ANA Marketing Musings

ANA's Marketer's Constitution

Today I will talk about ANA’s 100th Anniversary Marketer's Constitution. The constitution is a series of fundamental principles that we believe will apply to the marketing industry. Our hope is that these principles will carry us forward, helping us to build our brands and businesses. This is part one of a three part series.

Ad Deductibility & The Social / Political Environment

Today I will talk more about the current threat to Ad Deductibility and how this is having a profound affect on the US social and political environment.

Trends to Watch in 2008

By Bob Liodice

MARKETERS HIT A ROUGH PATCH 2008 will be about the economy and politics. Growth is slowing, fuel prices are high and credit is tight. That's a difficult mix for marketers to face as consumers will continue to pull in the reins as disposable income tightens dramatically. With caution flags waving, marketers will keep expectations and spending plans modest. Combined with lots of political "tax-raising" rhetoric , there will be plenty of room for nervousness. But political ad spending will more than make up for sluggish brand-marketing investments.

INNOVATION AND CREATIVITY RULE Marketers' ingenuity will continue to expand as the competitive marketplace challenges brands to devise ways to reach their audiences online and via other "out-of-the-box" avenues. Targeting consumers using unconventional methods in creative places will be the gold standard for outstanding creative. Marketers won't run away from traditional media -- but will leverage technology and new media to accentuate message delivery to consumers and customers. There is no turning back -- and creativity will rule.

GET SERIOUS ABOUT ACCOUNTABILITY In ANA's 2007 marketing accountability study, it was startling to find that, despite enormous efforts, 42% of marketers were dissatisfied with ROI measurements and metrics. In about half of the companies, marketing and finance don't speak with one voice or share common metrics. Enough! Recognizing the critical importance of accountability, companies will appoint a czar -- the chief accountability officer -- to lead a disciplined, internally consistent approach to marketing measurements, metrics and productivity.

DIGITAL, DIGITAL, DIGITAL (AND PORTABLE TOO) As Steve Ballmer proclaimed at the 2007 ANA Annual Conference, all media ultimately will be created and delivered digitally. Can anyone legitimately argue with that? Naahhh. And the beat goes on in 2008. Digital offers richness in information management, communication delivery, metrics -- and portability. Simply look at the iPhone and similar devices to know consumers will have all forms of media at their fingertips 24/7. The challenge: Are marketers skilled enough to take advantage of this rapidly changing landscape?

THE 'BRAND SWARM' Marketers will move decidedly in the direction of DDB CEO Chuck Brymer's "swarm theory" -- the notion that people and their opinions coalesce to form critical forces that massively influence marketplace ideas and concepts. "Swarm theory" will elevate social networking to new levels, confirming the immense impact that consumers have on each another. Marketers that embrace this trend can form consumer brand "advocates" and drive brand loyalty and trust to new heights -- if done responsibly.

GETTING COMPENSATION RIGHT (PLEASE) Compensation models will evolve in 2008. Agencies and clients will work together to create mutually fair value- and incentive-based approaches. The ANA 2007 Trends in Agency Compensation study showed that only 25% of respondents were very satisfied with their compensation models. Marketers will pay well for great ideas and superb media management. The key is to get expectations right between agency and client. Perhaps Procter & Gamble's just-announced compensation model is a blueprint of things to come.

NEUROLOGICAL MARKET RESEARCH Going beyond traditional focus groups and consumer surveys, market research will embrace scientific approaches that literally tap consumers' brains to learn how they neurologically respond to commercial messages and make brand choices. The Four A's and ARF have begun researching this topic in earnest with an intensive study, "On the Road to a New Effectiveness Model." In 2008 we will start to see practical applications of these insights as advertisers and shops begin to truly understand engagement.

EMERGENCE OF THE 'RENAISSANCE MARKETER' A new breed of marketing professional is emerging -- individuals with a holistic view of the world and extraordinary observational powers. These "renaissance marketers" will be part humanist, part psychologist, part anthropologist and part technologist. Cookie-cutter marketing will no longer survive as marketers must take a broader view of the consumer and customer. This includes the need to be socially responsible and to embrace key trends such as green.

THE POWER OF STRATEGIC ALIGNMENT Marketers succeed when brand messages are fully integrated and synchronized across all media channels. That requires strategic alignment -- leadership that ties everything together -- particularly when the forces of change can potentially pull them apart. Strategic alignment is one of the most important roles of the chief marketing officer, and In 2008 more CMOs will ensure organizations are strategically aligned. Lead agencies will be appointed to make sure all supporting agencies carry out the same brand message.

PRIVACY, PRIVACY, PRIVACY

In 2008, marketers will become increasingly sensitive to privacy issues. With "digital-intrusion" and identity-theft issues as paramount consumer concerns, marketers must be extraordinarily careful to respect worries of access to private information. This tug of war between consumer privacy and information access will require marketers to work hard to explain and justify the lifestyle benefits of highly individualized, personalized commercial communications.

(Content originally published in the December 17, 2007 issue of Advertising Age)

Media Buying Metamorphosis

My fifth “top ten trend” for 2007 is that media buying and selling will be transformed. The old, antiquated ways of doing business will give way to new, automated, highly efficient processes, as demonstrated by the growth of online media buying exchanges.

This prediction is hardly a wild and crazy idea.  In 2007, the eMedia exchange – an initiative of several large ANA member companies, including Lexus, Microsoft, Wal-Mart and Hewlett Packard – will conduct a pilot test for television (details will be forthcoming).  It will provide the entire industry an invaluable opportunity to assess the viability, scope and potential benefits of an online system.  It’s my belief that this test will trigger an explosion of new, more efficient ways of purchasing media.

In the October 2006 issue of The Advertiser, Josh Martin, author of the article entitled, “Time for a Sea Change?” succinctly expressed the concerns of many in the industry.  In his story, he says,  “The current system, created in the 1940s, is fragmented by region and by media.  To acquire ad time, companies must go through a costly and cumbersome process using ad agencies and media brokers.”

The expected transformation in 2007 actually has its roots in the ANA March 2005 TV Advertising Forum.  It was there that advertisers announced new ideas for buying and selling media, and for updating and fixing the Upfront.  The process which started at that gathering then began to come to fruition at the ANA’s May 2006 Advertising Financial Management Conference.  At this event, 72 percent of attendees thought the idea of an eMedia exchange was worth exploring.  It has since generated a great deal of healthy dialogue and serious scrutiny about media buying and selling.

Methods of online buying and selling of media have already been beta tested.  Last year, Google created a program for online purchase of newspaper advertising.  The January 15, 2007 issue of B to B magazine covered it this way:  “Although it is still in the test phase, newspaper and advertising executives are responding favorably to Google's newspaper ad program that allows advertisers to go online to bid on ad inventory in daily newspapers.”  The article goes on to explain that the program, “which currently includes more than 100 advertisers and 66 newspapers, is designed to help newspapers sell print advertising to smaller advertisers that buy Internet ads from Google and have generally been priced out of the newspaper advertising market. Advertisers bid on when and in which newspaper sections they want to run their ads. Newspapers can accept or reject the proposals.”

Looking at the broader needs of national advertisers today, it is widely acknowledged that the manner in which media is bought and sold is inefficient, opaque and in many cases out of sync with the strategic planning, budgeting and executional requirements of many marketers. Modernizing it will not only address these core issues but, in my opinion, will unleash a flood of new, creative ways of shaping media packages that help marketers more effectively reach consumers and build their brands.

It’s there in black and white…

Marketers will always have an affinity for print advertising.  It’s one of our most valuable targeting and reach-extending media. It has shelf life, and it’s extraordinary in its ability to match the advertising message with the editorial content.

However, the media landscape has evolved – and continues to evolve with lightening speed.  For print to remain competitive within our marketing mix, we offer 10 “pleas” to get the print industry to the head of the class. The following were presented at the June 16 ANA Print Advertising Forum held at the Grand Hyatt in New York City:

1. Help marketers understand print’s cause/effect contribution to generating results and building brands long-term. We need to understand more why print is the medium of choice for marketers to achieve their near term and strategic objectives.

2. Give us issue-specific circulation and cumulative data that show how an audience builds over time. Identify how that data is most specifically relevant for our brands target audience. Data is great – but it must be relevant and have targeted focused value.

3. Give us reader involvement insights that help us understand the unique connections publications have with readers. How do readers “get cozy” with the publications and show us how that affinity cascades to the advertised brands.

4. Tap into the creative energy that permeates editorial pages, and give advertisers some new, innovative, branded ways to sponsor publications. The relationship with print has to become broader, more integrated, more involved with a range of communications alternatives. We have to leverage them together to create enough “punch” to cut through the clutter and deliver an “embracing” message.

5. Reduce the long lead times to secure space and submit materials to monthly magazines. There really is no excuse for not making this happen. Publications need to examine their internal process chains and find ways to cut needless time out of their production cycle – to make it more accommodative to advertisers.

6. This one’s for agencies.  Find new, cost efficient ways for us to test print creative – and to test more frequently. With technological advances and the ability to transfer digital images of the web, there are clearly ways of expanding cost effective opportunities to understand the effectiveness of alternative print creative.

7. This one’s also for agencies. Raise the creative bar.  Put some of your senior talent on print advertising.  We want intelligent, visually exciting breakthrough print campaigns. This one has been talked about for years – and I just don’t get why print is always taking a back seat to electronic media. Recognizing the size of the investment in print vehicles, print creative must take a prominent stance in the minds of the agency creative management team

8. Either justify or end the practice – once and for all – of absurd bleed charges. Enough said. Let’s make this happen and let this old, antiquated legacy cost die a quick and painless death. They have no place in today’s marketing cost structure – particularly as the emphasis on marketing accountability has taken front and center position with CMO’s and CEO’s.

9. Either justify or end the practice of surcharges for national newspaper advertising in local editions. Fees should be based on value delivered – that’s why this doesn’t make sense.  

10. Get with the digital program!  Print media should be the leaders – not the followers – in this exciting realm. There is an expanding bundle of opportunities that will open up new vistas for everyone in the communications business – particularly those in the print arena. Do it now and make the world safe for the world of opportunity.

Marketing with Women

Last week, ANA and AXA Financial co-sponsored a day-long mini-conference titled “Marketing with Women”. Led by former agency CEO and Founder of “Just Ask a Woman”, Mary Lou Quinlan, and a cavalcade of marketing and industry executives, the day was focused on bringing attention to today’s most powerful constituency – women.

It’s rather strange that we almost take women’s focused marketing for granted. Maybe we’ve all been doing it for so long, that it’s a “given.” But it shouldn’t be. Recognizing that women make up 70-90% of all the purchase decisions in the US and control a preponderance of wealth, we need to keep women top of mind and really get into their heads – if we are going to enhance our probability for successful marketing. P&G certainly gets it. Not only do they profess “Know thy customer” – they also acknowledge that their customer is a woman. That helps, big time.

ANA’s conference highlighted so many fascinating knowledge points – too much for this writing. So let me take a crack at defining four distinct platforms that I took away from the meeting:

1. Understand women’s financial power and wide-ranging influence

By 2020, four-fifths of wealth will be in the hands of women whether personally accumulated, inherited or directly influenced. How women wield that power is critical for all marketers. Small shifts in spending patterns can have broad implications for many business categories. Those shifts can happen in reaction to product innovation or customer satisfaction. As marketers, we can never afford to be comfortable that we are doing it right – particularly in the fast paced / rapidly changing environment we live in.

2.  Listen to what women want – then get ready!

Sure, it’s very important to understand where the women consumer is today. But the real question is, where will she be tomorrow? Just when we think we have it figured out, the landscape changes and shifts – as fashion, innovation, quality and styles move rapidly. Companies like Toyota have made enormous inroads to the female consumer simply by setting up ownership groups and listening. Marketers have a captive audience in their female employees; use them as sounding boards. Let them teach you what’s hot and what’s not. Leverage their marketplace savvy to give you an honest peek under the tent to let you know where the marketplace is moving.

Then, prepare to react. Listening takes you so far. What marketers need do is to have the business systems in place to rapidly integrate these findings into tangible actions. Competitive advantages are typically “temporary” and often “fleeting”. Move quickly and responsibly to capture the moment – and the opportunity.

3.  Organize company communities to drive awareness / sensitivity / action

AXA Financial has been at this for about three years. They literally have begun creating company-wide communities that provide organized approaches to women’s marketing or generate unique findings about specific areas of women’s interests. This extraordinarily patient and rather unusual approach is paying off on AXA’s bottom line – as these individuals generate better results than typical company work groups.

These approaches have enormous implications for management structures as well. Ask yourself, is your company human resources and management structure properly crafted to optimize women performance and contributions? If not, consider the option of creating opportunities for women to facilitate their professional development and work/life balance – particularly when it comes to raising a family. Such women are incredibly valuable to your company as they carry years of experience and insight – that could be lost if they decide your company is not the place where they can successfully prosecute all of the complex demands in their rapidly changing lives.

4.  Make it all happen

Look at the processes achieved by marketers like Best Buy who have turned 25% of their stores into female friendly models and have watched these adaptations trump other stores’ performance. P&G has become increasingly creative with their female customer base as evidenced by their recent multi-platform product launch of Mr. Clean Magic Reach. 1-800 Flowers.com and Wyndham Hotels are other examples that have adapted and continue to adapt – as they have taken a far more progressive and aggressive approach to converting ideas into realities. There are some marketers out there who have smartly targeted this audience and have compassionately connected with them – a connection that has benefited everyone.

As marketers, it is important to truly understand the make up of our audience – and to set our marketing plans and initiatives into action. Let’s be sure to remember the power and influence of women as we set those wheels in motion.

Marketing Accountability – Finally Taking Hold

Of course the journey is very long – but the principle of marketing accountability seems to be finally getting a grip on the overall Marketing Supply Chain. And I am thrilled!

Several recent examples I would like to highlight:

* Ad-ID and E-biz for media are both starting to gain traction. Ad-ID is the new digital coding system that acts as the industry’s UPC code. By applying this to all advertising assets, companies can digitally track, traffic and transfer assets and messages across the entire chain of communications – from advertiser to media delivery. 250 companies are now using Ad-ID. E-biz, or EDI as many of us remember, provides two way digital information flow for television and radio – with applicability to other media as well. Through digital communications, paper and people can be removed from the advertising asset management process. This eliminates costly rework and agency labor, greatly improves accuracy and champions marketing and media accountability. Great progress has been seen – particularly in the local television and radio industries.

* The XMOS studies represent an important step forward in making media management decisions. XMOS literally helps companies identify optimum asset allocations but can also do so within the context of changing creative -- which is the wild card that has largely been viewed as less controllable. This gives companies the latitude to explore different media options to optimize revenue generation down at the brand level. Several “big-name” brands are leveraging this tool to make important brand / media management changes.

* Project Apollo represents a big step forward in consumer research. Apollo is a “single-source” research model that provides critical learning about actual purchases in response to exposure to radio and television media. Measuring “cause and effect” represents a significant leap in learning – providing marketers with increased knowledge about the implications of changing marketing spending and media allocations.

* Procurement departments have certainly proved their worth to improve agency accountability – even though they have elicited pain for marketers and agencies. Having this “third-party” group involved has elicited greater discipline among all parties improving the evaluation and decision making processes.

And, of course, I could go on and on. These “cases” are simply the tip of the iceberg for a “movement” that is well underway – but has a long way to go. We will not let our foot off the accelerator as we convene ANA’s Marketing Accountability Forum in July and ANA’s Annual Conference in October.

Great Marketers Market Great

So what are the common denominators for successful marketers in today’s rapidly changing environment? How can leaders best respond to the challenges of putting consumers in charge … and for making marketing investments more accountable?

I see six distinct platforms that are the foundation for consistent, top notch marketing performance in any industry:

1. Continuous product innovation or reinvention. If you’re not new … or you’re not perceived to be fresh and relevant … then you’re old news … yesterday’s business. Marketers must maintain their relevance in consumers’ minds or get blown away by fast-moving competition. Simply look at what Jet Blue and Southwest Airlines have done to reinvent the airline industry. By simply adding a few television screens and by offering consistent, understandable low fares, they’ve surged past the legacy carriers with sustainable, high quality business performance.

2. Product and service quality is the next critical marketing platform. Consistently being the best-in-class -- year-in and year-out -- is undoubtedly a fundamental component for long-term profitable success. Starbucks is a classic example of winning in the marketplace by consistently exceeding customer expectations … and accomplishing that without the benefit of a sustained communications program.

3. Offering flexible and fair value is an unbeatable way to win consumers’ hearts and minds. I think that one of the best and most recent examples of this marketing platform was Wendy’s extra value meal campaign. Not only was their offering reasonably priced, it was highly flexible. It provided consumers with the appealing choice of substituting a salad, chili or baked potato for the standard French fries offering. This was a stroke of brilliance and ingenuity – and was very useful to blunt the flood of food advertising criticism coming from Washington and special interest groups.

4. Marketing cost efficiency and streamlined marketing processes are paramount. Marketers are consistently looking at their own cost profiles to ensure they are getting the best return for their marketing investment. They need to know whether their marketing supply chain is as efficient as it can be. That’s why procurement departments are becoming increasingly involved in so many decisions, including agency management and media negotiation. It’s also why marketers are becoming more directly involved in functions like talent payments. In fact, the ANA Production Management Committee has just released guidelines for effectively managing television talent payments. And the Committee is encouraging advertisers to meet with their agencies and production consultants to discuss how these guidelines might help maximize efficiencies.

In addition, marketers are working to understand the effectiveness and efficiency of their media buys. Looking to maximize weight against working media, advertisers are striving to reconfigure their marketing mix to improve overall cost balance and to optimize revenue generation. American Express is one of the most visible examples of a marketer shrewdly redeploying its marketing mix.

5. Measurements and Metrics. Perhaps the most profound change in marketers’ behavior is the intensified focus on measurements and metrics.  Driven by the old adage, “you can’t manage what you can’t measure,” marketers are seeking greater precision in assessing the outcomes of their actions, as well as deeper knowledge of alternative communications disciplines. Indeed, the desire to transform marketing into a “science” is one of today’s hottest trends.

6. The final platform – and perhaps the most important transformation for marketers -- is making direct Consumer (or customer) Connections. Today, one-to-one connections are more feasible than ever thanks to targeted or addressable media – whether over the Internet … through the emerging arena of wireless … with the growing opportunities forged by cable TV … via enhanced forms of e-mail marketing … or in the new realm of blogging and other such alternative communication forms. In many respects, marketers are finding that “mass marketing is not dead,” it’s just undergoing an exciting transformation to “Mass Marketing – one customer at a time.” The proliferation of communication channels that we have demonized as “Media Fragmentation” has actually become the foundation for abundant new opportunities created by “Media Diversity.”
The pathway to each of these six platforms is through technology, innovation and experimentation. And importantly, they all recognize that marketing has dramatically shifted -- from a focus on the masses, to a focus on the individual. Marketing will continue to evolve -- ultimately, I believe, becoming a true “One-to-One” discipline. Consumers have enormous leverage and power to determine what they want to see and hear. We marketers must determine how we’re going to get invited to the table because in essence, marketing is becoming “By invitation only.”

Harkin Hears a Mouthful from Advertisers

I am extremely disappointed by the recurrent charges and finger-pointing of Senator Harkin regarding food advertising and marketing to children. Yesterday, Senator Tom Harkin (D-IA) spoke at the annual joint AAF/AAAA/ANA Government Affairs Conference commenting on the advertising industry and his opinions on the affect that he believes it is having on the child obesity issue in the

U.S.  Senator Harkin's comments are listed  here (PDF).

The ANA, AAAA and AAF presented Senator Harkin with this letter (PDF) at the conference yesterday, in response to a letter he sent in March which included many of the same criticisms of the ad industry included in his speech.   

The Most Socially Responsible Industry in America -- Advertising

The cornerstone principle that underscores all marketing is commercial free speech. When commercial messages for legal products are truthful and non-deceptive, marketers should be completely free to market their products and services unencumbered by government regulation – or the threat of such regulation.

I raise this point – at this particular moment in time – because of the outrageous attempts by Congress to vilify advertisers and marketers for many ills in American society. As noted by my colleague Dan Jaffe in his blog, Senators Harkin and Clinton bashed food marketers for undermining the health of our children by causing obesity. Representative Moran called for the restriction of ED ads. And Senator Grassley outlined provisions to eliminate the tax deductibility of prescription drug advertising.

I have no problems with politicians calling upon various industries to support initiatives that seek to improve the social well-being of all Americans. But I do have big problems when those calls threaten to impose governmental regulation and control -- particularly when the underlying issues are poorly supported by the facts.

I am particularly frustrated when the good work and socially responsible initiatives of our marketing industry go unrecognized and unappreciated – particularly by those grand standing in the political arena.

* Think of the great work done by the Advertising Council and its media partners who provide more than $1.5 Billion in donated media to educate the public on a variety of issues including drunk driving, seat belt usage and, of course, the well-being of children.

* Think of all of the great work done by the Partnership for Drug Free America and the enormous success it has had in curbing drug usage – particularly among teens and young adults.

* Think of all of the great work done by the Children’s Advertising Review Unit and the National Advertising Division of NARC – our self regulatory body -- to ensure truthful and non-deceptive advertising.

* Think of all of the great work done by the Family Friendly Programming Forum – the advertiser-sponsored group associated with the ANA that has successfully delivered outstanding prime time network programs so that parents and kids can watch television together.

* Think of all the great work done by the AAF, the 4A’s and the AEF to promote improved advertising and marketing education at our country’s higher institutions.

The marketing industry has done more than its share to contribute to the well being of people in America. Our industry’s social responsibility track record is second to none – and I encourage any and all politicians to take a fair and balanced look at the incredible good that we do.

All of us – the media, the agencies and our marketers -- should be very proud of the indelible contributions we have made -- and will continue to make – to American Society.