Marketing under pressure

Updated: Dec 30 2008, 09:06am hrs
We cant compete on price. We also cant compete on quality, features or service. That leaves fraud, which Id like you to call marketing. These were the instructions from Dilberts boss in one of the famous cartoon strips. Marketers are endangered species. The average tenure of marketing heads has shrunk to somewhere between one to two yearsand each year it reduces by 15 days. How long will it take for marketers to become extinct

Marketers are frivolous and difficult to approach feel the accountants. But then, accountants never loved marketers. They have always held that Marketers are faddish, irresponsible dont think like business people behave irresponsibly And the list goes on. Marketers have shrugged and moved on, safe in their abstract world of USP, brand positioning, key consumer insights and many such esoteric ideas.

When the going was good, this comic cat-and-mouse story continuedlike a typical Tom & Jerry cartoon show. But economic meltdowns in the past decade perhaps changed the sense of humour at boardrooms. CEOs, strapped for results and cash, began demanding return on investment (ROI) from every little bitmarketing included. There is a growing skepticism about the effectiveness of advertisingone of the most expensive marketing tools. And the accountants criticism gained momentum.

Who killed marketing

The writing has been on the wall for a while, but ostrich like attitude has delayed its acknowledgment. Consider some statistics. According to a WARC report, only 46% of marketers define clear objectives for their campaigns. According to another survey, senior marketers spend a pathetic 2% of their time on media strategytheir largest budget item. An UCLA research in 2004 concluded that 85% of sales promotions were unprofitable. As much as 95% of product launches in the US ended up being failures in 2005, according to E&Y. And we know that an overwhelming majority of audiences actively avoid advertising on television channels.

Let us look at it from the perspective of advertising awards of which there are two broad typescreative only and creative plus effectiveness. In India, out of over 4,000 campaigns that are thought fit to be entered into creative awards, less than 5% are able to build a case to enter effectiveness awards. Most campaigns fall out of effectiveness award because the marketers and their agencies have no data to prove the ROI of their investment. Extrapolate that to a Rs 20,000 crore industryand the facts are stunning: Rs 19,000 crore is being spent based on dollops of leaps of faith.

Is the situation different globally In developed markets, there is relatively greater effort to establish linkages between marketing investments and results. But even then, the majority of marketing investment goes un-measured and un-evaluated. There is an opportunity everywhere to rebuild faith in marketing and advertising.

Measurementthe first step

Majority of marketing decision making is intuitive, and it should be. But that is also a part of the problem. A marketing guru might say that a decision is correct; because I know it will work. But this argument would be a lot more persuasive if he uses some numbers to prove his case, especially when his board room colleagues have a different opinion. The number orientation would also bring about a lot of discipline into the decision making process.

Justifying a larger marketing budget would be so much simpler when the CMO can provethrough numbers that his ROI on communication was higher than that of the competition, and he knows the relative ROI and the peak ROI level of each channel of communication.

The answer lies in bringing a more scientific approach to marketingmeasuring the measurable and exploring ways to measure what is un-measurable today.

Measurement is a necessary and important step, but is not the destination. Sadly, in a number of companies, there is an overdose of data, but no insights. Statistics offers a number of very powerful tools to establish linkages and patterns in data and the use of these tools to extract insights is the important next step in this direction.

Challenges of the future

Marketing environment has changedmarketing principles have been slower to adapt. Web 2.0 is here and is changing the way people livemuch the same way as the railroads did in the early 20th century or the TV channels did in the early 1980s. What are the key challenges that marketers seeing in the future

An interesting study was recently done by Verse Group in association with Jupiter Research, covering over 100 marketing heads of companies with revenue greater than $ 250 million. The objective was to understand the marketers point of view about their key future challenges.

According to this study, marketers are concerned about the combined headwind from three forces that are creating unprecedented difficulties: one, economic crisis; two, internet disruption; and three, the failure of brand positioning theory in the new world. The emerging strategies are leading to a re-invention of marketing rule-books:

* Greater proportion of marketing budget is shifting to non-traditional media where the ROI is more measurable than the traditional media like TV, print, radio and outdoor.

* Brand stories or ideas are replacing the traditional concept of Brand Positioning, which tended to be more focused on the brands ability to deliver a differentiated benefit. Some of the successful campaigns for Airtel and Idea Cellular these days are great examples of brand storiesthese campaigns dont attempt to cell a functional or emotional superiority of the brand. They make a statement by plugging the brand into an interesting or surprising life narrative.

* There is greater recognition of visual design as a competitive advantage and a differentiator for the brand.

As marketers brace up to the difficult times ahead, accountability and re-invention are the two key concepts that would gain momentum.

The author is chairman and managing director, Brandscapes Worldwide