ANA Marketing Maestros

Agency Performance Evaluations Are A Good Thing!

By Bill Duggan

We are living in an era of marketing accountability.  So it’s a little hard to believe that one-fifth of marketers do NOT conduct formal evaluations of their advertising and other communication agencies.  That’s one of the findings from a new ANA survey.

It’s no surprise that “traditional” creative and media agencies are the types of shops most likely to be evaluated.  Evaluations are less likely to be done for other types of agencies including digital, direct marketing, public relations and multicultural agencies.  ANA encourages evaluations of ALL types of agencies.

Agency performance evaluations are an aid to maintaining and then enhancing client/agency relations. 97% of marketers believe that evaluations are effective in maintaining the client/agency relationship.  So agencies should not be afraid of evaluations or think that such evaluations will be used to “ding” them when overall evaluations are a positive tool.

Best practices identified from the survey include:
• All marketers (even those with smaller budgets) should conduct formal agency performance evaluations on a regular basis.
• Assign a trusted, neutral point person (could be internal – for example procurement – or an outside consultant) to keep focused on objectives and metrics vs. personalities.
• Consider having a more informal “mid-term review” to avoid surprises at the end of the year.
• Use a consistent format for all agencies, although specific questions can be varied for different agency types.
• Use technology to facilitate adoption, ease of implementation, and analytics.
• Consider 360-degree evaluations to get the perspective of the agency.
• Present results in person.
• Have clear corrective action plans with due dates and owners.

Full survey results will be presented at the ANA Agency/Client Forum September 24 in New York.  View the press release here.

A Little Marketing Spending Can Go a Long Way

By Barbara Bacci Mirque

Dial Corporation’s CEO Brad Casper, speaking at the 2009 ANA Advertising Financial Marketing Conference which concluded last week, noted that you can make “one buck look like 10 if you are creative and think about how to efficiently target.”  He explained their philosophy which is you don’t need to be the biggest spender to create effective campaigns and a little idea can generate a large return.  As a result they went from being a fast follower to becoming a fast initiator.   As an example he talked about the Purex Green brand which created a $100 million franchise in a year and received an award from Wal-Mart a being the most sustainable brand.  They also conducted ethnographic research deep dives in which they discovered a key insight  - there were a lot of shower products for women in most families showers’ but little for men.  Thus was born “Dial for Men”.  Their innovative marketing included messaging in men’s urinals and gas toppers.  They calculate they spent 75 – 100% less than their competitors and their marketing spend paid back in a year.  The results: in all categories their share of voice is below their share of market and they are growing into a most admired company on the Fortune list.

The Clydesdales Remain at Anheuser – Busch InBev

By Barbara Bacci Mirque

Keith Levy of Anheuser – Busch InBev had the crowd laughing as he debunked the myths perpetuating since the A-B purchase by InBev.  He promised that the iconic Clydesdales would not be replaced by lower cost and cheaper to feed mini horses.  And the creative focus we have seen from A-B also remains a key priority as brands must help grow the topline and innovation plays a role in that.  What has changed he said is more of a movement to manage costs and optimize business efficiency – a change to which we all can relate in the current economy.  As they take the best of both companies they are now using zero based budgeting and adding data driven decision making into the mix.  So for example, they will begin to do a bit more rigorous pre ad testing as they add precision and create higher persuasion scores from their creative executions since modern consumers require both rational and emotional benefits.  The world’s most valuable brands innovate at the core he said, and he pointed to Bud Light Lime as a recent innovation.  He also described a core consumer insight that emerged after some ethnographic research and that was the notion of  - in consumers’ words - “drinkability.”  As they question every touch point he also noted their digital spend is double what it was a few years ago since people don’t wake up and say “Today I am going live in the  analog world.”  Oh and Michelob is tweeting.  These changes seem very progressive and those that will build the business and maintain their carefully cultivated brand equity.

The Method Success Story

By Barbara Bacci Mirque

On the second day of ANA’s AFM conference we heard from not one but two companies who manufacture household cleaning products.  The first one I will write about is Method, whose core brand value is to create a happy and healthy home.  Founder Eric Ryan told the story of this challenger brand.  Their belief is that they do not worry about share of market rather they focus on share of culture.  They have created a movement around the in home environment which they sum up as “aveda for the home.”  What they do is also good for the environment but that is not in their advertising – that is what they believe in.  Their entire operating philosophy centered around this movement is embodied in how they run the company.  They carefully hire like minded people then turn their employees loose as brand ambassadors – any employee can talk to the press.  They create advocates not consumers as they focus on a smaller audience who they serve well.  They consider their elegant packaging to be media and in their view they do not make the mistake of separating out product design from the product. Eric feels great packaging inspires great merchandising and to him design and creativity embody leadership.  One of their core principles is to brand from the inside out and everything is a touch point, including their trucks and their office.  One of the more interesting tidbits he imparted is one of their seven “obsessions” or core values is “to be weird.”  Weird is about creating differentiation and an aura of authenticity that cannot be replicated.  Food for thought for all of us is to think about how great marketing efficiency starts before you ever get to marketing and that mature categories are not always as mature as one might think. 

The Coca Cola Company’s Value Based Compensation Model

By Barbara Bacci Mirque

Coke created some “compensation envy at the second day ANA’s Advertising Financial Management Conference by being one of the first companies to stop talking about value based compensation and actually implementing the model.  Their primary reason for sharing – from a company that likes to keep its secrets to itself - is that they want to work with other advertisers to see this adopted as an industry standard and by sharing their journey they hope it shortens that of other advertisers.  In 2008 they piloted the model and in 2009 they rolled it to 35 markets.  Their objective is to be fully on board with VBC by 2011.  Fee based compensation - based on inputs – is today’s primary compensation methodology.  The issue is compensation  methods become based on the amount of labor and tends to have little connection between the price paid and value received. 

So one of their first steps was to frame the principles under which they would operate and adopt a mind shift from how much time to what is the value of the work received?  The core thought here is that if you focus on the value the discussion alone is a more productive one.  For example one of the five value pieces they identified is what is the strategic challenge of the work – is it a strategy priority for the company or something they need to do that is not a priority?  Another is industry dynamics: is this agency uniquely qualified to do this work or are their four other agencies that could do it thus level setting what the market will demand.  The three other pieces to the equation are Budget Reality; Share of Work Management; and Talent.  From all of this they determine a value per deliverable and Sarah shared supporting charts and figures. Be forewarned – this is not just moving to a new agency compensation model, this is a change management exercise requiring top level support.

The ANA’s Advertising Financial Management Committee will be dissecting this in more detail.  ANA members interested in this topic should join the committee to become part of that conversation.

Brands That Follow The Money

By Barbara Bacci Mirque

Procter & Gamble and Millward Brown mesmerized Monday’s ANA Advertising Financial Management Conference crowd by talking about the world’s leading brands, how they follow the money and what we can learn about them.  The top 25 brands added $400 billion in shareholder value in the period examined.  When studied in more depth, these brands – which included Blackberry, Toyota, Apple, Google, Pampers, Method, eBay, HP, Samsung, Zara, Esprit, Red Bull, Freshness Burger and four brands from the LVMH group – had some remarkable similarities.  They share a common set of brand principles, not the least of which is they are built on human ideals, not product ideals.  It is not about what people buy but why they buy.  These brands tend to serve a bigger purpose and tap into universal human values. They believe a brand is about owning a share of culture, not share of market.  And not coincidentally, the latter tends to happen when the former is invoked.  For example, the Pampers brand turned around when they went from being about the driest diaper to happy, healthy babies.  The second principle is they stick with the fundamentals such as heritage and design– the best brands respect and have one foot in the past and one in the future.  Design is part of the brand, used strategically and plays a lead role.  For example, Samsung has won 28 international design awards and Apple 22.  A third principle is they demonstrate brand leadership - the Brand DNA guides everything that they do from recruiting and training to advertising.  They are thought leaders who are first to market with break through ideas.  They know the product attributes that matter to the user and those that do not. They organize around the brand and empower creative minded business leaders.  They are guardians of the brand and always worried about the brand.  The entire organization is united around the delivery of the brand vision – from suppliers to employees.  The last common principle is engagement: the best brand builders don’t tell consumers why to buy the product, rather they invite them in and they co-create. Red Bull is famous for this. They balance price and value while creating exciting encounters for consumers.

The proof that this works is in the financials – these brands have all made more money than other brands and have grown more financial value for their shareholders.  Procter & Gamble shared this research as their hope is that other brands will engage in more research and that learning will also be shared at future ANA conferences.  Contact the ANA if this sounds appealing to you.  ANA members can read more about the study in the ANA members only Marketing Insights Center.

Optimizing Social Media

By Barbara Bacci Mirque

LinkedIn’s Reid Hoffman imparted the Holy Grail about achieving impactful advertising on social networking sites at Monday’s ANA Advertising Financial Management Conference. He believes the massive growth these sites are witnessing is because for the user they represent a trusted network and the decisions an individual makes are more likely to be influenced by people they know. The key to success with social media he said, is to truly understand the DNA of the site and act accordingly.  For example, Twitter specializes in what people are doing now.  Facebook is all about being playful and checking in with friends and family. LinkedIn is professional networking and corresponding people search. If you understand the site context and target and fine tune your messaging so it is part of the site, your advertising will resonate with the users. These sites will deliver advertising value because people put in information that is important to them, thus enabling micro targeting.   Social media and Web 2.0 are still in its infancy but Hoffman believes advertising will be an integral and fundamental component. He advises advertisers to experiment and take some risk as long as what you do is relevant and appropriate to the site’s context. As far as predicting the future, in Silicon Valley the future resides two months out he told the audience, so all bets are off but he predicts in the next five years the social networking sites will be even more open than they are now.

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 [email protected].

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.

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