-to-measure short term at the expense of the long term is simply irresponsible. While you will be appeasing the C-suite, board and shareholders today, you will be disappointing them tomorrow. You must uncover a holistic form of marketing measurement.
Typically, key brand metrics include awareness, familiarity, consideration and advocacy. All too often, these are viewed by those outside of marketing as “soft metrics.” What is required is showcasing how brand efforts track to growth. Unified marketing measurement aims to do that, with a number of marketing measurement and optimization vendors innovating in this space.
Enlightened senior marketers should hold onto the vision of unified measurement delivering a holistic analysis of all factors affecting ROI. Without this unified approach, senior marketers will struggle to establish the right mix of brand and performance marketing. By using unified marketing measurement, the senior marketer will be less biased toward short-term performance given the ability to uncover insights into the impact of brand activity on long-term growth.
As adopting unified marketing measurement may represent too significant of a leap for some organizations, sharpening your current measurement approach could serve as a quick win. For example, Adidas recently shared that while focusing on efficiency vs. effectiveness, the brand over-invested in performance marketing, focusing on last-click attributions while paying little attention to brand tracking. This led them to look at specific KPIs and how to reduce their cost rather than what was in the best interest of their brands.
Once Adidas brought in an econometric model, they discovered that while they thought loyal customers were driving sales, in fact 60% of revenue came from first-time buyers. As a result, they were over-investing in CRM. Further, while Adidas thought only performance drove e-commerce sales, in fact it was brand activity driving 65% of sales across wholesale, retail and e-commerce, while performance also drove wholesale and retail sales. Adidas admitted they were using the wrong metrics and were focused on the short term because of a “fiduciary responsibility to shareholders.” Adidas is now working on what the right media and attribution model is for them, as they seek to shift away from their historical 23:77 (brand to activation) split. They are also adopting a test-and-learn approach to aid in refining their efforts.
In sum, a holistic analytics platform that measures both brand and performance is critical as you seek to realize your growth goals both short and long term. Consideration needs to be given to engaging with the leaders in unified marketing measurement. If you are looking to remain competitive in today’s landscape, the synthesis of brand and performance marketing is essential if you want to achieve the growth and success needed to make a substantial and lasting impact.
3. Forge strong relationships across the organization and C-suite and partner with them to drive growth.
It is widely understood that one key to CMO success is garnering the trust and advocacy of the C-suite and the larger organization. A recent McKinsey & Company report, Marketing’s Moment Is Now: The C-Suite Partnership to Deliver on Growth, underscores the importance of the relationships a CMO has with the C-suite and others in the organization.
The report calls out the optimal CMO archetype as “the Unifier,” “someone who fosters robust, collaborative partnerships across the C-suite.” McKinsey’s analysis indicates that high-growth companies are seven times more likely to have a CMO who is a Unifier. So, what are the traits of the Unifier that enlightened CMOs should be modeling? McKinsey describes the most successful CMOs:
“These CMOs are masters at fostering cross-functional collaboration. They ensure that marketing has a clearly defined role in the eyes of C-suite peers; they adopt the language and mindset of other C-suite executives; and they articulate how marketing can help meet the C-suite’s needs. They also establish mutual accountability and a shared vision with other executives. Sought after by peers for advice, they have a seat at the table when critical decisions are made, have broad profit-and-loss (P&L) responsibility, and are often involved in defining the company’s strategy. As a result, their budgets are more likely to be protected during a downturn, and they enjoy a 48 percent longer tenure.”Julien Boudet, Biljana Cvetanovski, Brian Gregg, Jason Heller and Jesko Perrey, Marketing’s Moment Is Now: The C-Suite Partnership to Deliver on Growth
Admittedly, a CMO’s ability to fall into this archetype is as much about their vision and behavior as it is the organization’s receptivity to a more robust collaboration model. Ultimately, the C-suite sets the tone for the entire organization and both the CMO and the C-suite must be willing to embrace a give-and-take relationship. McKinsey suggests that we consider these factors:
- The CEO and CMO engagement. CEOs must fully support their CMOs and instill in them the trust to give CMOs the authority to put forward new ideas in support of the growth agenda. CMOs need to embrace that trust and run with it, looking holistically at the opportunities to drive growth with no bounds. The drive for growth should move beyond advertising and branding and include customer experience, employee experience, innovation, technology, operations, product and pricing. To facilitate this, the CEO needs to promote cross-functional collaboration. CMOs also need to leverage the broader team as they seek to uncover big ideas with no bounds. Of key importance, the CMO needs to work with the team to deliver the data that clearly articulates anticipated impacts on both short and long-term growth, and regularly share insights as they become available.
- The CFO and CMO engagement. Given the tendency for CFOs to be a bit skeptical of the value of marketing, the CMO must work hard to demonstrate that marketing is delivering value. A CMO should work to create a holistic analytics framework leveraging advanced analytics and report on both short- and long-term impacts in language that resonates with the CFO. For example, while brand awareness, familiarity and share-of-voice mean something to the marketer, CMOs need to work to translate those metrics to showcase their impact on the growth agenda. Consider KPIs such as profitable growth, market share, lifetime value and marketing ROI. Ideally, the CFO and CMO align on the growth goals, marketing’s impact and the target KPIs, and the CMO reports back regularly with updates on performance.
- The CTO and CMO engagement. In our new world,CMOs must embrace that their success is to a great degree dependent on how well they advance and sync with technology. They must collaborate with the CTO to establish the appropriate technology platforms that will not only provide for the optimal customer experience but also enable them to sift through the plethora of data available effectively and efficiently to better inform their marketing decisions. Ideally, the CTO and CMO develop a shared vision and work toward that vision, providing updates to the C-suite as a team. As McKinsey notes, “CTOs who feel responsible for the outcomes of marketing initiatives are more likely to devote dedicated resources to them.”
In sum, the successful CMO must uncover ways to seamlessly partner with the C-suite to advance the brand’s growth agenda. Collaborating on goals and KPIs and establishing mutual accountability is key. And consideration should always be given to adopting an “in your shoes” perspective to ensure that you are using the right language and your message will resonate. Do not fall into the trap of “marketing speak,” but speak the data- and results-driven language that the C-suite requires.
Today’s senior marketing leaders are faced with myriad challenges. Increased pressure to drive growth with an expanded role just begins to scratch the surface. Layer on the impacts of the coronavirus pandemic and the economic and political disruptions of this year, and you can see that 2021 will be an inflection point where senior marketers must deliver value and think big. The key is to ground everything you do with a “growth through marketing” lens while driving a collaborative culture across the organization and embracing both brand and performance marketing to ensure success both today and tomorrow.