ANA Marketing Maestros

The 2009 ANA/MMA Marketing Accountability Survey

Key findings from the ANA/MMA Marketing Accountability Survey presented by Barbara Bacci Mirque.

Value Based Compensation

By Barbara Bacci Mirque

At the recent 2009 ANA Agency Relations Forum, Sarah Armstrong from The Coca Cola Company updated the audience about Coke’s journey with value based compensation. You may recall that Coke first spoke publicly about this at the ANA’s 2009 Advertising Financial Management Conference because they wanted to socialize the marketing community to this new agency compensation model with the hopes of more widespread adoption of a construct that has been discussed for the past several years with little action taken against it. They wanted to expose their learning so that as more advertisers utilized VBC they would add to the body of knowledge on how to generate maximum results, thus benefiting all advertisers including Coke. Coke has rolled their VBC plan to many markets and expects full implementation by 2011. 
Along the way they have made some refinements but the central tenet still remains the same–Coke believes that there is no correlation between the amount of hours an agency works and the value it provides. It is not about cost cutting Sarah emphasizes, it is about focusing on the components of business growth. But Coke feels very strongly she adds, that they are no longer going to guarantee their agencies’ profits if the agency performance does not meet up to certain predetermined standards. An agency can make up to a 30% profit if it meets a set of prearranged goals–or none at all. The importance is that agencies are being measured on results–not on hours worked. There is no doubt that for marketers, labor based compensation was an advancement over fixed rate commissions. But spending hours and hours constructing and tracking labor based compensation does not move the business ahead nor does it work well in an era of integrated marketing. Advertisers generally agreed that although progress had been made, labor based compensation was not the end game. But not much progress had been made on moving forward. The groundbreaking work of The Coca Cola Company certainly adds to the debate–and knowledge–on improving agency compensation. The discussion will no doubt continue for years to come.

ANA members interested in participating and sharing their agency compensation learnings should consider joining the ANA’s Advertising Financial Management committee.       

Maximizing B2B Marketing

By Barbara Bacci Mirque

Eduardo Conrado, Chief Marketing Officer, Broadband Mobility Solutions, Motorola, regaled the crowd at ANA’s 2009 B2B conference with a marketing case study that was a primer about how to conduct B2B marketing and have a seat at the table as a growth driver.  I watched as his colleagues furiously scribbled notes and nodded their heads in agreement as he spoke.  Some key takeaways include:

• Work with the product groups at the start of ideation
• Evolve the marketing mix to go where the customers are
• Embed resources in all key areas early in the development cycle
• Have a single, comprehensive go to market strategy
• Start with the customer mindset
• Define solutions that address each segment’s needs

Tactically Eduardo addressed how Motorola activated social media to create an immersive digital experience.  A final thought he left us with: B2B marketers should not think of themselves just as transaction drivers but as relationship drivers.  

I know that I am going to use many of his learnings as I construct the ANA’s marketing plan.  If you are an ANA member you can access the summary of his presentation at the ANA’s Marketing Insights Center.  If you are a client side marketer who is not a member, shouldn’t you be?  To find out how to join, click 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.

Procter & Gamble Creates an Agency/Client Relationship of the Future

By Barbara Bacci Mirque

My blog about The Coca Cola Company’s journey into value based compensation as discussed at the ANA’s recent Advertising Financial Management Conference has generated several comments.  The last day of the conference we also heard about another interesting methodology from the Procter & Gamble Company.  P&G’s Rich Delcore described how they have been working to refine agency structure in a world of fragmented media and the need for more integrated communications.  Their former agency structures were created in a world of one dominant communications medium and a very specific communications funnel. Today we live in a word where the communications flow to consumers is generated from multiple touch points and consumers move through decision making processes very differently from the past. So Procter is now planning for integration from the start and in the process hoping to build marketers and agency personnel who are flexible, adaptable and comfortable with different communications vehicles. They are moving from decentralized agency planning in which there were 300 pay points, duplication and overlapping responsibilities as each brand undertook its own master planning and non advertising agencies were rarely involved from the start, to a model in which they have a Brand Agency Leader. This huge organizational cultural change is all about understanding the needs of the consumer – not their own internal needs. Under BAL there is a single point of contact per brand and a person and an agency leads an integrated agency team and manages the work of each member agency. The benefits they have realized are holistic communications, more efficient spending, a reduction in time and touches and the number one benefit – more integrated marketing. They find that every area of expertise is on the same issue from the start and all agency types have an equal seat at the table. When market opportunities arise, they can be quickly addressed and they all win and lose together. They acknowledge this approach may not work for every company but at Procter they have begun to reap the benefits.

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.