Research carried out over the past couple of years by the IPA, Enders Analysis and consumer magazine marketing agency Magnetic has all confirmed something many in the advertising community have suspected: marketing spend is overly focused on the short term.
So concerned about the trend is Sue Todd, Magnetic’s chief executive, that she joined forces with Campaign to convene a dinner debate in London’s Soho to start a conversation between groups including advertisers, media owners and agencies as to how this can be rebalanced.
The problem of short-termism isn’t only due to the rise of digital media or the rate at which CMOs switch roles. It also reflects broader trends in corporate governance over the past 20 years, such as the declining role of relatively staid pension funds compared with investors looking to get rich quick, as well as the advent of quarterly reporting as good regulatory practice.
Why does this matter? Because brands are being eroded. This isn’t just a case of favourite cupboard staples disappearing from supermarket shelves – it undermines the ability of brands to charge a premium and to build profitability and longer-term shareholder value.
There’s a more insidious effect, too. "Without brands, what shareholder value is there? In a world with no brands, the power is going to shift from the consumer to the platform," Derek Morris, a communications consultant with a background in media agencies, warned.
Douglas McCabe, chief executive of Enders Analysis and author of the recent report Marketing Short-termism: is an Effectiveness Crisis Looming? (goo.gl/JuVrVE), commissioned by Magnetic, didn’t let the marketing industry off the hook for the current state of affairs.
"Advertisers have caused a bit of it, agencies have caused a bit and media have probably caused a bit by not sticking to their guns on quality all the time," he said. "There’s a complicity to the whole trading environment."
The idea of uniting the industry appealed to the room. "We need structures where different bodies come together to present collective arguments," Todd said. "I feel heartened that there’s been a positive reaction to the report. Now it’s about organising these responses."
Only collective action and more joined-up evidence and metrics can combat short-termist thinking, all agreed. But how to achieve this?
Nadya Powell, co-founder of creativity-focused business consultancy Utopia, argued in favour of a confident stance. "There’s 120 years of evidence about the power of brands," she said. "We have to stand firm and have real confidence that brands are the future of every business."
Even disruptor tech businesses are now spending significant amounts on advertising in established media channels, Powell noted. "This is because brands are going to be so much more in the future," Sinead Bunting, Monster’s European director for consumer marketing, added.
There was agreement when Carat chief client officer Alison Jones said getting into the board-room and presenting persuasive figures to the chief executive was vital.
"No CEO will say they don’t believe in the brand, but they don’t know what investment it takes to build one," she added. "They want to see some evidence, so what we need to do as an industry is to equip the marketing director."
Claire Sadler, group brand director at BT, laid out the challenge. "[For] any marketer who’s felt the pressure of trading numbers and quarterly reporting, convincing the board to invest in brand-building – which, by its nature, is slow-burn – can be a tough job. It has to be a balance between investment in the brand and budget spent on direct-response, and combining this with evidence to prove the value of doing both," she contended. "If we can [build on the IPA’s research to] look at how short-term metrics can be early indicators of longer-term brand- and market-share growth, that will be a good thing."
Marcus Rich, chief executive of Time Inc UK and chairman of Magnetic, agreed. "We all have to lean in to the challenge of how we value different environments and their effect on brands. Context matters. We know this is true of magazines."
ISBA director-general Phil Smith warned that his members had a problem with measurement and metrics. "Digital allows you to measure some things well, but there’s no joined-up thinking or agreed-upon standards," he said.
The case was made for drawing on the existing, vast body of data to show the value of developing long-term brand-building strategies – and to take this evidence to different audiences, including CMOs, CEOs and finance directors.
Bridget Angear, joint chief strategy officer at Abbott Mead Vickers BBDO, said: "We don’t need to keep experimenting, we know what works. We know more about the how and why than ever before."
Having had experience in drawing disparate parties together to write the Tech Talent Charter to improve diversity, Bunting had some inspiring words for the industry. "We have to act collectively to succeed," she said. "I hope that we take the best from the past and present and together we make something better."
Main photo: the panel
Back row (L-R) Douglas McCabe, CEO, director of publishing and tech, Enders Analysis; Phil Smith, director-general, ISBA; Marcus Rich, CEO, Time Inc UK, and chairman, Magnetic; Alison Jones, chief client officer, Carat UK; Claire Beale, global editor-in-chief, Campaign (chair); Sue Todd, CEO, Magnetic; Nadya Powell, co-founder, Utopia Front row (L-R) Sinead Bunting, European director of consumer marketing, Monster; Derek Morris, communications consultant; Bridget Angear, joint chief strategy officer, Abbott Mead Vickers BBDO. Not pictured: Claire Sadler, group brand director, BT