In The Lessons of History, Pulitzer Prize winners Will and Ariel Durant said, “The present is the past rolled up for action, and the past is the present unrolled for understanding.” Disruption therefore should be viewed not as a new phenomenon, but seen in the larger context of human evolution which has ebbed and flowed since time immemorial, preceding the first to the current Industrial Revolutions.
In that regard, we are all subjected to the processes and trials of evolution, to the struggle for existence and the survival of the fittest to survive. If some of us seem to escape the strife or the trials it is because our group protects us; but that group itself must meet the tests of survival. Unfortunately, some groups haven’t fared as well as others in managing the disruption arising from today’s digital economy.
In spite of exhortations from marketing industry leaders such as Sir Martin Sorrell, to turn his group of “Mad men” into “Math men”, many agencies belonging to the world’s largest holding companies have become victims of natural attrition. Shares in WPP, Publicis, Omnicom and Interpublic Group were down sharply over the past 12 months.
Agency clients such as consumer goods groups are rethinking their marketing spending. For example, in the past three years, Procter & Gamble (P&G), the world’s biggest advertiser in that category, has cut agency and commercial production spending by US$750 million. It forecasts almost doubling that sum in the next three years.
While marketing holding companies struggle, digital behemoths Facebook and Google have virtually become a digital duopoly. Today, they represent about 60% of a growing global digital advertising market, effectively disintermediating these holding companies both from their clients and the audience they try to reach.
Fortunately, if history has taught us any lessons, is that what results from natural attrition time and again is a stronger species than its predecessor. While marketing holding companies might be languishing, the modern day marketer shouldn’t have to.
Evolving for efficiency
In its bid for greater efficiency, P&G marketing chief Marc Pritchard has reportedly said that his company would “take back control” of its marketing and move more of it in-house, saving over US$2 billion.
Acknowledging Pritchard’s sentiment, WPP chief Sir Martin Sorrell said: “We had too many people between us and the consumer,” adding that it was “taking too long to get things done. We have to move a lot faster.”
While traditional holding companies are facing declining revenue and profits, firms that are embracing digital capabilities – from AI to analytics – are projected to see efficiency gains translate into solid growth rates. A recent IDC study commissioned by Microsoft predicts that approximately 60% of Asia Pacific’s gross domestic product (GDP) will be derived from digital products or services by 2021.
A study by McKinsey echoed these findings, showing that businesses enjoyed five to six percent more in returns on investment in profitability and productivity by harnessing analytics. Another research firm New Vantage found that 73% of their respondents received measurable value from harnessing data – which was 50% higher than last year. This suggests that more value is being achieved as companies grow familiar with harnessing these data analytics platforms.
In the same vein, the modern day marketer will need to the march to the beat of disintermediation and which ability to keep step rests on one’s pace of personal mastery of digital capabilities. Which begs the question: “What core digital capabilities should marketers should acquire?”
Analytics puts marketers in the driver’s seat:
In a recent article by Marketing, an Adobe and Econsultancy study surfaced the top three areas of priorities for marketers in 2018 as being “Content and customer experience”, followed by “analytics” and “audience and data management”.
While there is much focus being placed on how “content marketing’s increasingly strategic nature means that more organisations are seeing the function as a crucial in-house competency”, a sticking point from the study is the significant 13 per cent gap between the first and second priorities – in other words, “content” and “analytics”.
This gap indicates that while many marketers in Asia seem to recognise that compelling content breathes life into modern marketing, the imperative of acquiring deeper capabilities and mastery in analytics – the sine qua non of content – is still lagging relatively severely.
This is worrying because it evokes what management guru Peter Drucker said, "you can't manage what you can't measure". What Drucker meant, was that you can't know whether or not you are successful unless success is defined and tracked. Ad legend David Ogilvy’s adds, “Never stop testing, and your advertising will never stop improving.”
With data analytics, an explosion of digital footprints and data sets, and measurement tools, testing and honing our marketing efforts have never been more within reach. Even for marketers who see themselves more as artists than scientists, the problem with not having a grasp of analytics is that if you can't measure marketing’s performance, you can't improve it. Moreover, imagine the potential efficiency gains that can be realised by marketers if they were empowered as a function to become skilled at making productive decisions by seeing and understand all these data for themselves, instead of having to rely on the IT folks?
By not mastering analytics, marketers could face three impediments to truly being in control of their marketing efforts, much less keep pace with transformations in the digital economy.
Connections, accountability and impact
Firstly, this lacklustre appreciation of analytics show that many marketers aren’t fully appreciating the necessity of being symmetrical in managing communication with the audiences that matter.
Compelling content after all should be designed in the context of larger narratives. For that matter context is always subjected to prevailing narratives. And a marketer who listens less than he speaks - or worse, ignores research - would be hard-pressed to fully appreciate these narratives. These marketers are as "as dangerous as generals who ignore decodes of enemy signals", said Ogilvy.
Secondly, analytics offers accountability to one’s marketing investments. It is one of the most effective ways I know that a marketing chief can communicate the business impact of his function to his colleagues in senior management.
Harnessing analytics, one can very quickly separate vanity metrics from meaningful data that has an impact on business performance indicators such as revenue, EBITA or growth. By speaking the language of business and by establishing him/herself as the go-to-driver of these indicators, the marketer gains credibility and earns a permanent seat at the strategy table.
On the other hand, by abdicating one’s mastery of analytics, the marketer has essentially given up on that opportunity and worse, reinforces the negative impression that marketers cannot demonstrate accountability to business performance.
Finally, by not appreciating - much less harness - data analytics, marketers are shirking one of the most important roles that they should be playing for an organisation - which is to be connected with the eyes, ears and heart of the customer.
In today's digital-first world, we're experiencing a data explosion - we're producing more data in these three years, as compared to the last 5,000 years of human development. Yet only 0.5% of this data is used by organisations meaningfully. This explosion of data is not lost on in the marketing function. And for that matter, because we generate so much content, on a much wider plethora of marketing channels, marketing must be a key contributor to that explosion of data.
Akin to data as oil of the 21st century, a marketer that doesn’t have capabilities in analytics isn't data literate enough to turn that crude into usable energy. And that means that without analytics, marketers are not only producers of useless data, we are also proponents of wasting this valuable resource.
The writer is Marcus Loh, vice president of marketing and corporate communication, PSB Academy.