CULTURE FIRST HOW EFFECTIVENESS WORKS IN PRACTICE

FRAN CASSIDY

AN IPA REPORT IN PARTNERSHIP WITH CIMA

In association with 03 Foreword 02 Sandra Fazackerley 02 Janet Hull OBE CULTURE 03 Dr Noel Tagoe

05 In a nutshell FIRST

1.0 07 Background 06 Project Objectives 07 Methodology and Sample

2.0 09 Overview 08 Business Context 09 Definitions 09 Effectiveness Resource 11 Structure 11 Expertise

3.0 15 Key behaviours for culture change 14 Collaboration 17 Language 19 Process 23 Toolbox 26 Capability

4.0 29 Implications for client/agency relationships 28 Changing behaviours 30 Three-speed framework for planning and reporting Fran Cassidy has experience of working in 5.0 agencies, and as a client and media owner, and 31 Recommendations and actions has been a marketing consultant specialising in research and marketing services for the last 15 32 Participating years. Her current practice includes research into the reputations and practices of the media and marketing industry across Europe, Asia and US. She is a regular judge of the industry’s many awards programmes including the IPA Effectiveness Awards, and a Fellow and Board Director of The Marketing Society. About the author Contents CULTURE FIRST – HOW MARKETING EFFECTIVENESS WORKS IN PRACTICE

Sandra Fazackerley Janet Hull OBE Dr Noel Tagoe Head of Research & Analytics, Telefónica Director of , IPA EVP Academics, Management Accounting

Telefónica has been embracing marketing The idea for this research project came out of an As the chartered professional body charged effectiveness as a discipline for over three years, IPA satellite event at our inaugural EffWeek in with advancing the science of management so, when I was invited to join the IPA EffWeek October 2016. Held at the FT, in partnership with accountancy, CIMA has been delighted to Client Advisory Board it was a ‘no-brainer’; and the Chartered Institute of Management partner with the IPA on this research we are delighted to be the corporate sponsor of Accountants (CIMA), it brought together agency, programme. this new research report. marketing, and finance professionals to discuss ‘how to make marketing more accountable’. The main objectives of our syllabus and Since its inception, O2 has been a -led examinations are to equip management business, so the role of marketing has always Through a series of enlightened presentations, accountants with the competencies employers been respected from the top down. We were and subsequent workshops, it identified the expect. These include the business and analysis founded by an ex-marketing CEO. Over the years opportunity for greater collaboration between skills needed to make the right investment we have been assiduous in maintaining a this triangle of influence, in the planning and decisions, including marketing investment. marketing-led culture. reporting stages of any marketing investment. This research is designed to help support this Even so, as organisations grow in size, scope This research project is the next step toward role and to foster a spirit of collaboration and and geography, and become part of bigger helping encourage this cultural dynamic. common ambition among finance and conglomerates, so we need to work ever harder Thanks to Telefónica, we have been able to fund marketing professionals. to keep ‘brand values’ and ‘customer experience’ an in-depth survey of over 20 blue chip at the top of the Board agenda. organisations, all of which are champions of Preparatory workshops demonstrated an this ethos. appetite for developing a shared language, and a At Telefónica the discipline of marketing common framework of the most important levers effectiveness is managed as a separate Bringing together, for the first time, the views and metrics. Agency strategists, in particular, department reporting into Marketing. This gives and experiences of this tripartite group, we benefitted from hearing marketing finance people us autonomy and independence but enough have been able to provide a framework for what talk about the business model and reporting visibility and connection to day-to-day practice good looks like, how to make it happen, and framework they were operating against. to provide sound stewardship to the business. what difference it makes. It will form part of our qualifications development strategy. Looking forward, we are keen to join forces Our aim in marketing effectiveness is to provide with the IPA to turn the learnings from this the evidence the organisation needs to switch The new IPA Effectiveness initiative, exploratory study into a qualifications from a reporting culture to a learning culture. exemplified through EffWeek, EffWorks and an framework which all sides of the business – That’s why this report is so timely. It provides a expanded EffTest, is designed to facilitate just marketing, finance and agencies – can model for culture change and growth, validated this sort of debate and enterprise and to benefit from. A shared culture of by some of the best in the business. support the industry in building a shared evidence-based decision-making for marketing understanding, in the Boardroom, of marketing will be improved by shared learning. effectiveness as a growth driver for business.

Foreword

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The improvement of marketing effectiveness culture list, little or no reference to the ‘quality’ of messages. Both have been proven to affect Driving an and practice is now a business imperative. It is increased focus on consistency of metrics across profitability. There is much more focus on about moving from a ‘justification’ culture to a products and markets – a particular issue of the ‘pipes’. effectiveness ‘learning’ culture. Whilst the maturity of the course, for international brands. A meaningful approach varies by organisation and sector, over feedback and learning loop made the process Capability the last three years substantial additional progressive and focussed on the future. Capabilities for evidence-based, data-driven culture is about resource and focus has been invested to better decisions are increasing, expanding the understand which marketing levers are driving Language influence of marketing teams. But there is a the outcomes desired by the organisation. Over Marketing should be at the heart of the growth, skills shortage, meaning training existing making an three quarters of our sample had increased profit or other success narrative that staff and/or using agency resource, at least as their resource over this period and over a third organisations strive for. One of the ways this a short-term measure, is increasing. organisation had developed specialist marketing could be accelerated is by changing some of the effectiveness units. marketing terminology, either to words or Implications for agency and client relationships phrases that are more easily understood, or Agencies need to put effectiveness more into stronger, However, whatever level of maturity the reframing some of the measures or budget lines their day-to-day operations. Finding the metrics effectiveness culture had reached, all were very to more accurately reflect their commercial that are key to driving clients’ business and confident that their process was improving, and benefit e.g. ‘non-working media budget’ which focussing their efforts upon those will be fitter and able some believed that either they already possessed includes agency fees, becomes ‘asset production’; increasingly key. an effectiveness culture and system that worked ‘brand health’ may be better described for to deliver its for most of their needs or it would be completed financial teams as ‘future share protection’. As the decision-makers on marketing investment by 2019 or 2020. broaden to include financial and other Toolbox commercial colleagues outside marketing teams, targets. We have observed 5 behaviours and practices In the more mature effectiveness cultures, agencies may find it beneficial to incorporate which are common among the more successful whilst the metrics themselves are not radically them in their planning and reviews. The current effectiveness cultures: changing, datasets are being integrated and trend for effectiveness-based contracts and automated. Proliferaton of data means there is incentives is likely to continue and is a reflection Collaboration much more focus on finding and focussing upon of the demands being placed upon the brand Marketing investment decisions are now more the metrics that matter, the levers that affect teams themselves. often being made alongside financial and behaviour. There is increasing use of econometrics commercial colleagues. The silos that are so and MMM. Driving an effectiveness culture is about making corrosive in organisations are slowly beginning an organisation stronger, fitter and able to to break down. This change is happening There is also an encouraging trend to incorporate deliver its targets. And that is the attitude through a combination of structural and cultural long-term brand health and short-term metrics adopted by the successful organisations we changes. However for some financial colleagues, into models, but at the same time, a desire for interviewed. This project revealed many reasons understanding the real of longer-term data to help real time decisions. to be optimistic about the development of brand health measures still remains an issue. marketing effectiveness cultures and the final Successful organisations use their effectiveness section of this report reveals the actions currently Process data for strategic planning, therefore confidence planned by the IPA to accelerate this development The more successful cultures were those where in the data across leadership teams is critical. and to fill the gaps uncovered. effectiveness was baked into the beginning not An area of concern potentially is the lack of the end of the process. What would be measured, reference in the metrics mentioned to ‘price and how, was agreed at the outset. There was an elasticity’ and in the more -related In a nutshell

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Project objectives Methodology and sample The needs of brands and the changes in the We wanted to discover the behaviours that communications landscape have accelerated the need to improved an organisation’s success at measuring the not only showcase the best in effectiveness, but to help effect of their marketing investment. A combination develop frameworks and capabilities to improve the process of over 30 face-to-face and telephone interviews were and behaviours to deliver effective marketing investment. conducted across Spring and Summer 2017.

Core to this development is how marketing teams are Among brands, individuals in Finance, Marketing, working alongside their financial and commercial Analytics and Effectiveness Units were interviewed. colleagues. The IPA has therefore created this project in And within agencies, we interviewed at CEO, COO association with CIMA, the Chartered Institute of and Strategy or Insight Director level. Management Accountants. The objectives of the study are to understand: A full range of the organisations interviewed is listed at the end of this report. They include both How important is marketing effectiveness to business? commercial organisations and not for profit and public bodies. The language of this report will therefore reflect What impact is it having on an organisation’s culture those organisations whose focus is growth and/or and behaviours? profit margin, but also the public institutions whose success is measured by the achievement of a range of What implications will these developments have for objectives, from saving time to saving lives. client/agency relationships? 1.0 Background

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Business context Another commented on the current difference Definitions in attitude towards marketing budgets: Clearly the current business environment What is meant by the term ‘marketing remains uncertain. For those organisations effectiveness’? For most of our respondents, this with overtly commercial models, issues such meant the successful delivery of the marketing as Brexit; the continuing low growth in the We are focusing objectives and targets set by senior management. majority of mainstream markets; and the continual disruption of business models in more on this now. As we all know, the complexity of the marketing almost every sector, have meant a climate of environment means that just making sense of cautious optimism at best. customer interactions with the organisations is The budget is as hard enough. But that sense now needs to be Organisations have already actioned any low channelled into effective planning and execution. hanging fruit for any cost savings. Respondents big as capex for spoke of the increase in zero-based budgeting, which is also fuelling the focus on Effectiveness resource understanding better the levers to brand and us, but has none Such is the focus of our sample, that over three organisational growth or improvement. quarters of the organisations interviewed have of the rigour. increased resource, or created major new As one of the interviewees stated: decision-making structures, in the last 3 years, Commercial Finance Manager to improve the effectiveness of their marketing We have now had investment. These have certainly been some of the drivers, Furthermore, over a third have created specialist to grasp the nettle but there is no doubt that the increased effectiveness units in the same time period. For availability of data, digital initiatives and the the rest, some had actioned this greater resource of marketing pressure and potential offered through earlier than 3 years ago, and a handful ran technology innovation have fuelled this further. systems that were more basic.

effectiveness. Indeed, this scenario has given the illusion that Marketing Finance Analyst the process is now easier, whereas the reverse is I have been here just over true, giving rise to scenario planning and fewer absolutes. 2 years. But our team What is also true, however, is that, for the has evolved massively in majority of our sample, transforming marketing effectiveness is a new business imperative. that time. My new role only started For us effectiveness has become a bit of a global this year... and my mantra over the last couple of years. remit is solely to improve It has always been important, but there’s been a marketing effectiveness. 2.0 huge dial-up in the last 24 months. Senior Planning and Performance Manager Marketing Finance Analyst Overview

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Marketing Effectiveness Structures

STRUCTURE STRENGTHS WEAKNESSES Structure Expertise Naturally enough there are differing levels of Effectiveness Unit • Enables absolute focus • Relies on strong relationship with Commercial / While the structure and responsibilities created within • Training other marketing team members Finance team of Marketing Departments vary by sector, competence in measuring effectiveness across Marketing should be easier • All separate Effectiveness Units rely on data sets not surprisingly, the overall responsibility the sample. Whilst maturity levels differed, Department, but Can help ensure objectives centre on given to them at point of evaluation – which are separate from • for marketing effectiveness still tends to sometimes even within organisations’ different Insight/Analytics effectiveness and balance of long/short term not always complete and could change sit within the Marketing function. But the divisions, it was possible to split the brands • More likely to search for best practice across the industry day-to-day accountability differs. The broadly into three groups: • Building Effectiveness into Strategy easier as responsibility sits mostly in: senior Marketers often at Planning table Group 1 Insight or Insight/Analytics team Effectiveness measures were relatively basic, • The Marketing team themselves, most often Effectiveness Unit • Insight has other datasets to help create • Potentially separated from the briefing of activity with a focus on short-term effects, direct within holistic effectiveness viewpoint and original marketing objectives. Detached from • Marketing Communications response and simple brand tracking. In Insight/Analytics • Absolute focus day-to-day issues / why decisions were taken that Specialist Effectiveness Units service-based companies, there were often NPS • Likely strong understanding of data, its might affect effectiveness • analyses and/or broad customer satisfaction structural needs and potential for integration • Again reliant on others giving you datasets • Understanding of customer/human behaviour • Relies on strong influence of Head of Insight Occasionally, the responsibility sits across a metrics. The attitude towards the results was can put results in context with the rest of on business strategy and objectives to influence broader group of functions. more ‘review and report’, rather than learning customer data decisions and future-facing. The chart opposite offers a view of some of the Group 2 Effectiveness Unit • Understanding across whole business so • Potential danger of short-term focus strengths and weaknesses of several of the within marketing levers can be compared with other • Potential separation from datasets such as brand structures adopted. (However, it does not list This group showed more sophisticated brand Commercial growth/effectiveness levers health, important for longer-term growth, unless every potential option as not all were evidenced health tracking and use of ROI analysis, and Department • Impartiality / Credibility datasets are successfully integrated in the research sample e.g. all responsibility much greater use of econometrics and MMM. Financial involvement ensures commercial rigour • given to Data Analytics department.) There was certainly an understanding of the differences between long and short-term Responsibility split • Likely regular communication can help • Relies on strong leadership to ensure The number of markets an organisation works measures, but it was still difficult to balance across Marketing, understanding of objectives, data, and effectiveness remains a priority across also is clearly a factor but in the sample investment between the two. Service-based Insight functions measurement priorities • Day-to-day pressures can dissipate focus we interviewed there was no clear winner in companies in this group are wading through • Less likely to create excellence hub structural terms, although the skills shortage customer touchpoint data to try and determine forced significant amounts of internal training. the profit/growth levers. There was a clear Responsibility split • Cross-functional teams could potentially • Relies on strong leadership and communications realisation that more investment in across Marketing, assess effectiveness performance if no one fully accountable But of course it is not just about structure – it’s effectiveness resource was needed to move Insight and holistically and potentially bring feedback • As above, less likely to create a hub of excellence about mentality, not just in marketing but forward and an understanding that predictive Finance functions loops more easily into planning and strategy in function across the organisation. And, to a degree, and forward-looking systems were optimal. • Helps bring finance teams more directly up to speed on effect of customer and brand interdisciplinary culture also becomes more metrics on profit or other success levers necessary in a digital landscape. We will explore Group 3 in this report how this is evolving and no matter This group were in the process of, or had what structure is emerging, how agencies and completed, major data and insight system organisations can change the culture and the changes. Several felt that they have already way they think about effectiveness. created a solution that analysed and predicted their activity well, or would do in the next 24 months, though a couple felt that it might take longer. Most importantly, the data is being used in strategic planning and decision-making.

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Marketing Effectiveness Trajectory by Group 10 We asked the respondents to indicate the level and speed of their journey to a satisfactory I think there has understanding of the impact of their 9 investment.We asked them how they felt they would score out of 10, just 3 years ago, now, and been a change. in a few years’ time. 8

The chart opposite demonstrates the trajectory, Brands who have confidence and focus of their efforts. clear KPIs and are 7 Not surprisingly, perhaps, all respondents felt they were moving forward, including 6 respondents from the financial department, keen to set them, although this latter group did report more variability in the assessment of the success of 5 their journey. and have made it

Whilst this is a qualitative group, the part of their 4 interesting point is perhaps the speed of the expected trajectory for all groups. company culture, 3 Some agencies have already noticed a difference.

have increased 2 from around 1

10-20% of our 2014 2017 2020 2014 2017 2020 2014 2017 2020

PERCEIVED SCORE OUT OF 10 SCORE OUT PERCEIVED 0 client base to up to CLIENT GROUP 1 CLIENT GROUP 2 CLIENT GROUP 3 40%. Agency COO

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Collaboration At the heart of the changes in behaviour, The other has been better understanding within in the more mature and successful marketing teams of the financial impact of organisations, is an increase in collaboration their activity and, whilst slower to materialise, between Finance and Marketing teams, there was certainly a willingness to better LANGUAGE particularly regarding decision-making on understand marketing principles among the marketing investment. financial respondents. There seems to be a move towards more shared responsibility for budgets One of the reasons that inter-departmental and the success of the organisation. Not collaboration has been a factor is the surprisingly communication between the realization that organisational silos are more functions was always improved with reliable than just lines and boxes. Silos are corrosive. datasets. If you are first introduced to I will speak to the Marketing somebody with the title of Director and Finance Director CAPABILITY COLLABORATION PROCESS finance analyst or anything about what the plans looks like finance related in the title, you from a marketing effectiveness probably think ‘this is not going perspective. And they can take to be a fun conversation.’ I also had a feeling we weren’t on the my view or not – so it’s like a same side at the beginning. consultant view, but they tend It was a ‘side’ thing and now it’s to listen, because I come with a ‘team’ thing. It took 3 months data and a lot of argument. TOOLBOX to break down the barriers. It’s totally changed. My job didn’t Finance Manager exist 3 or 4 years ago. And Part of this new collaboration has been achieved Finance used to work in a silo. through structural change – the broadening of Head of Marketing Effectiveness leadership teams to include the wider business 3.0 e.g. or Commercial Leaders; Heads of Strategy; Heads of Data. Key We now sit down with the policy team and with the analysts and decide how the activity will be behaviours measured, and the metrics. for culture Head of Strategy and Insight change

5 key behaviours and practices for marketing effectiveness in the most successful organisations 14/15 CULTURE FIRST – HOW MARKETING EFFECTIVENESS WORKS IN PRACTICE

The area where marketing activity and resource is least Language Whilst respondents from both the financial understood among financial teams is the commercial value and marketing teams felt they ‘used’ the of longer-term brand-building and, where relevant, same language when reporting on effectiveness, the value and meaning I am a Finance person. customer experience data. This is particularly the case for attached to the lexicon was clearly different I like certainty. Groups 1 and 2 described earlier. The current datasets being for each party. If the marketing industry wants to increase the credibility of its brand Marketing also look at presented to this audience and the way it is presented does health and customer metrics among – I can’t quite not demonstrate financial teams, it should consider changing enough commercial value to many of the its language to reflect the commercial remember the name organisations interviewed. benefit it drives. of it – something to do We believe there are several reasons for this: There is now evidence that some of this is being with brand equity. If I’m Lack of conversion of the value of brand metrics addressed. References to ‘soft metrics’ and ‘brand • halo effects’ were specifically called out as not really honest, from a to commercial metrics being perceived to drive value by respondents from financial departments. There were also finance point of view, I Lack of integration of brand health into econometric references among this respondent group to the don’t give much weight • widespread use of terminology such as models where it could reveal its value ‘non-working budgets’ which include areas to the softer ones – the Language used to describe brand health metrics like production and agency fees, and ‘working • budgets’, which refer to media costs. brand equity stuff.

One of the financial respondents concluded: It seems clear that one of the key actions arising A number of respondents had started to rephrase from this report is the need for the IPA and other these. For example, ‘non-working media’ had marketing bodies to help marketers engage more been changed to ‘asset production’. Whilst the Putting a financial with the financial community, to bring together budget in question may not comprise exactly the combination of magic and matter. We have a the same line items as before, the new phrase outcome on our wealth of resource that can help respondents had resonated more internally across the understand how marketing investment drives organisation and indeed reflected the benefit of brand campaign is performance, but also to appreciate its complexities. the budget line more accurately. The list below Finance Director gives more examples of what the industry may virtually impossible, However there is also more of an understanding reconsider in the light of this report. that marketing functions just need to be better because it’s not at making themselves understood. ‘Non-working media’ ‘Asset Creation’ Finance tend to want ‘yes’ driving a specific ‘Management Information’ ‘Business Intelligence’ or ‘no’ answers. But when you ‘Brand halo effect’ ‘Value/Margin protection’ customer to come start to bring in the role of ‘Soft metrics’ ‘Levers to unlock future growth’ in and buy xyz – brand or customer, it’s shades ‘Longer-term spend’ ‘Margin defence’ / of grey. Part of the role of ‘Share protection’ it’s driving a ‘brand marketing is to help finance halo’ effect. accept and understand there New phrase Marketing Finance Controller will be shades of grey. Existing term Head of Marketing Effectiveness 16/17 CULTURE FIRST – HOW MARKETING EFFECTIVENESS WORKS IN PRACTICE

We should be In my view there has Process Whilst most of the organisations in the sample had some talking about our been unhealthy focus on form of process to determine the effectiveness of their short term commercials marketing investment, there were certain elements or understanding stages that were lacking, that reduced the efficiency of (ie revenue). People the process and thus effectiveness of the organisation. of the levers to As one respondent commented – the effectiveness generate ‘value’ always look at the processes used often needed to have more ‘integrity’. commercial levers and and ‘share’ and Improvements include: then we can stop say they are always the 01 Make Effectiveness the beginning not the end of the process talking about same – the price and the 02 Have a shared view of customer and measurement priorities creating ‘likes’. proposition. We are now 03 Find the metrics that matter and be consistent starting to get the 04 Have a meaningful feedback and learning cycle evidence in to say that 01 brand has an impact on Make effectiveness the beginning Effectiveness commercials, and not the end of the process Agency CEO One of the key issues was the sense that sometimes gets lost customer experience effectiveness was often perceived as being the ‘end’ of the marketing process rather than as you get into a has an impact on the beginning.Whilst objectives were set, somehow, either the objectives were not linked But language change alone is not enough. project or campaign. commercials. So we can into the business strategy, or, somewhere along Whilst phraseology may help to reframe the the process, the teams become more focussed benefits of the budgets spent, we still need to All the focus is on the now start to challenge on the execution. focus on the fact that the data supporting the value of brand building and inclusion of the status quo on how execution and we lose Bringing effectiveness into the planning customer metrics needs to be proven more stage of the process, using data and learnings, often and accepted among financial teams. decisions are made. sight of the original is essential.

There is increasing evidence that this is I think we are there in objectives. Agency COO As two agency executives commented: now happening. terms of setting the agenda in the Effectiveness sometimes gets put in a box that organisation, but not gets given to the strategist. And it feels like effectiveness is at the end of the journey, rather actually actioning it. than the start of the journey... Agency, Strategy and Planning Director

Head of Marketing Effectiveness 18/19 CULTURE FIRST – HOW MARKETING EFFECTIVENESS WORKS IN PRACTICE

Government Communication Service

Interestingly, a new system has 02 been introduced in the Government Communications Have a shared view of customer The end point is not Service. This brought and measurement priorities effectiveness back into the first the process, the end Another essential element in a successful stages of the planning cycle by effectiveness process follows on from the including several collaboration across functions, is a shared view point is the results. effectiveness-related questions in of the customer and of the business priorities. the brief: quantified objectives; From this should emerge an agreement on We are process evidence as to why the author what data needs capturing, what needs believed the approach will be measuring to understand the metrics that driven, but only as effective; and an estimate on the matter, and thus a common definition of what ROI that was likely to be delivered. success looks like. a means to an end. The team we spoke to reported 03 We don’t want that this approach has had a huge effect on the efficacy of the Find the metrics that matter anyone turning round planning cycle and resultant and be consistent campaign success. A common issue, even in the mature and saying effectiveness processes, and certainly in international organisations, was a lack of ‘It didn’t work – but I consistency in the metrics collected across markets. Inconsistencies included: followed the process.’

different suppliers used therefore different It just helps us to be • calculations/methodologies different definitions for the same terminology efficient. • – ‘retailer’, ’penetration’, even ‘customer’ Director, Strategy, Insight, Capability • different product specifications • data access Suffice to say that it is now an issue that Many respondents returned time and again organisations recognise and are trying to to the need for more planning time or address. Clearly an understanding of which ‘thinking time’. measurements to prioritise, through an understanding of the key success levers, is However, in spite of all the important changes helpful in this process, as is the potential needed to improve the integrity and coherence consolidation of suppliers, which is happening of the process, we should be mindful that the increasingly. process is just an aid to efficiency and the focus should still be on how the investment has The process of pulling together the numerical performed. data in global organisations is, not surprisingly, often the job of the finance department. Those using this method were keen on this practice stating that finance for them was the ‘process backbone’ of their organisations. It also helped with consistency issues.

Extract from Government Communication Service Briefing Form 20/21 CULTURE FIRST – HOW MARKETING EFFECTIVENESS WORKS IN PRACTICE

04 Toolbox FINANCIAL PERFORMANCE Have a meaningful feedback This section defines the measures and Revenue/sales and learning cycle metrics currently being used among our • When we have all this sample to measure marketing effectiveness • Market share Driving an effectiveness culture is about and highlights key issues such as Market growth making an organisation stronger, fitter and integration, and getting buy-in from all • able to deliver on its targets. Part of this journey data – it won’t all be Gross profit stakeholder groups, missing metrics and • is the creation of meaningful feedback Gross margin positive… Some may moving beyond a ‘reporting culture’. • processes. And some colleagues may find this Operating profit difficult. find they need to adopt • 01 • Penetration For those with feedback and learning processes a new attitude to being Metrics and Measures • Footfall already in place, there is an understanding, Rate of sale that the learnings, as well as the rest of the Clearly the volume of data varies by market. • measured – there could effectiveness practices, should be built into the Service markets tend to have a plethora of • planning cycle. be a lot of ‘high fibre customer experience data from their many touchpoints, particularly those in , and BRAND HEALTH Some of the larger organisations have major cereal’ to swallow. have many more complex primary lever management systems such as Six Sigma analyses to find the metrics that matter. Head of Planning and Brand Insight (Define, Measure, Analyse, Improve, Control), • Brand affinity where improvement is part of the system. However, this is not always the case. In one • However others approach learning in a less In the UK we had the service organisation, the structure was so • Brand consideration formal manner using more basic principles e.g. fragmented and legacy systems were so Distinctiveness entrenched that, at the beginning of the • Plan, Do, Check, Act (PDCA) or ‘Do: Plan: capability and toolbox, but Salience Review: Revise’. Some are also trying to enable effectiveness journey, the organisation was • their systems to help support more decisions not the culture. We would even unsure how many customers they had. • Relevance in real time. Brand love In addition to the list there is increasing use • do analysis and then the Reputation Only with a ‘learning’ and ‘improvement’ and evolution of econometrics, and media mix • system in place can effectiveness culture be issue was whether the modelling, which are evolving to cope with maximised. the complexity of channels and remain more CUSTOMER/SERVICE output got used in anger, strategic and holistic. There were many systems for capturing and Customer volume or learning, or whether we In fact, all of the more mature effectiveness • disseminating learnings. These include: Cost per acquisition webinars; formal development programmes; just did the things we systems use them. More tactical attribution • effectiveness team debriefs; quarterly modelling,whilst used by some of the • Churn/retention organisations,was not mentioned spontaneously marketing forums; ‘lunch and learn’ systems have always done and it • Lifetime value or combinations of the above. by any respondent. Net promoter score (NPS) got filed away. • Whatever method is used, learnings need The more advanced companies include short, Employee engagement Head of Insight • to be shared as part of the spinal chord of (1 year) and longer-term, brand health and/or • Cost to serve marketing skills development. customer metrics (2-3 years), into their models, Customer satisfaction (CSI) using methods such as ‘unobserved component’ • modelling or the inclusion of ‘consideration / • Complaints awareness’ data into econometric or market mix modelling (MMM) models. Current metrics and measures

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02 03 04 05 Integration Getting stakeholder buy-in Where is price elasticity in the And where is the ‘quality’ of metrics list? the message? There are no major surprises in the metrics and It is hugely important for all senior teams measures list. It is not the metrics themselves involved in marketing investment decisions to In the IPA Effectiveness database, including Also conspicuous by its absence were references that are changing, it is the integration of them. understand and have confidence in the datasets The Long and the Short of it and Marketing in the Digital to taking into account the quality of the being used for the effectiveness analyses and Era, there are important references to the value of communication messages, which, given that Larger and larger datasets are increasingly being external agencies were sometimes used to help the brand in maintaining for such a large percentage of the resource is integrated, with a trend towards a need for to sell in the approach and methodology used. maximum profit. One of the principle roles of focussed on this, is surprising. predictive analyses. In addition, more data marketing is to drive purchase or use without collection is being automated, with some One Marketing Effectiveness Head spoke of the need for the brand to discount it. However, There is a huge focus among the respondents organisations planning more extreme internal believing that the strategic and planning only one respondent actually mentioned price and in their systems on the communication strategies in a relatively short time period. See processes could be improved, soon after his elasticity as a specific metric. ‘pipes’ rather than the communication itself. quote below. arrival at his organisation, but realised he Another action point therefore seems to be to needed to wait until he had built up both Pretty much all price elasticities are negative: widen the engagement on the excellent work These are significant projects which require huge personal credibility and sufficient meaningful if the price is increased we would expect done within the IPA and other organisations sums of investment and are being executed by data to challenge senior management on consumers to buy less. For example, a price to also demonstrate the value of superior different combinations of Finance, Analytics, their processes. elasticity of -2.5 means a volume decline of 2.5% insight and creative execution. and Insight. However, in almost every case, the for every 1% of price increase. It is easy to delivery of these major projects has taken much Another interesting development was the extrapolate, then, the benefit of reducing the 06 longer than anticipated. In one case a 12-week review of setting only annual targets, to one price elasticity to 1.5% or 1.0%, making the project took over 30 weeks. Interestingly, IT where the targets were more aligned with the consumer less sensitive to price changes and Moving from a ‘reporting culture’ departments were rarely mentioned, and there business needs across the year. Not only were the serious margin that could be generated. to a ‘so what, what next?’ culture was only one reference to Artificial Intelligence the commercial calendar and product launches Though this is often more difficult to achieve (AI). aligned, but it made more sense if brand health in FMCG, where price or volume promotions are Whatever metrics are being used, in the and customer satisfaction peaked at the same part of major retailer negotiations. more mature effectiveness organisations, Importantly both financial and marketing time for maximum effectiveness. With the there is a movement from a ‘reporting culture’, respondents stated these models were still acting increase in longer-term metrics being integrated We certainly feel this is an area which could where the generation of reports are its own end, as support for decisions made by management, into the modelling processes, the intuitive benefit from further investigation and be to a ‘so what, what next’ culture. rather than being the dictators of them. Human common sense of maximising this alignment, hugely beneficial to certain clients and to the Boards now want to know what teams are intervention, with its broader perspective and where possible, is likely to be more easily proven, agencies who championed it. doing about their findings, as much as what intuition is still critical. and more clarity obtained, on the balance of they find. short and long term investments.

We have a Central Data Another benefit of improving effectiveness understanding and transparency is that it We have to get the leadership teams comfortable with Science team – with the should be much better protected when the organisation needs a quick financial fix. When the language and they have to understand and have ambition to become its value is strengthened, it is in a stronger confidence in the data, such as econometrics, so we position. obsolete in 3 years’ time. don’t waste time challenging the data and discussing Data has to become generalities, but having meaningful and nuanced endemic. Just like no one discussions about what we should do about what the should have digital in their data tells us. title anymore. Director of Marketing Marketing Director

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Capability Marketers should be mini

There is no doubt that skills development in widespread as it should be, particularly at general managers. They effectiveness is an essential requirement middle management level and lower. across the marketing industry. The choice This is still an issue but has improved over should be owning the for organisations is whether to create a new the last few years. centre of excellence, or develop existing numbers and owning the marketing and research teams or some kind Some of the respondents believe that If you compare of combination of both. understanding, if not ownership of the P&L plans around them and should be ‘hardwired’ into marketing teams. structure and mindset, What is certain however, is that there is a skills But both financial and marketing teams getting input from Sales, gap, as in all areas of data and analytics, would benefit from understanding more of mindset is a lot harder. particularly for individuals with client-side the principles of one another’s functions. from demand planning experience. So for the time being, developing You only really crack staff is a key requirement. As has been seen in a number of the and input from Finance. respondents in our sample, the combination the mindset if you Training needs to be on-going for two reasons: of increasing capability in effectiveness and I have a very strong view measure effectiveness speed of change in the industry, and staff deeper understanding of the commercial turnover. Training tends to be done in-house imperatives means a surge in the influence the of Marketing that they are and people get by the new effectiveness units where they marketing function can effect across the exist, or by insight and analytics teams. organisation. the centre point of the evaluated on it. Education of the marketers can take up to 25% Corporate Innovation and Strategy Director of their time. And with brand manager tenure It was also interesting to note that several organisation. I give them at 6 months to 1 year, the need is continuous. of the organisations who had more mature As a result, in this scenario, the understanding effectiveness cultures remunerated their and effectiveness history for a brand sometimes marketing teams, at least partly, on brand tools to help them – it resides at the agency, rather than in the health metric measures – probably the most client team. powerful demonstration of the belief that saves me time and they these metrics are the engine of growth. Part of effectiveness is of course financial feel more empowered. literacy. It has often been said that financial Finance Director literacy among marketing teams is not as The biggest change I have seen is that marketing Our crown jewels will increasingly be the brand equity teams are getting involved with the numbers – what piece, where we have got the science of combining their activities do to their profit level. They are MMM and brand tracking. It took a year – built with getting challenged by senior management. It’s so econometrics agency and our team …. We now have a much more productive for the business. ‘Total ROI’ – short and long term combined. ...That’s Marketing Finance Manager what we show at Board meetings. We don’t show the ad any more.

Marketing Director

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Changing behaviours 03 05 Review client contact and Create cross-agency effectiveness The results of this study create both challenges reporting strategies hubs for clients and opportunities for agencies. However, by putting effectiveness at the heart of day-to-day Agencies sometimes find it difficult to access Some agencies have been asked to create joint operations agencies can drive positive clients at Marketing Director level on a regular agency planning or strategy hubs, for example, improvements for their clients’ and their own basis. However, there are now new groups of to maximise thinking in this space. And, clearly, businesses. decision-makers with whom to engage in the the predictive analytics landscape is an area marketing process within client organisations, where several agencies already provide excellent that could help dial up effectiveness regimes. services. Still, the increasing integration of Changes to agency practices This, in turn, may also help agencies to improve longer-term brand measures into the evidence 01 Make effectiveness the beginning not the end of the process senior contact levels, as it is the delivery of base for decision-making mean agency teams effectiveness and its improvement that is being need to understand this process and how their 02 Find what metrics matter most reported at Board level. work fuels it. 03 Review client contact and reporting strategies 04 06 04 Find the best language and marketing story Find the best language and Effectiveness-based contracts, 05 Create cross-agency effectiveness hubs for clients marketing story incentives and reviews 06 Effectiveness-based contracts, incentives and reviews The agency sector should be in the best possible Certainly, some of the pitches that are currently position to help clients position Marketing to be in the market include commercial performance part of the growth narrative, or, for metrics. But this practice can go both ways. When not-for-profit or public service organisations, agencies can demonstrate driving commercial 01 02 narrative around delivery on objectives. value this can be used in negotiation when Make effectiveness the beginning Find what metrics matter most As one agency CEO respondent commented: renewing contracts. In addition, regular activity not the end of the process reviews should include, where possible, how We know how to campaigns and other activities are delivering on By bringing effectiveness more into the Some agencies have already moved way beyond strategic metrics originally set. beginning of processes rather than at the end, ROMI as a key reporting measure. Agencies create ideas and agency cultures may begin to change alongside should discover those metrics that have more their clients. For those clients where the credibility within the clients’ commercial teams. messages that effectiveness culture is still elementary, these behaviours and practices should be able to help Some agencies are already helping clients to change behaviour the client drive success and gain influence in determine these, where it is needed. These 4.0 their organisation. metrics then need to be understood by the entire team, not just the strategists. It is not just the and become part In the same way that marketing teams need job of the strategist to prove the activity has to understand the fundamental commercials been successful. The whole team can then help of culture. Implications of their organisations, agency teams should to ensure the rigour of the original strategic Agency CEO understand effectiveness case law available in objectives are maintained. This could be helpful the IPA and throughout other industry bodies. when brand team churn is an issue. for Whilst one can argue that SOV/SOM equations We still receive briefs where client/agency are less precise in a digital world, it still remains a useful analysis for brands when everything stays the same, considering marketing investment, and one that but the client expects to account teams should be aware of, to help relationships educate and challenge clients when necessary. double the size of the brand. Strategy Director

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This report was always intended as a provocation for change in our industry. It is Three-speed clearly important that the IPA helps to cement an effectiveness framework into brand NOW and agency culture to make effectiveness a day-to-day experience, not a post-event framework for planning practice. Reflecting the shift in behaviours and processes already happening across and reporting brands, the industry, facilitated by the IPA, has the potential to: Given the changes in effectiveness cultures that 01 03 are emerging, one response may be to suggest a ‘three-speed effectiveness framework’ for the Create cross-functional network Keep on top of best practice planning and reporting of their investment. to develop effectiveness culture and disseminate

This may help both clients and agencies to plan The IPA will bring together Finance; Analytics; Effectiveness practices will evolve and we need and manage the different effectiveness horizons Marketing and Agency teams to develop to ensure that our case law keeps pace with the that are increasingly important. ‘Now’ reflects cross functional understanding, potentially way it is changing. the shorter deadlines and sales activation collaborating with CIMA. communications that are very prevalent; 04 ‘6 months – 1 year’, which as we know is when 6 months-1 year 02 the longer-term effects of communication on Develop the Three-Speed growth start to take over from the shorter term; Pool marketing effectiveness Framework 1 year – 3 years, enabling the analysis of longer knowledge and promote more We will develop the concept of the ‘Three-Speed term brand health. Some clients are already widely Framework for Planning and Reporting’. We working on ‘two-speed’ planning models – will examine how, with the help of partners, we focussing on the medium and long term, but the We will pull together the available ‘case law’ can flesh out the framework for true practical addition of the current focus potentially means (rather than ‘case studies’) and other marketing application and follow up its use and efficacy, all activity is viewed in the light of its objective. learnings and maximise the real engagement of what we know. There is a need to further modifying where necessary. promote and widen the audience for our collective wisdom, and, alongside what is happening 05 across the enterprise landscape, ensure we feed in to professional development across other Evolve our development offer functions and organisations. Business Schools; We will evolve our development offer to incorporate 1 year-3 years Finance Courses etc. But not only make it some of the key elements of this study e.g. accessible, but to try and ensure it is understood language, day-to-day effectiveness practices, and used. financial literacy. We will look to CIMA to help develop this. This could be through joint professional development programmes, ideally with some accreditation built in. 5.0 Recommendations and actions

30/31 AMV BBDO More about Effworks

The IPA’s new Marketing Effectiveness initiative seeks to create a global industry movement, to promote a marketing effectiveness culture in client and agency organisations, and improve our day-to-day working practices in three key areas:

01 marketing marketing: developing the case for marketing and brand investment in the short, medium and long term, and promoting the benefits to internal and external stakeholders

02 managing marketing: providing awareness and understanding of how marketing works, and how to write the best brief, develop the best process for planning and executing marketing programmes, and motivating marketing and agency teams

03 monitoring marketing: delivering the best models, and guidance on tools and techniques, to plan, monitor, direct and Public Health measure the impact of marketing activity, England using holistic approaches to return on investment.

This takes the IPA’s effectiveness programme to a new level; working in collaboration with client advisors and association partners to showcase best in class, evidence based decision-making across the marketing function. By bringing together the best people in the industry Effectiveness Week (EffWeek) provides a trusted source of new thinking to address the issues that matter, and an invaluable learning resource, under the umbrella of Effectiveness Works (EffWorks), our online hub.

Find out more at www.effworks.co.uk

Participating brands For more information contact Janet Hull OBE [email protected]

Copyright ©IPA October2017 www.ipa.co.uk 02072357020 T London SW1X8QS 44 BelgraveSquare Institute of PractitionersinAdvertising key behaviours for success. understanding marketingeffectiveness andidentifiesthe brands andotherorganisations ontheirjourneyto of aresearchprojecttoexaminethecurrentbehaviours of business imperative. Culture Firstdetailsthefindings marketing effectiveness cultureandpracticeisnow a initiative (www.effworks.co.uk). The improvement of This reportforms partoftheIPA’s EffWorks cross-industry flickr.com/theipa Linkedin.com/company/theIPA youtube.com/theipa facebook.com/theipa @IPAScotland @The_IPA

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