Building a culture of Effectiveness                Tendensdagen         Stockholm 27th October 2011                 Gurdee...
Here to discuss  What is Effectiveness   Why it is importantWhy Effectiveness is not at the heart of the agenda   A vision...
Let’s clearly define Effectiveness
The Marketing ProcessMarketing      Marketing   Marketing                                       EvaluationStrategy        ...
The problem with this approach
Imagine you had a choice                    Do the rightAbility to                      thing formeasure                  ...
Some common misconceptions   “It’s an Effectiveness                        “Brand consideration”        Award paper”      ...
What is Effectiveness?Creating Marketing  Communications   that Maximise Commercial Value
Ultimate focus for Effectiveness      Shareholder value           Commercial           Behavioural          Intermediate
Effectiveness should be future           focused
This immediately shifts the            conversation  HAS IT WORKED?             HOW CAN WE BE                       EFFECT...
This has implications for theway we approach Effectiveness     Planning for Effectiveness    Demonstrating Effectiveness
Clarifying the objective                    What is the role for Marketing                       and Communications?      ...
Target high spenders from    competitive stores
What was more achievable?
Reframing the commercial objective into            an actionable task  Sainsbury’s target of delivering £2.5bn extrasales ...
Source: IPA, AMV BBDO
Would you run a race      without a   finishing line?
Why is Effectiveness important
Marketing is the key driver of organic corporate growth
Organic growth correlated with                                       35%                                              shar...
“One third of CFOs do not believe that                             Marketing is a key growth driver or                    ...
Client pressure is building‘It did not matter while clients had plenty of money to throw at the problem,but they are no lo...
Profit and Loss AccountWe are considered a cost not a depreciating asset..                                         Groupo ...
“Only marketing investments can deliver           increased revenue and increased profit. Yet           marketing budgets ...
High Brand Value                                       Market Cap of               Contribution of   Brand Value          ...
Why Effectiveness is not at the    heart of the agenda
Lack of alignment between Corporate Strategy               and Marketing
The marketing sphere           Media           Agency                                                       Fund Manager  ...
Marketing is not joined up             Media             Agency                                 Fund Manager              ...
Dissatisfaction within Marketing               “82% of Marketing leaders were dissatisfied with the role and              ...
Marketing doesn’t often have a                    seat at the top table             Minority of CEOs have previous experie...
Agencies don’t always ask the rightquestions at the start of the process
Who owns the problem?
HOW will creativity deliver value?                            Communications activity                             Generate...
Fragmentation of channels creates another                 hurdle
This has led to an explosion in data
There are low levels of data sharing
Dashboardsare offered as a solution
A vision for change
Focus on answering these            questions What is expected from Marketing from thedifferent elements of the client org...
Make the connectionAlignment between business strategy and marketing              objectives is critical     Marketing Eff...
“We are focussed on being  business solution providers,rather than just advertising and         buzz creators.”           ...
Put Effectiveness at the START of the  process rather than at the end
Invest time upfront to investigate the                business issue                             Market Dynamics          ...
Set objectives that are realistic and            achievable
CollaborateThere is an urgent need to bring everyone together
Make creativity purposefulConduct business reviews alongside the brand creative review
Aim to demonstrate Effectiveness to          the client CFO
Reposition creativity as an  investment rather than a costInvestment    Years    ROCE FTSE 100       3       6%   OMX     ...
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Tendensdagen 2011 Gurdeep Puri - Building a culture of Effectiveness

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Building a culture of Effectiveness
Möt en expert på hur man skapar effektivitet och lönsamhet i en marknadsorganisation. Om utmaningar i kontakten mellan marknadsavdelning, ledning och styrelse, samt konsekvenser för byråerna. Om hur det kan bli fel och lösningen på problemen med att bygga effektivitet i en organisation.

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Tendensdagen 2011 Gurdeep Puri - Building a culture of Effectiveness

  1. 1. Building a culture of Effectiveness Tendensdagen Stockholm 27th October 2011 Gurdeep Puri
  2. 2. Here to discuss What is Effectiveness Why it is importantWhy Effectiveness is not at the heart of the agenda A vision for change
  3. 3. Let’s clearly define Effectiveness
  4. 4. The Marketing ProcessMarketing Marketing Marketing EvaluationStrategy Plans Execution
  5. 5. The problem with this approach
  6. 6. Imagine you had a choice Do the rightAbility to thing formeasure the business
  7. 7. Some common misconceptions “It’s an Effectiveness “Brand consideration” Award paper” “It’s the return on investment from the campaign” “Once a year fuss rather than ongoing business practice” “Measuring what we do”“Agencies seem to define Effectiveness as beingthe work you do after the campaign has run”Source: IPA VAG Industry Effectiveness Study, The Effectiveness Partnership interviews
  8. 8. What is Effectiveness?Creating Marketing Communications that Maximise Commercial Value
  9. 9. Ultimate focus for Effectiveness Shareholder value Commercial Behavioural Intermediate
  10. 10. Effectiveness should be future focused
  11. 11. This immediately shifts the conversation HAS IT WORKED? HOW CAN WE BE EFFECTIVE? WHAT ARE THE WHAT DOES RESULTS WESUCCESS LOOK LIKE? DESIRE?
  12. 12. This has implications for theway we approach Effectiveness Planning for Effectiveness Demonstrating Effectiveness
  13. 13. Clarifying the objective What is the role for Marketing and Communications? Help deliver £2.5bn extra sales over 3 yearsSource: Warc IPA Effectiveness Awards 2008
  14. 14. Target high spenders from competitive stores
  15. 15. What was more achievable?
  16. 16. Reframing the commercial objective into an actionable task Sainsbury’s target of delivering £2.5bn extrasales over three years was turned into the much more approachable task of getting existing shoppers to spend an extra £1.14
  17. 17. Source: IPA, AMV BBDO
  18. 18. Would you run a race without a finishing line?
  19. 19. Why is Effectiveness important
  20. 20. Marketing is the key driver of organic corporate growth
  21. 21. Organic growth correlated with 35% shareholder value LVM H 30% InBev Reckit t Pernod-Ricard 25% Cadbury SAB M illerT ot al shar eholder r eturn % H enkel D anone 20% 2 R = 0.4761 Kelloggs Pepsico 15% N est le Kim berly-Clark LO real P&G 10% H eineken 5% Sara Lee D iageo U nilever Foods Alt ria H einz Colgat e 0% -2% 0% 2% 4% 6% 8% 10% 12% O rganic r evenue gr owt h rat e % Source: Datastream, Martin Deboo-Investec Securities 2007
  22. 22. “One third of CFOs do not believe that Marketing is a key growth driver or crucial to devising strategy”Source: Leadership for growth, Marketing in 3D; Delloite Consulting/London Business School 2008
  23. 23. Client pressure is building‘It did not matter while clients had plenty of money to throw at the problem,but they are no longer willing to pay lots of agencies for overlapping roles, andare squeezing fees. Coca-Cola wants to reimburse its agencies for costsand only reward them beyond that when campaigns have been shown to work.’ John Gapper, Financial Times 30th April 2009
  24. 24. Profit and Loss AccountWe are considered a cost not a depreciating asset.. Groupo Campari 2009
  25. 25. “Only marketing investments can deliver increased revenue and increased profit. Yet marketing budgets are the first to be cut and the last to get incremental investments.” Guy Powell, Marketing CalculatorSource: Marketing calculator by Guy R. Powell
  26. 26. High Brand Value Market Cap of Contribution of Brand Value Parent Company Brand Value as % of Brand ($m) ($m) Market Cap $126,782 $70,452 56% $ 166,597 $64,727 39% $71,788 $33,578 47% $67,708 $28,731 42% $58,428 $29,495 50% $29,214 $13,706 47% $20,284 $11,041 54%Interbrand Research: Best Global Brands 2010, FT Global 500 2010
  27. 27. Why Effectiveness is not at the heart of the agenda
  28. 28. Lack of alignment between Corporate Strategy and Marketing
  29. 29. The marketing sphere Media Agency Fund Manager Procurement Venture Capitalist EconometricResearch Consultancy Private Equity Agency PR Agency Comms Agencies Marketing Company Financial Share Agency Dept Dept Board Markets Holders Build Meet Sales/Share Meet financial Demand to see High share pricebrands targets targets successful, highly High dividend set by the board set by The City profitable company ROCE (usually short-term) ROMI with excellent ROMI Payback cash flow Payback forecast
  30. 30. Marketing is not joined up Media Agency Fund Manager Procurement Venture Capitalist Research Private Equity Econometric Agency PR Consultancy AgencyAgencies Marketing Company Financial Share Dept Board Markets Holders
  31. 31. Dissatisfaction within Marketing “82% of Marketing leaders were dissatisfied with the role and positioning of Marketing within their organisation.” * “Board level CMOs say that only 16% of board level discussions are about Marketing.” *Sources: Leadership for growth, Marketing in 3D; Delloite Consulting/London Business School In search for a strategic role for Marketing: The Chartered Institute of Marketing 2009
  32. 32. Marketing doesn’t often have a seat at the top table Minority of CEOs have previous experience in Marketing Only 14% of FTSE 100 companies had a Marketing Director on the Company Board* To compound the situation, the average tenure of a Marketing Director is less than 28 months and could be as little as 15 months1* themarketingdirectors.co.uk 2008, 1 Forbes/ Spencer Stuart 2008/7, 2 Spencer Stuart 2007
  33. 33. Agencies don’t always ask the rightquestions at the start of the process
  34. 34. Who owns the problem?
  35. 35. HOW will creativity deliver value? Communications activity Generate intended response Build brand perceptions Build brand commitment Drive consumer behaviour Create value for business
  36. 36. Fragmentation of channels creates another hurdle
  37. 37. This has led to an explosion in data
  38. 38. There are low levels of data sharing
  39. 39. Dashboardsare offered as a solution
  40. 40. A vision for change
  41. 41. Focus on answering these questions What is expected from Marketing from thedifferent elements of the client organisation? What are the KPIs that Marketing shouldpresent to the company board to demonstrate effectiveness?Do your Marketing briefs contain commercial objectives for the agencies?
  42. 42. Make the connectionAlignment between business strategy and marketing objectives is critical Marketing Effectiveness should be explicit and shared between CMO and the CFO
  43. 43. “We are focussed on being business solution providers,rather than just advertising and buzz creators.” Law and Kenneth- Campaign magazine 2011
  44. 44. Put Effectiveness at the START of the process rather than at the end
  45. 45. Invest time upfront to investigate the business issue Market Dynamics Sales PriceCompetition Value share Marketing Volume share Support Media spend Competitor (relative to mkt) activity Business Issue Innovation Retail factors Quality Distribution Seasonality Product Share of Trade Penetration repertoire Purchase & Usage Behaviour
  46. 46. Set objectives that are realistic and achievable
  47. 47. CollaborateThere is an urgent need to bring everyone together
  48. 48. Make creativity purposefulConduct business reviews alongside the brand creative review
  49. 49. Aim to demonstrate Effectiveness to the client CFO
  50. 50. Reposition creativity as an investment rather than a costInvestment Years ROCE FTSE 100 3 6% OMX 3 8.5% Govt Bonds 3 5% Creativecampaign 3 57%

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