David Buttle, the FT’s Global Marketing Director, Commercial, explains how brands and media owners can return marketing to a healthier balance between short- and long-term ad investment.
Of all the popular sessions hosted by WARC at Cannes Lions 2019 – and punters were regularly having to pull up chairs in an overflow room – Peter Field’s talk about ‘The Crisis in Creative Effectiveness’ was easily the most controversial.
Field’s assertion that creatively-awarded campaigns are delivering the lowest effectiveness in 24 years will have come as a huge concern to all those who believe in the power of creativity to transform businesses – not least the crowds gathered at Cannes’ Palais des Festivals.
The reason for this downturn? A growing trend towards short-termism among marketers, he argued. Rather than follow Field and Les Binet’s tried-and-tested ‘60-40’ rule of splitting a budget between brand building and activation, many advertisers are being drawn into pursuing short-term goals at the cost of longer-term effectiveness.
To understand the causes of this behaviour, the Financial Times (FT) partnered with the Institute Of Practitioners In Advertising (IPA) to carry out a survey of 500 FT readers, 43% of whom are C-level executives. The resulting report, ‘Board-Brand Rift’, paints a damning picture of board-level brand expertise, and the ability of marketing teams to communicate with senior colleagues.
Over half of business leaders – including 30% of senior-level marketers – rate their knowledge of brand building as average to very poor, while less than a third of organisations use ‘brand health’ metrics, such as salience, distinctiveness and favourability, at board level.
Alongside that is a widespread misalignment between the marketing tactics perceived by senior leaders to be most effective at building brands and those which are proven to be drivers of those objectives. For example, over half of business leaders ranked social media as one of the most effective channels for brand building –second only to word-of-mouth – when the majority of evidence places it much closer to the bottom of the list.
WARC caught up with David Buttle, the FT’s Global Marketing Director, Commercial, to dig deeper into the findings, and find out what role publishers may have in reversing the slide towards shorttermism.
Why did the FT decide to commission the study with the IPA?
We’re seeing this shift in marketing investment [and] I actually don’t know two organisations [better-placed] to look at this. [The FT comes] at it from the perspective of business as a whole, [rather than purely] from a marketing perspective, while the IPA can conduct a huge amount of research on what is the most effective approach to advertising and marketing. Ample research – much which has been conducted by the IPA – suggests the optimal balance between long and shorter-term marketing investment hasn't changed, and that you still need to build a brand. By building that brand, you reduce your cost per acquisition, and reduce your cost per sale.
What do you consider to be the key findings of the report?
What comes through is that, at a theoretical level, people still believe that brands deliver performance to the bottom line of the business. They also believe that the appropriate balance of long and short-term activity delivers the most effective return. [At a] conceptual level that's all encouraging. When we asked about what brands do, their response was focused around growth: launching new products, enterprise growth, stuff like that. They didn't associate brand with what you might call defensive strategies – things like resilience, future cash flow and profitability – [and connect those more with] operational efficiency. Once again, we’re hearing strongly that, across the world, marketing reporting cycles are getting shorter. One of the starkest findings in the report is that there is a real lack of confidence [at] board [level] about how to how to build and maintain a brand. That knowledge doesn't seem to exist. Over 50% [of respondents] rated the knowledge of their board as average or worse. Even knowledge within the marketing department about brand building seems to be under threat. Over 30% of senior marketers said that their knowledge of brand building was average or worse, which is fairly staggering.
What are the barriers to a balanced approach to long- and short-term marketing investment?
What came through strongly was a lack of metrics. It seems that boards don't have access, or aren’t discussing, brand metrics on a regular basis. That was the strongest impediment by long way. [There is] a big divergence in belief in the power of a balanced approach to marketing [investment] between those businesses which understand how brands are built [and those that don’t]. If you can successfully communicate to your business and actually explain how brands are built, that seems to translate into a desire for a more balanced approach to marketing objectives. Yet there's clearly a long way to go. We asked which channels they perceive to be most effective for brand-building – word of mouth was top and social media was second, [despite] abundant evidence [to the contrary]. There's a long way to go in the education piece.
What is your advice for the clients that you encounter? What can they do to shift the situation you’ve described?
Bring the notion of brand into the boardroom. That's through evidence about the efficacy of brand to deliver commercial performance, and reviewing brand health metrics on a regular basis. Familiarity breeds belief and marketing teams need to create that familiarity. They're communicating with a sophisticated audience, so it needs to be built on robust evidence, and the presentation of that in an appropriate manner is key. There’s a lot of woolly stuff out there – it’s about selecting the [evidence] that will pass muster when talking to senior executives.
What do you think are the obstacles preventing brand marketing from gaining that credibility among the very senior C-suite executives?
I think language is probably one of those areas. General management effectively operates using the language of finance, and marketing has its own language. That immediately creates a kind of dissonance between these two functions. I think marketers need to challenge themselves to be financially literate, and to be able to express the output of their efforts in financial, rather than marketing, terms.
What kinds of metrics should be used to convince boardrooms about the importance of long-term brand building?
When you're measuring sales performance, and you know you can put $1 in there and get $3 out here, and that's extremely alluring. Whereas, for brand, you are investing in lowering the cost-persale in two or three years’ time. That may have a net greater effect on commercial performance over the long run, but it's not as alluring right now as putting in a dollar here and getting three out there when you’re facing huge pressure.
As a content company, what does this mean for the FT? Does it mean that publishers need to focus more on delivering performance outcomes for brands?
Because of the structure of the digital advertising market, media owners that invest in high quality journalism are not going to be able to compete in direct response, as a general rule. The reason for that is because of the assets which media owners like the FT bring, which is premium, trusted environments – they aren't as important to direct response performance as they are for brand performance. We need to think about the ways we are communicating the benefits of working with us, in the same way that marketers need to be communicating the benefits of brand performance to their board. How are we measuring the performance of campaigns that brands run with us? What language are we using to describe that? It’s certainly an area we're focused on.
Is there a way for media brands like the FT to win back ad spend from some of those performance-driven digital platforms?
The position we're in is not one of profound depression for a number of reasons. Firstly, we operate a paywall model online, we have just passed a million paying readers, and we have a mixed revenue model. On the commercial side of the business, we are performing extremely well. We are seeing – and I think this comes through in this study, actually – a sense that the pendulum may have shifted too far. 62% of our respondents said that they're taking steps to redress the balance from shortterm back towards long-term. We think that there's a belief within businesses that this isn't necessarily good for the long-term sustainability of companies. You only need to look at a number of recent examples of businesses which have come unstuck by pursuing performance alone.
Do publishers need to get better at promoting their strengths, rather than chipping away at perceived weaknesses in digital media rivals?
It’s absolutely not about chipping away at digital. This is about what, over a three- to five-year period, we will deliver you in revenues and [brand] confidence. It needs to be a conversation about that, not just a sort of philosophical belief in creativity. There is abundant evidence that tells us that if you create an impression in the minds of consumers as to what your brand stands for, that a desirable thing. People will pay more for it and people will continue buying it, even if their competitors bring out a superior product, because there's affinity. It can be a guarantor of future sales, as well as driving margin. By not pursuing the right balance, businesses are at risk of commoditisation and entering a race to the bottom, unless you're in a highly concentrated market.