ANA Marketing Maestros

The Digital Agency Compensation Paradox

By Barbara Bacci Mirque

One of the paradoxes that marketers are currently grappling with is that in many circumstances the production costs of digital media exceeds that of the media costs. And since production is something for which agencies need to be compensated, digital agency compensation costs are rising. What I have heard some senior marketers say is that their bosses don’t understand this situation since digital media was initially touted as being more efficient than traditional media. Some of this can be attributed to inefficient processes that currently exist in the digital media ecosystem which the IAB and AAAA, with support of the ANA, are working on. To help our members benchmark digital agency compensation, the ANA recently fielded a survey on this topic. Mary Conrad of Jones, Lundin, Beals was nice enough to be our subject matter expert and interpret the survey findings. The initial results reflect this contradiction. 

The good news is that digital budgets are increasing despite economic stress.  But along with that, the number of digital agencies being utilized is also increasing as services proliferate.  The bad news for marketers is that the expanding roster of digital agencies means more complex agency management issues and higher agency compensation fees.  The bottom line is that on a percentage basis digital agencies command a higher percentage of the marketing budget than traditional agencies.  As we obtain more survey respondents, we will be delving into and releasing these findings in the coming months.   A preliminary report will be issued at the ANA Advertising Financial Management Conference beginning Sunday April 19 in

Phoenix

.  

 

If you are a client side marketer and would like to take the survey, contact Lindsey Raczka at LRaczka@ana.net.

Marketing Accountability Rocks

By Barbara Bacci Mirque:

At the recent ANA Marketing Accountability Conference, we heard from a series of marketing accountability practitioners including Doug Palladini from Vans, Dean Adams from 3M, Rich Martino from US Bank, Pat LaPointe filling in for Blair Gibson from Merck, Karna Crawford from Coke, and Jay Gillespie from Fiskars.  Ed Abrams from IBM was the master of ceremonies. The recurrent theme from the speakers:  CFO buy in is a great asset in the success of marketing accountability programs.  This is verified by the recent 2008 ANA/MMA Marketing Accountability survey in which we saw positive movement in the marketing/finance relationship over the past year.   

Build a culture of inclusion with finance and you will be on your way to a successful marketing accountability effort. Jay Gillespie told us how by including finance in consumer focus groups there is now such buy in that often the CFO will intervene when cost cutting discussions ensue and claim that it is important to build the brand!  Dean Adams mentioned that at 3M the controller is on the same floor as marketing and Karna Crawford noted that at the Coca Cola Company, finance is integrated into the marketing teams.  Ed Abrams said that at IBM it is not just finance that has a seat at the marketing table but also sales and general management functions.  When you don’t do this the results are that finance will not buy into your numbers, they won’t trust marketing and they won’t take the marketing numbers to the street.

If we don’t want marketing to be considered the black box that asks for cash we must implement these simple strategies.  ANA members can obtain more information about this important topic by joning the ANA Marketing Accountability Committee and visiting the ANA Marketing Insights Center and searching "marketing accountability".

ANA phone directory committee seeks better metrics from Yellow Pages industry

By: Bill Duggan

The ANA Telephone Directory Committee recently released an open letter to the Yellow Pages industry, citing “a lack of fundamental accountability metrics and other questionable practices” on four key issues.

Syndicated Audience Measurement Research
In July 2002, the ANA Telephone Directory Committee and AAAA Yellow Pages Committee coauthored “The Need for Third-Party Telephone Directory Usage Research,” a white paper urging restoration of syndicated audience measurement research.  The white paper noted that Yellow Pages is the only major advertising medium that does not provide syndicated audience measurement research.  Such research provides the “currency” for buyers and sellers in other media; for example, Nielsen for television, Arbitron for radio, and MRI for print.  The white paper stated, “It is unthinkable that investment decisions for television and magazines would ever be made without the benefit of audience research.  Why should the Yellow Pages advertising medium be any different?”

The committees were pleased when syndicated audience measurement research was finally reintroduced in the marketplace, via Knowledge Networks/SRI, in January 2005.  While that introduction was only in markets representing 28 percent of the U.S., (versus the 90 percent-plus coverage of such research for other media), at least it represented a start.  However, three years later this initiative is now in peril as the Yellow Pages publishers have dramatically cut back support to only 18 percent of the U.S. population.

Circulation Auditing
In August 2005, the ANA Telephone Directory Committee and AAAA Directory Advertising Committee released another white paper titled, “The Need for Third-Party Circulation Auditing.”  Circulation auditing would confirm the number of directories that are actually delivered, protecting advertising investments from inflated and misstated circulation claims.  That white paper noted, “Currently Yellow Pages is the only major medium that does not provide independent, third-party circulation auditing.  Such auditing has been a best practice in other media for many years. 

The white paper helped influence one major publisher to begin circulation auditing and other publishers to consider it.  Again, a good start.  However, today that one major publisher is rumored to be reducing its commitment to circulation auditing and no other major publisher has participated.

Directory Extensions
While the normal life of a Yellow Pages directory is a year (12 months), it is not uncommon for a new book to be published 13 or 14 months later.  Hence, the life of the older directory is “extended” by a month or two.  When such instances occur (quite frequently), the publisher bills the advertiser for the media cost of the extra month(s).  This, of course, is ludicrous.  Imagine a monthly magazine that publishes in March and then decides to take April off and then sends an additional invoice to advertisers!  In addition to the extra costs—which are often not budgeted—directory extensions further hurt advertisers as incorrect and outdated numbers are given longer life, and new listings (e.g., agents, franchisees, etc.) cannot be included.

Companion Books
Major Yellow Pages publishers have recently begun offering a second, usually smaller, version of the standard directory.  These “companion books” are positioned for use in home offices and other rooms in the house beyond the kitchen.  Most publishers mandate that national advertisers purchase both the primary directory and the companion book.  Meanwhile, local advertisers are not required to buy the companion book.  National advertisers as well as publishers refer to this as “forced bundling.”  National advertisers are upset with the fact that they are not provided the option of a la carte purchasing.

ACCOUNTABILITY, CREDIBILITY, INTEGRITY
Yellow Pages is a $15-billion industry, with national advertisers accounting for $2.3 billion of total spend; it’s a mature medium with growth slowing.  The ANA Telephone Directory Committee’s perspective is that not addressing the issues outlined in this open letter contributes to the limited growth potential of the medium. The committee has called on the Yellow Pages industry to:

1. Make a serious commitment to syndicated audience measurement research, and specifically, reinstate KN/SRI YPMR coverage by 2009 to at least those levels as in 2006 (about one-third of the U.S. population).
2. Make a serious commitment to circulation auditing, and specifically, audit the circulation of at least one-third of all directories by 2009 (the same coverage requested for syndicated audience measurement research).
3. Stop the practice of directory extensions by keeping to a 12 month publishing cycle.  In instances where books are indeed extended, reconsider charging advertisers incremental media costs.
4. Reconsider the practice of forced-bundling of companion books and ideally offer them as an optional purchase to national advertisers.

The current environment provides a tremendous opportunity for Yellow Pages.  Marketing accountability and ROI are senior management imperatives—all marketing and advertising expenditures require justification.  Yellow Pages already provides a unique level of accountability as marketers can track the calls resulting from their ads.  However, without the fundamental metrics of syndicated audience measurement research and circulation auditing, the Yellow Pages medium simply won’t maximize its potential.  Meanwhile, questionable practices regarding directory extensions and companion books hurt the medium’s integrity with advertisers. 

The Yellow Pages medium is approaching a crossroads as it relates to national advertisers.  Which road will the medium take? Stay tuned.

Marketing Investment Not Expense

by Mark Fogelberg

With the news Friday that Sears Holding's profits dropped 99% (!) to a mere $2 million dollars, analysts have come out swinging. Cost cutting and gains from merger consolidation helped the company for a couple of years. But...old stores in need of refreshing and cuts in marketing spending pummeled the stores during the crucial back to school shopping season. While JCPenney's finding its love marks; while Kohl's has been rolling out campaign after campaign, Sears has been awfully quiet.

I am a huge fan of Sears -- Tools, electronics and automotive in the same store as clothing, housewares and appliances? What could be better? -- yet I can't think of any recent advertising. Yikes.

Edward Lampert may be several billion times $marter than me but I would love for him to read Chapter 4 of my favorite recent book. By adopting an "Invest, don't spend" mindset, marketing and advertising could move to center stage and yank this icon forward.

Come on Sears et al! We know you can do it!

Marketing Accountability is Still Elusive

By Barbara Bacci Mirque

The results from our Annual Marketing Accountability Survey were recently revealed at the 2007 Marketing Accountability Conference. This survey was conducted in conjunction with MMA and fielded by our friends at Guideline Inc.

The conference buzzed after learning that the survey results indicated that rather than marketers progressing in their marketing accountability efforts, it appeared they are backsliding. I took part in many discussions about this phenomenon and a few theories were advanced. The most compelling: the bar is being raised. 

In the past, as we all embarked on our respective marketing accountability journeys, we did not know what we did not know!  Now as we are more enlightened, we realize that we aren’t as successful as we thought we were.

Also, we have tackled the low hanging fruit and now are dealing with the more difficult aspects of marketing accountability such as instituting repeatable, sustainable marketing process and organizational changes which are difficult to implement on a good day. Even finance is becoming more sophisticated about marketing accountability and is challenging us more than they have in the past.  We may have erred in not including their input into the assumptions that we put into our marketing models and now they are questioning if models were built upon faulty assumptions.  All the more reason to keep talking to each other and discussing best marketing accountability practices. We invite ANA members to join the Marketing Accountability Committee to keep the conversations going. 

For more details about the Marketing Accountability Survey results, ANA members can visit the new face of the Marketing Insights Center. Also, I was recently interviewed about the survey by Adweek for their online magazine, click here to read the story.

Technorati tags: marketing accountability , marketing

ANA/Guideline Brand Deterioration Study

                                                  

By Kaitlin Villanova

The ANA recently surveyed a random sample of ANA members who are part of the ANA's Brand Leadership Panel  - managed by Guideline Inc. - about brand deterioration. The survey was initiated by the ANA Brand Management Commitee and led by Committee Chair Rodger Adams, SVP and CMO of The Home Depot.

Interestingly enough, roughly 68 percent of companies surveyed indicated their company has been marketing its brand for more than 25 years. Nine percent for 15 to 25 years, 14 percent 5 to 15 years and only 8 percent of companies have been marketing its brand for 5 years or less. With so many veteran brands in the marketplace, more than half felt that despite the age of the brand, they are still well established and strong.

David Ogilvy reminds us that brand equity is defined as "the consumer's idea of a product." As simple as this definition is, measuring this is challenging. There are numerous approaches to measuring brand equity, and they generally fall into two categories:

• Research-based brand equity evaluations - measures buyer behavior and attitudes and how they impact the economic performance of a brand.
• Financially driven approaches - measures that consider the aggregate of historic costs incurred or replacement cost required to bring the brand to its current state.

Brand deterioration has been talked about, written about, and worried about for the past decade. The perception of a companys' brand equity has become integral to its perceived value, stature and success.

To learn more on the subject, check out Brand Deterioration: How to Identify, Measure and Respond or you can register for a complimentary Guideline Webinar on Wednesday June 6.

Technorati tags: brand equity marketing brand deterioration

Engagement Making Progress

By Barbara Bacci Mirque

Max, you have broken my heart! That is Max Kalehoff I am talking about, the VP Marketing of Nielsen BuzzMetrics who made me a star (to my family and friends that is) by conducting a video interview with me (and others) about engagement that he ran last September on the video blog, Engagement by Engagement. Recently Max commented about engagement in a MediaPost article in which he questioned if engagement has stuck or if it is a passing fad.

The ANA is an industry partner in an important initiative about engagement metrics, spearheaded by the AAAA and the ARF. I agree with Max there was a lot of initial press hype and lately press about engagement has been "quiet," but the fact remains that advertisers are clamoring for information about what and how to measure in a world of fragmented media options and consumer control and our industry group is making enormous and carefully calibrated, progress.

Recently, an ANA poll of senior marketers found that accountability, usually the top issue on senior marketers’ minds, was now neck and neck with integrated marketing communications, specifically "how to bring together the various marketing channels," as what is keeping them up at night. The old purchase behavior paradigms don’t work anymore, we now live in a "feel, think, do" world which has important implications for marketers. Here is what Joe Plummer of the ARF, for whom I have immense respect, has to say about the work of the industry consortium on engagement and about Max’s post:

...the primary strategy for our combined effort is creating brand demand by "turning on" (or engaging) prospects in the brand idea enhanced by the context, this summary is valuable baseline knowledge. The vast majority of the research supports our research and thinking to date, in that much of what occurs between brands and prospects/customers is emotional and behavioral with minimal amounts of cognitive problem-solving and "rational man" economic-decision making. The research confirms that go-to-market components combine with the brand idea signifiers and meanings in a powerful (and possibly complex) process…the lack of buzz in the press reflects the short attention span of journalism in general and the ad industry in particular. It may also reflect a shift to a more applied phase in the engagement journey.

Stay tuned for a dialogue between Max and Joe in an upcoming Engagement by Engagement blog.

Technorati tags: engagement marketing accountability

Private Equity to Save Marketing?

By Will Waugh

Normally I don't comment on AdAge articles, but the article this morning titled 'How private equity is reshaping marketing' (sub req'd) struck a cord. Why? Some of the key points:

• Accountability - This has been the #1 issue for marketers for three years running now. This quote by 2x Management's Andy Whitman says it all: "The fact that private-equity marketing executives are compensated based mainly on profit and enterprise value also helps solve marketing's return-on-investment problem."
• Marketing Talent - Another challenge for our CMOs and senior marketers. Our Annual Conference keynote, AG Lafley, said that private equity is his largest competitor for talent. Marketing recruiter Barbara Pickens said, "Five years ago it was almost never part of the conversation." Innovation and accountability are the two most valuable traits of today's marketer (in a nutshell). Perhaps by seeing the talent drain to industries like private equity, brands and companies will hold a higher value on their marketing brain trust.
• Agency Compensation - This one is close to us as our 14th triennial agency compensation survey results come out in May. In the face of a changing marketing model, private equity is buying up specialized shops, adjusting them for this new world and offering them to the highest bidder. Advertiser's issues with agency overhead, agency executive compensation and the like become moot points because these shops are reorganized for efficiency. Value based deals (which we are seeing more and more of) hold long term value to private equity firms because they are not one-off deals.

Technorati tags: private equity marketing accountability talent

Marketing Silos Still a Bad Idea

In the  third annual ANA marketing accountability survey recently reported on at  the July 20 ANA Marketing Accountability Forum, I was stunned to learn how few companies were using cross functinal teams to work on accountability (a mere 36%).  A key finding from the 2005 ANA Marketing Accountability Task Force comprised of 20 ANA member companies was that an end to end process was a best practice necessary to seed accountability practices throughout the organization.  If  marketing  accouuntability is siloed in the marketing department, you will be doomed to fail.

Good News on Marketing Accountability

Results are in from the third annual ANA Marketing Accountability survey, conducted by  ANA in conjunction with Marketing Management Analytics (MMA) and the 2006 ANA Marketing Accountability Task Force. Thanks to Adage reporting on it, their Crain counterparts at BtoB magazine and Marketing Vox.

The Good News

• More marketers are succeeding at marketing ROI and accountability! Thirty-two percent of marketers polled in the survey said they are satisfied with their ability to measure and act on ROI to improve business results, up from 19% in 2005.
• Substantial improvements in the ability of senior-level marketers to measure and act on ROI

The Not So Good News

• There is still tremendous difficulty in turning marketing metrics into action due to organizational impediments and process barriers.
• Another 20% of senior-level marketers said they can measure ROI, but cannot act on it.

ANA is extremely pleased about the continued progress our members are making. More best practices will be discussed by seasoned  accountability marketers at ANA's upcoming Marketing Accountability Forum this Thursday. We will share some learnings from this event.