By Jayne, Vicki
Does marketing matter? Is it really a revenue generator and protector or just a cost? These are questions many business leaders are asking as they pass newly sharpened cost-slashing pencils over departmental budgets. And if marketers cant answer " clearly and compellingly " they risk losing some hard-gained ground. Thats already happening in recession-hit economies like the United Kingdom where, after an arduous struggle to gain their place in the boardroom sun, chief marketing officers (CMOs) last year found themselves on the back foot peering down the barrel of record third quarter budget cuts. Just when they thought theyd proved their worth.
Its foolish stuff, says NZ Marketing Association CEO Sue McCarty.
Bringing CMOs into organisations has had a huge influence on the success of business and on their ability to be nimble, flexible, customer focused and market led. And there are many case studies to show this. In fact [companies] have been celebrating CMO success in the past few years. But when times get tough, they say lets slash this and chuck out these good people " its crazy. Theyve already forgotten the lesson they had just taught themselves.
Marketers never really reached such giddy heights in New Zealand so have less distance to fall. But whether New Zealand companies suffer a similar crisis of confidence or not, its certainly a good time to get clear about the connection between marketing spend, revenue and brand value " and maybe to get a whole lot braver in terms of generating customer engagement. That, after all, is marketings area of expertise, notes McCarty.
Marketers should be the ones that are really championing the need to look after customers. Even if youre not deriving as much revenue from them as before because theyre in trouble too, you need to keep them loyal and engaged and intimate with you and really that is marketings job.
Like any relationship the process cant be based on intermittent wooing or short-term sales sprees.
Its not just about marketing communications " its so much more than that, stresses McCarty. You need to talk about the brand because the brand at the end of the day brings the companys vision to life through an identity and promise out to the market, she says.
So business leaders should be looking to their marketers to say " is what were doing still appropriate? What is the marketing dynamic were playing in right now? Do we need to change anything? And marketers should be focusing their efforts around bringing the intelligence back to business leaders so they can make good informed business decisions about what they should be doing, what they should cut and what not.
Sadly, marketing is positioned in a number of organisations as a cost rather than as revenue generator and revenue protector, says McCarty. And while she and other marketers busily cite evidence to prove that cutting marketing budgets during a downturn puts companies at a competitive disadvantage come the inevitable upturn, is that enough to convince local companies to boldly market their way through tough times?
The picture is mixed. Yes, some marketing budgets are getting the chop; cost pressures are pushing others into different, more cost- effective channels. Theres also a much stronger emphasis on marketing metrics. If you cant connect the dots between marketing endeavour and organisational health, then you end up on the back foot " perhaps deservedly.
Visiting global brand commitment expert Jannie Hofmeyr " Synovates global director of innovation " sums up the challenge. Brand building is a long-term thing and he can now draw on new understandings culled from evolutionary psychology and neuroscience to prove it.
When learning happens it does so because neuro-physiological changes have actually taken place in the brain " and it takes time for this to happen. It takes time to create what I call the embedded connections between say brown, fizzy, sugary water and peoples sense of fun, good memories, social times.
So you just need to link the product with the imagery you want " and be patient. Not easy in the face of hard financial facts, says Hofmeyr.
I think the difficulty marketers have is that when you make these investments, it shows up slowly because we are slow-moving creatures. Unfortunately, money is the lifeblood of a company so the people who understand its ebbs and flows end up, correctly, running companies and they come with a fair question to the marketer.
That fair question is: show me why this is money worth spending? And when your customers are busy migrating away because they just cant afford you any more, it becomes almost impossible to answer.
But, he adds, the evidence is certainly there that in post- recessionary times people do migrate back to premium brands. What we can do now is build much better arguments around why this is the case.
Designworks creative director Sven Baker has plenty of good arguments " and believes brand is not just something that can be left to the marketing department.
Its the responsibility of the CEO and it affects the whole culture of the business " the commercial decisions as well as the corporate decisions " how and where capital is invested. I think the appreciation of how important it is to define your unique attributes around your brand and translate that into an experience that consumers develop a preference for is greater than ever. Its more competitive so you have to be better at it.
But I can tell you I dont think any company is going to communicate their way out of this crisis. They are going to have to be much smarter and look much more deeply at their brand promise and how it is engineered into every aspect of the company.
Recession, he adds, offers a real opportunity to do just that.
For us change has always forced a keener need for appreciating how you are truly going to compete. It forces you to re-evaluate everything you are doing to ensure you are doing it in the best possible way.
One company holding the faith in its brand-building efforts is Kiwibank " thats because it is focused on the long term, says general marketing manager Sadhana Ramen.
I guess when you look at the life cycle of the brand, a recession that may last a year or two is just a wee blip in the overall scheme of things. My view longer term is that it will be cheaper to stay in the game and keep your presence in the market than to withdraw and then have to spend a lot of time and money to build up some presence and momentum again.
It helps that Kiwibank has a brand with a good value proposition ideally suited for recessionary times, adds Ramen. And there are opportunities in maintaining a high-profile presence when people are making critical decisions about their financial needs, she says.
Air NZ general manager marketing Steven Bayliss also focuses on the up-side.
I think it is a terrific opportunity for marketers to demonstrate to their business that not only can they steward the long-term health of the brand or the portfolio but they can also be a very active contributor to the immediate revenue needs of the business.
Its a good time to sharpen the strategy " not to retrench away from the market.
Instead of getting caught up in the gloom and doom of it all, he believes the role of marketer is to be a voice of optimism for whats possible. Not, he adds, in a nave or over-fanciful way. But to say there is a path through here and theres an opportunity to leverage these challenging times to improve our relative competitive positions " so lets not squander that.
Recent Air NZ promotions push the fun buttons. Last years cranial billboards " messages hennaed onto the shaved skulls of volunteers to highlight the companys new domestic terminal facilities " attracted a lot of local and offshore interest. More recently, the company has been having a not-so-gentle poke at the misleading pricing tactics of some airlines via an internet marketing campaign about a fictitious company " saverjet.com. The high profile of such stunts amongst a web-based audience does no harm to the image of a small-country airline trying to cut it in global markets.
I think the currency for giving people, consumers and internal audiences, a bit of a smile at the moment is pretty high, notes Bayliss.
Its what Jenene Freer, founder of online mag NZ Girl and Flossie Media Group, would describe as breaking through the white noise of product messaging. Thats something shes done successfully via a bunch of low-cost/high-profile campaigns including the dont mess with NZ girls series at the Big Day Out or the supply of a genuine man-vending machine for Auckland shoppers. Its bold stuff but Freer reckons too many marketers tend toward being risk averse.
Its not often you see a brave client willing to stick their neck out to excite, engage and delight the public. But if youre not doing things like that then youre just white noise. I prefer the notion of either make them love you or hate you but dont leave them feeling indifferent.
Risk aversion may also stymie moves into marketing channels that offer a more measurable response, she suggests. If anything its time for online to bask in the sun because we have been measurable for so many years and its been frustrating that other media havent had to be so measurable.
Measurability certainly comes into its own when marketing budgets come under pressure " a point made clearly by Todd Hunter, general manager sales and marketing for Turners Auctions.
My advice to marketers is you really have to understand the connection between the spend, the activity and what its doing for the business. If the connection is strong then youll always spend the money. If its not strong, then obviously it will be at risk. And I think you find in these times that branding type spend will be at risk because generally the connection is not as strong.
In an industry that has been hit quite squarely by recession (used vehicle sales have suffered an annual drop of 10 percent), you have to be realistic in terms of delivering results to shareholders, says Hunter.
You do look at the tactical kinds of things you can do to maintain a level of profit or to stay in business and that does take some hard decisions. Sure youll have spoken to people whove said now is the time you should be spending to build market share and I absolutely agree with that as well " but you do have to be realistic and that comes back to things people can actually say hand on heart, it works.
For Turners, that has meant a wholesale shift to the online environment for its marketing because we understand precisely the return and the value we get from that spend, says Hunter.
Fonterras general manager shareholder and supplier services Tim Deane agrees measurement is a vital tool in tough markets.
I think that old adage " that 50 percent of marketing works, the trouble is you dont know which 50 percent " really has no place in a recession. And I think marketers who understand metrics and take more of an evidence-based marketing approach " where you understand cause and effect and what works " are those that are going to serve their companies well.
With its farmer shareholder customers, Fonterra uses a methodology called customer value management (CVM) which precisely tracks shareholder loyalty and engagement. And while there are some aspects of satisfaction it cant control " international commodity prices and its impact on milk payouts for instance " there are other levers to pull to enhance the customer experience.
So were effectively going through all of those and working out where we can do better and the bits of spend that really make a difference.
His advice to smaller businesses that cant manage such intensive tracking is go out and talk to your customers about what they do and dont value; get out with the sales team and find out what tools they need or dont need.
Marketers who have the metrics will do well at a time when budgets are under pressure.
I think recession will just force marketers to demonstrate their value " and its not just about marketing communications. I see marketing as about the entire customer experience. So marketing has got to be interested in what the sales people do, interested in PR " all of those parts of the customer value proposition.
If accountants are people who can help control costs, good marketers are the ones who should be putting their hands up to say I can help you drive revenue and I can be held accountable for that.
Vicki Jayne is 3media Groups editor at large. vickij@3media.co.nz
Top tips for surviving tough times
Sue McCarty, CEO, Marketing Association
Focus on revenue generation and protection. I would say to marketers " own the return on investment, own the financial results. I would say to business leaders " use the market intelligence that sits inside your marketing departments to stay ahead of this economic wave.
Jannie Hofmeyr, global innovation director, Synovate
If you continue to support the brand, you come out of recession stronger. You will see a shift to cheaper offers " but people dont migrate with conviction if you maintain the connection between the brand and the core things that people really care about.
Tim Deane, general manager shareholder and supplier services, Fonterra
Do everything you can to work out which 50 percent of marketing effort actually works. Get out and talk to customers, ask them what part of your offering they value and which they dont. Take accountability, take responsibility " and step up.
Steven Bayliss, general manager marketing, Air New Zealand
Use the opportunity to call into question historical behaviour " test beliefs around what works really hard. Demonstrate to the business that there is both short and medium term returns that marketing activity can generate. Be a voice of optimism for whats possible and have some fun on that journey.
Jenene Freer, founder, Flossie Media Group
Question the validity of everything on your schedule " why is it there, how to measure it. Break through the white noise " thats probably the biggest challenge in the marketing world. I think some [marketers] are so worried about failing they dont try " so they dont get cut through.
Sadhana Ramen, general marketing manager, Kiwibank
This is a temporary situation and you really need to look at what position you want to be in when you come out of it rather than just reacting. There are always opportunities; it is just a matter of looking for those and leveraging them to the max. You cant just keep doing things because theyve worked before. Everything is up for review and you have to rethink everything.
Sven Baker, creative director, Designworks
For me in terms of traditional marketing, it is quite a good idea to take a sharp pencil to the traditional tactical advertising side of things because you really wont communicate your way out of this crisis. Change forces a keener need for appreciation of how you are truly going to compete. It forces you to re-evaluate everything youre doing.
Todd Hunter, general manager sales and marketing, Turners Auctions
You have to own and be the expert on what your customers needs and wants are because once you understand that, you are able to justify everything you are doing or want to do that is right for your organisation. So ensure your internal relationships are strong. Then be able to demonstrate the value " make sure the connections between the [marketing] activity and the outcomes you are achieving for the business are very strong.
Switching channels?
Traditional marketing channels are taking a hit as recession bites into organisational spend and that reflects general acceptance they are less effective, says Designworks creative director Sven Baker.
I think dilution of the effect of traditional advertising is pretty well accepted these days. The brands that are performing are the ones that understand brands are experiences not advertising campaigns.
Jenene Freer, founder of Flossie Media Group, believes the shift to online is already showing up offshore and though New Zealand is lagging behind the trend, the downturn could help change minds. I think online has been around for long enough and has enough points on the board to prove, if anything youd be daft not to be going there at this second.
Turners Auctions made the decision late last year to shift all its advertising online, and Air NZs Steven Bayliss notes there is clearly great measurability and efficiency online.
But online youre in danger of moving into clichd territory very quickly. Last year when we launched a campaign around new entertainment systems, our leading media vehicle was the backs of seats " in cinemas, restaurants, cabs, shopping malls you name it. For us its about breaking out of cluttered interruption-based environments to entertain people.
Bucking the trend to shift its spend from traditional channels is Kiwibank. TVCs are still a good channel for brand building, says Kiwibanks general marketing manager Sadhana Ramen, but theyre used alongside a wide media mix. It is, she says, a matter of mixing and matching to get the right message to the relevant audience via the best channel.
I think generally the media market has become really fragmented so its harder to target the audience you want to reach through just one medium.
Integration is very much the name of the game, agrees NZ Marketing Association CEO Sue McCarty.
Its not about choosing channels but choosing the mix of channels and that mix may change in tough economic times. As a marketer I find it really exciting " because I believe the marketing mix is adding new ways of helping businesses to survive and thrive through challenging times.
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