Senior marketers and analysts working in the TV sector have outlined some of the structural faults that are currently undermining marketing effectiveness and subsequently threatening the strength of brands. Asked at Future TV Advertising Forum Manchester this week whether the ‘brand-marketing-media machine’ is broken, the majority view was that it is broken, or is at least partially damaged.
Jill Hind, COO at the respected research firm Enders Analysis, set the scene with a presentation that laid bare the negative impact of cost pressures and short-termism in media marketing. She traced the problem to its source, in the boardrooms of corporations, noting that, “short-termism is a theme that is much bigger than this industry; it is a major structural force.”
She pointed to less long-term investors, like pension funds, and an obsession with quarterly results, leading to zero-based budgeting and the rise of procurement. “This affects all business functioning, including marketing.”
“All media agency deals today are at least partly anchored by procurement and an extraordinary 23% of them are negotiated entirely by procurement,” she told the Manchester audience. Meanwhile, agency-client tenures have reduced dramatically, meaning everyone is focused on the next negotiation, limiting the willingness of agencies to invest in more creative quality, for example.
It is hard for marketers to stand up against the drive for lower costs and Hind revealed a major reason why, drawing on research behind an Enders Analysis report on the structural impediments to marketing effectiveness, which was published last year. Firstly, barely anyone with a marketing background sits on a company board. Secondly, the CMO (Chief Marketing Officer) has the shortest tenure in the senior executive team – with an average term of office that is half that of CEOs.
This all leaves the marketing function weaker than it should be, with the danger that cost-cutting can trump brand performance concerns. “Arguably, marketing is being driven by the agenda of procurement and other non-marketing specialists,” Hind said.
Rapid changes in how people consume and shop, including the growth of e-commerce and mobile, has simultaneously encouraged a focus on shorter-term objectives. One manifestation of this is the growth in direct response marketing while brand and display marketing has barely grown in two decades, Hind observed.
“We believe industry, and the marketers who support industry, are often making a much braver decision than they realise, without necessarily understanding the possible long-term consequences,” she said. “All activation needs brand marketing to sustain efficiency, and complex and emotional messaging cannot be delivered as direct response.”
She used search as the purest example of direct response (DR) marketing and noted that it becomes less effective if it is not supported by brand communications. “DR advertising alone will not enable brands to maintain their premium price position and market share over time.”
There is also a serious problem with metrics and attribution, which under-value the performance of traditional media and long-term brand investment, Hind suggested. Digital media provides timely and persuasive data, and click-through rates feed the desire to provide evidence to non-marketers who want answers quickly. “Many of the UK media are not so good at being timely and persuasive, even if they are consistently more effective.”
ROI measures often fail to consider the impact of extensive TV and magazine advertising that has been running, too. “The desire for demonstrated ROI, with tough budgeting procedures, puts the focus on digital responses. Ignorance about the effects and interactions of other media is glossed over,” she declared.
The net result is that the short-termism becomes self-perpetuating. “We are over-stating the value of short-term targeting and engagement. We are under-rating the importance of long-term awareness and consideration through quality associations and context. We are not measuring the long-term consequences for brands.”
Hinds concluded that the industry is using patchy digital data to underpin a structural bias towards short-term goals, and without change, advertising effectiveness will diminish over time.
Backing up the warnings about effectiveness, Mike Campbell, Head of International Effectiveness at Ebiquity, the data analytics and econometrics specialists that gives independent and evidence-based insights about the effectiveness and ROI of different media, showed a slide that should shock everyone. It revealed that marketing effectiveness peaked in 2012 and has been declining ever since.
One company that has managed to buck this aggregate trend, however, is Direct Line Group, which is providing a masterclass in brand building and its benefits. Having already shunned comparison websites for its premium insurance products brand, Direct Line, the company set out on a post-2016 strategy that included heavy brand building. This included a big commitment to TV and its now iconic Winston Wolfe advertisements showing how every mishap can be dealt with by the unflappable fixer made famous in the film Pulp Fiction.
Direct Line achieved strong growth as a result, and as Sam Taylor, Brand & Commercial Marketing Director at Direct Line Group pointed out at Future TV Advertising Forum Manchester, the company recently received an IPA Effectiveness Award for its successful mix of long-term and short-term marketing strategies across various media including TV and radio.
Taylor was the lone dissenter in a group of marketers when he argued that the ‘brand-marketing-media machine’ is not broken. “No, it is not broken, he argued. “I have to grow the business in the short and long-term. If you do not water the tree there is no fruit to pick, but if you do not pick some fruit, there is no money to water the tree. We are watering the tree and picking the fruit.”
Taylor added that for Direct Line Group, effectiveness is the key metric and not efficiency. He did admit there can be pressure on long-term goals when the business climate is difficult, but added that the insurance market is currently weaker than it was a couple of years ago, yet Direct Line Group continues to ‘water the tree’ with top-of-funnel brand and awareness building on the basis that it will pay back handsomely when the market swings upwards again.
“Now is the time to start watering more trees because the market will get stronger and more people will convert at lower cost in the long-term,” Taylor said. “The more you invest now, the more efficient you become in the long-term. But you do have to make the short-term [strategies] work hard.”
Taylor was unapologetic about the way clients are squeezing agencies on price, noting that a corporate boardroom expects this. But he is keen to reward value. “It might cost more to get a bit more. Ultimately, it is about effectiveness and outputs and if you have to pay the agency more to get a better output and better outcomes, we will do that.”
Direct Line Group uses a procurement team, but they take their guidance from the marketing department about where they should squeeze costs and where they should not. “The challenge for us, when using TV, is the lack of understanding around how it works in marketing terms compared to the understanding we have about how digital works.”
This is important to those marketers who want to use TV. Taylor warned that without that understanding, there is a danger that you end up relying on procurement to decide the shape of deals.
Taylor agreed with a key theme in Jill Hind’s presentation, that current measurement and metrics is leading to a digital bias. But he sees a big positive from the recent focus on performance and the KPIs (key performance indicators) that go with it, as long as the industry does not focus only on the short-term and applies the same discipline to the question of how brands grow.
Mick Style, CEO Manchester at Wavemaker, the GroupM-owned agency, did agree with the thesis that the brand-marketing-media machine is broken. He also flagged the need to get short-term and long-term strategies correctly balanced – seeing this as a key agency role.
Looking more widely at things that have gone wrong in media marketing, he implied that broadcasters must take their share of the blame. “I am massively concerned about the haemorrhaging of audiences from television,” he declared, pointing to young audiences as a particular problem.
He is worried about the large volume of 15-34 year-olds who are unaccounted for even on the four-screen figures that BARB has started publishing as part of its Dovetail multiscreen measurement initiative. “They are somewhere in Netflix or Amazon, or they are gaming,” he suggested.
“You build brands with [audience] penetration and loyalty and the only way to get penetration is to have massive [TV] programmes”. Asked by the session chair Jon Block (VP, Product and Platform at Amobee) whether Netflix was a bigger threat to audience reach than social media, Style was in no doubt. “They [Netflix] are more damaging to that big screen viewing moment than Facebook, or Google.”
Stuart Feather, Director at Republic of Media, the independent media planning and buying agency that has offices in Manchester and Edinburgh, said he could not disagree with the idea that the brand-marketing-media machine is broken. Broadening the debate, he pointed to transparency as one of the biggest problems.
“We got some of the fundamentals wrong in this business,” he suggested. “There is not enough trust in the business and not enough openness, and that undermines relationships and how people work with each other, “ he said.
He thinks the focus on “machines, programmes and trading desks” under-valued the human touch. He would not be drawn on whether the squeeze on agency costs (by clients) is due to transparency issues and a lack of trust, but did comment: “You have to have confidence in where money is being made before you can establish a relationship on a proper professional footing.”
He added: “We are an independent agency and trade openly and declare all our sources of income with clients. In the UK at the moment, the three fastest growing agencies are all independents, which is a strange place to be.”
Style hopes there is no digital bias within the media agency world. “I hope we are trying to put the customer, the client, first.” There are still clients who come with a pre-conceived idea about how much of each media they should use, however, with an idea that they should spend X on digital.
“That can be quite common. We need to understand what KPIs they are working to, and if they are working only towards performance KPIs we have to understand the life stage of their brand. If it needs brand building, we find the opportunities for branding.”
Amanda Jones, Planning Director at the media agency McCann Manchester, acknowledged there is a digital bias among some clients when they come to an agency. “Some legacy brands think that the way to be relevant is to be digital, and that being digital is a short-cut to relevance.” She also thinks the marketing industry has become over-familiar with TV and has started to overlook its benefits. “Newer media have been thrust upon us constantly.”
Sam Taylor at Direct Line emphasised the need to follow the evidence. “It either works or it doesn’t work,” he said of the various media choices. “We hardly spend anything on display because it does not work for us. We spend half our budget on television because it does work. Traditional broadcast works really well from an ROI perspective, both short- and long-term, and it is the only thing that does both really well.”
Taylor said that when the cost of additional reach starts getting expensive on TV it is time to flip towards more addressable media. That could be YouTube or it could mean addressable TV.
Jones believes the ‘brand-marketing-media’ machine is partly broken and said advertisers do not have the self-confidence they had ten years ago. She highlighted what she thinks is another structural challenge for the industry: the growth in the number of agencies each client engages with, covering media planning, creative and PR. Each supplier has their own desire for ownership, and is looking to put their own spin on the core brand marketing message.
CMOs have an average tenure of 18 months and they can bring a new vision and ambition for the brand, and may want a new campaign, she said. They may want their own agencies and trusted people, too. “It is much harder to build brands. Brands can become diluted,” Jones suggested.
Asked if the television industry has let marketers down, by allowing audiences to fragment without properly measuring their multiscreen behaviours, and also letting them drift to ad-free environments like Netflix, she argued that it was actually the marketing industry that is letting TV down. Jones said: “The quality of the advertisements used to be as good as the television you watched, but that is no longer the case.”
Jill Hind at Enders Analysis said the industry needs to value both creative and planning more. “These matter now more than ever, yet investment in them seems to be falling.”
Jones agreed that “they definitely matter more than before.” She reckons spending on strategy is stable but is now spent in smaller portions, spread across more stakeholders, with specialised social agencies, digital agencies and creative agencies taking their own share.
“We are seeing more spend on pure strategy,” Stuart Feather at Republic of Media declared. He thinks falling production budgets for TV advertisements is a problem, though. “The core idea may still be great, but we are not seeing those seminal films [commercials] as frequently as we used to.”
A range of solutions were offered that would increase the effectiveness of media (including TV) marketing. Style at Wavemaker returned to his theme about audience reach – the most important change needed to help fix the brand-marketing-media machine, in his opinion. He wants big TV audiences. “That is what our clients need more than anything else, as penetration is the greatest driver for brand growth.
“We need more programmes like ‘Love Island’ and ‘Britain’s Got Talent’ and ‘The Great British Bake-Off’. And we need broadcasters to retain their sports rights and the rights for all sorts of other fantastic live programming.”
Jones thinks we need great advertising content so that people want to engage out of choice rather than because they are forced to. She also advised a shift in focus from what can be measured (as a guide to successful marketing) to what should be measured, and a move away from the obsession with immediacy.
Feather reiterated the need for more transparency. He highlighted the occasional disconnect between what is the most effective media and where budget is invested, based on where an agency is making money itself. “You have to say, ‘This is how we make money, because we want to make a profit’.”
The change recommendations from Hind at Enders Analysis, besides placing more value on planning and creative, include clients focusing on business objectives rather than how much money they want to spend on a given media this quarter, like social media. And the industry should recognise that perfect attribution is a false goal, she said.
The industry needs to show the effects of long-term media planning and marketing, and better demonstrate the value of premium context, she said. “Context and association remain critical and this offers huge additional value to brands through the quality environments that are perfectly primed for audience immersion.” She also called for a greater emphasis on experience-backed judgement that is informed by financial analytics.
For Sam Taylor at Direct Line, the key is to focus on effectiveness and not on efficiency, and to remember that brands are the biggest driver for sales. “Brand is a sales lever, and that is why we have brands.”
He pointed to a marketplace that is becoming more challenging for brands, flagging comparison sites and Amazon and, in future, voice search, as intermediate layers between companies selling goods and services and the end consumer. “Brands will be more important than ever – you have to ensure that you are the preferred choice,” he predicted. “We need to go back to ‘Marketing 101’ and remember our brand strategy investment.”
In her opening presentation, Hind acknowledged that there is growing recognition of the short-term versus long-term debate, especially noticeable in the last few months. “I think the way that some agency deals currently work seems to encourage more value going back into the planning and creative side, which has to be good for the long-term.”
She also emphasised the structural nature of the current problems, and how everyone in the value-chain, individually, has been acting rationally. “We are not arguing that everyone is doing the wrong thing. We are arguing that the industry is changing more radically than the evidence can keep up with.”
She views this as a collective problem that needs a collective solution. “Everyone is complicit, and everyone is to blame.” She concluded, however, that advertisers are best placed to force through the changes she thinks are necessary to fix the system.
Interested in the future of TV advertising?
Then check out Future TV Advertising Forum London, December 5-6, where leaders from some of the world’s biggest broadcasters, Pay TV operators, agencies and brand owners will discuss their vision for TV advertising. We are debating whether the marketing industry is sleepwalking towards a brand-health crisis and exploring all the immediate and mid-term solutions that can make TV advertising more effective and more compelling as a medium.
The role of audience-based buying and broadcaster collaboration is investigated, and there is a focus on how we enable ‘whole-market’ addressable TV. We are also looking at how the industry proves outcomes and audiences, and how advertisers reach consumers across the increasingly diverse premium digital video landscape.
Full conference details here
Full speaker list here
FTVA 18 London speakers include:
- Linda Yaccarino, Chairman, Advertising and Client Partnerships, NBCUniversal
- Josh Krichefski, CEO, MediaCom
- James Seckel, Director of Media EMEA, Expedia Group
- Stephen Van Rooyen, CEO, UK and Ireland, Sky
- Dominic Grainger, CEO, EMEA, GroupM
- Virginie Dremeaux, Digital Marketing Director, CANAL+ REGIE
- Carolyn McCall, CEO, ITV
- Sam Taylor, Head of Commercial Marketing, Direct Line Group
- Alex Mahon, CEO, Channel 4
- Joe Marchese, President, Advertising Revenue, Fox Networks Group
- Jean-Paul Edwards, Strategy and Product Development Director EMEA, OMD
- Henry Rivero, VP Advanced Advertising & Innovation, RTL Group
- Mathias Berg, Chief Operating Officer, TV4 Group
- Brian Lesser, CEO, AT&T, Advertising & Analytics, AT&T Services
- Paul Haddad, President 4A (Altice Media and Data Solutions)
- Sam Gaunt, Head of Media, Lidl
- Justin Sampson, CEO, BARB
- Christian Kurz, SVP, Global Consumer Insights, Viacom
- Nicolle Pangis, President & CEO, NCC Media
- Paul Evans, Global Head of Media, Vodafone Group
You can register for this event here