Marketers tend to shy away from metrics. I see eyes glaze over when I start to ask about measurement. I suspect that when marketers signed up to their wonderful, interesting and creative marketing careers, they didn’t have things like negative binomial distribution or double jeopardy in mind. I most definitely did not.
There is probably some truth in the accusation that we just prefer to make ads.
Professor Tim Ambler, who I interviewed for this book, once said that marketers prefer to “make the runs than keep the score”.4 He added that “perhaps this is how it should be”. Of course, making ads is more fun than spreadsheets. But Tim is right – ‘making the runs’ is what creates real value for companies. This is what we’re paid to do. Marketers are just not great at proving it. So we end up with situations where it takes longer to get an ad signed off than it did to write it.
Almost two thirds of CMOs do not successfully demonstrate their marketing return on investment.5 This does not go down so well with the board.
Professor Patrick Barwise, another expert I quizzed for the book, once reminded an audience that CEOs and CFOs have a similar mindset to Ed Deming – “In God we trust, all others must bring data.”
Lack of metrics is not the problem. We’ve buckets of measures. Too many. A mistake we make is bundling them all in together. Not all metrics are equal. Don’t talk about the sales figures data and your fans or followers in the same sentence. And presenting them as equal is going to worry some senior execs that you don’t understand the difference.
Our role model here must be Direct Line Group in the UK, the company responsible for three brands – Direct Line, Churchill and Privilege. They set up a marketing effectiveness team that analysed what factors drove sales at each brand, measuring the contribution of brand and acquisition activity over the short and long term. Ultimately the team was able to show with confidence that their marketing had contributed £46m profit to its home and motor insurance businesses.
They explained that if they had made budget decisions on a purely short-term basis, they would have disinvested their Churchill brand at this point. When just measuring the short-term profit contribution, the ROI of their brand marketing was contributing just £0.45 for every £1 invested. So, a negative ROI. But they were able to measure the long-term contribution, too, which gave them an additional ROI of £0.63 – bringing them to a positive contribution of £1.08. This was a number that was commercially sustainable to continue supporting the brand with marketing.6
Mark Evans, managing director, marketing and digital for the Direct Line Group, also kindly agreed to answer some of my questions. He told me that building credibility is critical. This is about managing stakeholders in a diligent way and consistently demonstrating a strong sense of commerciality. Marketing lives in a world of many unknowns. This is why having credibility is so important; so that the function can be trusted to balance what’s right for customers and shareholders alike. He explained that “With research showing that 80% of CEOs trust their CFO compared to just 10% trusting their CMO, more needs to be done to build this trust”.
In their gold-winning IPA Effectiveness case study, Mark explained that when recently responding to a cost challenge, they were not panicking since finance were saying that marketing “is the last place we want to have to take from”. He noted that there has been no greater accolade for the team than moving from the front of the cuts queue three years ago to the back of the queue today. Invaluably, their decisions carried as much standing as anyone else’s, which may not always be the case.
So, effectiveness may not be an area of expertise for most marketers. Not the thing that helped you get to where you are today. But don’t put it on the long finger. Make it a priority to find out what the number is, so that you can get on with the hard work of making the runs that will improve that number.
Fox lesson: Get a definitive number on what the payback is on marketing spend. Make this the first thing you do.
5
Differentiate, or die trying
Around 2009, when working for O2 in Ireland, I attended hundreds of focus groups on the hugely successful mobile phone network. The groups usually had a mix of customers and non-customers. The moderator would get their views on various mobile phone networks. Why are you with O2? Why are you with Vodafone? Why did you choose them? What is different about each? “How would you describe the brands?” The response: “O2 is blue. Vodafone is red”.
Most mentioned O2’s sponsorships. People struggled to remember the details of the advertising. But they all knew what the ads looked like. And sounded like. They knew what an ‘O2’ ad would be like. Everybody spontaneously mentioned the O2 bubbles. Since day one, the advertising has featured bubbles. These tend to generate a bit of lively banter in focus groups. Always happened. “What’s up with those bubbles? They don’t make any sense.”
Generally we’d find several people in the groups that had switched brand at some point in the past four or five years. Why? Coverage was patchy in their new house. Or they got a new work phone with their job and O2 was the network the company used. Or they lost their phone at the weekend, tried a few stores and ended up with Vodafone. Their offers were better that particular day.
The brand personalities were quite different for sure. You’d never mistake O2 for Vodafone. O2 was visually very distinctive. No question about that. Tonally it was somewhat distinctive too. But the actual services were pretty much the same. Neither was the cheapest option in the market. Both had good network coverage in Ireland. Vodafone had a slight advantage here in people’s minds, but not a meaningful one I believed. Both had retail stores across the country. Both had a similar range of phone handsets. Our customers told us how much they liked O2’s customer service. O2 might have had a slight edge on that. But again, only slight.
How frustrating. If my job was to differentiate the brand, I was failing miserably. Never enjoyed bumping into our CEO after a focus group. In fairness to her, she bought into the importance of long-term brand building. And had always supported it.
The assumption I never challenged was whether we needed to differentiate ourselves to win. At least, not until How Brands Grow. The possibility genuinely never crossed my mind that we might not need to differentiate ourselves. There are few ideas in business as ingrained as differentiation. From Michael Porter’s ‘Five Forces framework’ to Jack Trout’s book, Differentiate Or Die.
The rarely-challenged view is that, in order to sell, brands must be differentiated. Consumers must have a reason to buy them. This is a compelling, and intuitive concept. Makes sense. No reason to suspect that it might not be true. Except that some of the marketers best-known for empirical findings are not big fans of it.
Andrew Ehrenberg, Byron Sharp and others have said that the concept lacks empirical evidence.7 Peter Field told me that within his effectiveness research using the IPA database, he too found that “differentiation turns out to be actually a relatively weak driver of success. It is rare to find brands that have functional differentiation that is very significant. So if you pursue the route of seeking out points of difference which you then maximise, and then talk about in your advertising, you inevitably get driven to what are often peripheral or perhaps even irrelevant kind of points of difference.”
So there may be a subtle difference between advancing a theory like Porter’s, which advocates for a business to differentiate itself, and one that recommends talking about how we’re different in our advertising and marketing communications. I don’t think the debate is whether or not it is a solid business strategy. Although executing this over the long term is difficult. The debate tends to be about whether it is an effective advertising one.
Why might it not be effective? Well, it seems that people don’t really believe that one brand’s products are very different from another’s. The experts point to data that shows that we regularly buy a handful of brands. And we switch seamlessly between them. In my own situation, the argument