Paul Stringer, Managing Editor, Research & Advisory at WARC, hears Les Binet call for more number-crunchers in marketing and fewer pie-in-the-sky thinkers.
What can marketing do to be taken seriously? Well if you believe the words of the ‘godfather’ of marketing effectiveness, Les Binet, group head of effectiveness at adam&eveDDB, then a good place to start would be if we all behaved a bit more like ‘business people’.
If that conjures up stock images of smartly dressed professional types having serious conversations in tall glass buildings then you’re not alone. But my impression is that Binet cares less about these things and more about how marketers can get better at maximising profit and shareholder value.
Indeed, this was the focus of his recent presentation for the IPA, titled ‘The World Turned Upside Down’, which began with a rundown of the extraordinary events of the last three years before turning to the question of how brands can unlock growth in turbulent times (tl;dr: it has nothing to do with ‘brand purpose’).
Call it the ‘forgotten P’. Call it the least sexy P in marketing. The first thing he wants us all to think a bit more about is price.
Pricing power matters. Brands able to reduce price elasticity while increasing prices can deliver whopping returns. What’s more, with econometric modelling, we have the ability to properly measure price elasticity and correctly optimise pricing strategies.
This type of modelling is also useful in demonstrating the futility of promotions – “the crack cocaine of marketing” in Binet’s words – which not only cut profits, but also reduce pricing power while making consumers more sensitive to future price increases.
Which begs the question, why run promotions at all? The answer often comes back to the pressure to deliver short-term profits – a pressure that has increased for many brands across many categories as the threat of a global recession looms.
If marketers want to get serious about marketing, then they need to think about the long term as well as short term – the long and short of it, if you will.
One way to do this, Binet argues, is to stop treating advertising as a cost but instead as a financial investment. It’s a bit like pitching on Dragons’ Den: you (the marketer) need to think about how to convince your investors (the business) that your product (advertising) is an investment that is 1) low risk; and 2) capable of generating long-term returns.
If that sounds rather cold and rational then that’s exactly what it is. But this is precisely Binet’s point. He thinks marketing is too much art and not enough science, a discipline filled with too many pie-in-the-sky thinkers and not enough number-crunchers who enjoy spending time in the weeds.
Thankfully there is a way out. The first and perhaps most obvious is through talent; by hiring people with backgrounds in areas like mathematics, economics and statistics. Competition for left-brain thinkers is fierce, but here maybe big tech’s loss could be advertising’s gain?
Hiring aside, a second way in which marketers can get more serious about advertising is through measurement. Here, we are talking specifically about econometrics and controlled
tests – measurement approaches that ‘put hairs on your chest’ as your mother might say.
Binet demonstrates that through this type of modelling and experimentation, marketers can get better at explaining the role of advertising in growing demand, reducing price sensitivity, measuring the synergies between different marketing channels, increasing profitability and, ultimately, value for shareholders.
If this all sounds a bit ‘left-brain’ to you then there is a silver lining. As Binet explains, one key way to optimise your advertising investment is by harnessing the ‘irrational power’ of creativity.
True to form, he can’t help but try to take this slippery, irrational thing and make it rational by referencing a Data2Decisions study that showed creativity to be the second most important determinant of advertising profitability, behind brand and market size. Indeed, Binet’s own work with Peter Field has estimated that creative ad campaigns deliver up to 11x more market share growth than average ones.
This is brilliant because it shows marketing can have its cake and eat it. And, in Binet’s view, that all starts with the sort of left-brain thinking that will get marketers taken more seriously.