This year, marketing leaders in many well-established consumer industries will be hard-pressed to deliver the top-line revenue growth demanded by Wall Street investors and their management. Megatrends are part of the challenge. Shifting consumer spending habits, the proliferation of media channels and the growth of smart devices all impact marketing effectiveness. But these trends are in some ways a distraction as they are beyond people’s control.
What is in a marketer’s control is finding ways to drive more growth with the same budget. If P&G was willing to cut $140 million from its digital budget in one quarter due to lack of sales impact, how long will it be before your board asks, “Can we do the same?” Preparedness to answer this question is both a solvable challenge and an opportunity. Finding ineffective spend is a chance to improve it. The alternative is a downward spiral of shrinking sales, media budgets and reach.
With that backdrop, it’s no wonder the average CMO tenure continues to decline. So, how should marketing leaders adapt to grow in 2018? My startup helps retail marketers know which tactics are driving growth. The following are general lessons we’ve learned along our journey.
Learn From The Pros
In the sports world, teams share a common goal: to win. The scoreboard is the common measure that tracks progress. The effectiveness of plans and actions can be measured within minutes or seconds. The coach is well-equipped to make changes as results of the team’s strategy and execution are clear.
In the military, goals are more complex. The effectiveness of actions is dependent on many more factors. In this environment, decentralized decision-making and centralized information-sharing (G2) make for the most effective team.
In both arenas, leaders reach their objectives by quickly assessing the effectiveness of their plans and making rapid adjustments. Contrast this with how media plans are often developed and bought by brands and agencies. If ever there were a time for more marketers to adopt this quick-learning and adaptable approach, it’s now. For agencies and marketers ready to make rapid learning and adaptation a priority, there are three key steps you must take to succeed:
1. Define common goals and measures.
This may seem obvious, but does your team really have common goals and measures? What is the common yardstick you currently use to communicate across external partners, internal teams, your CEO and CFO? Google communicates in clicks, Facebook in likes and TV in GRPs. If you can’t consistently communicate across your team, you can’t consistently measure progress or take action.
Incremental sales are the most obvious candidate for the common metric. At Google, we called this “closing the loop.” Tracking this consistently and communicating it throughout your team not only helps to measure the effectiveness of plans but also helps to adapt and reallocate resources. Additionally, this metric aligns marketing with the rest of the organization.
2. Create a ‘G2 engine’ capable of sharing intelligence and progress.
While companies like Nielsen and IRI have provided measurement for over 40 years, we are now moving into an environment where incremental sales data is available in one to two days. With data available at this speed, the challenge has become enabling action across the enterprise at comparable speeds. How can you take action quickly when you have three- to six-month commitments and bespoke processes?
One approach is to find partners who are willing to be held accountable to your metrics. Given that your customers seldom make three- to six-month commitments, why should you extend this to your partners? For example, the advent of “programmatic” automated many actions, but these actions were based on clicks or impressions, not on sales. When you measure (and pay) partners based on clicks, what do you get more of?
For companies with in-house media buying teams, it’s equally important to retain flexibility. These teams must share the common goal that is aligned with the CFO’s objectives. While CPC and volume discounts are attractive, they may not connect to shared internal goals.
When building your G2 insights engine around incremental sales, there are two types of marketing performance measurements, broadly speaking: long-term attribution and short-term lift studies (disclosure: my company falls into the latter category). Long-term models represent the average of how a media channel performs over time. This info is great for forecasting and planning.
Short-term lift studies measure the incremental sales driven by your current campaign. When the insights are timely and granular (e.g., by publisher, ad exchange, audience, etc.), short-term studies enable campaign optimization to grow sales in the near-term. Marketing leaders should ensure their teams are using the right measurement that matches their purpose.
3. Create a decentralized organization that can quickly adapt to insights.
There are many reasons to empower your internal teams. One is that you have aligned objectives. You are all responsible for driving sales. Another reason is the learning and ideas you will gain by talking with those doing the work. Gemba walks, or going to where the work is done, are very popular in lean manufacturing to reveal true insights. Gemba holds the same promise in marketing.
By contrast, some brands rely on third-parties to find insights and act on them. If your brand chooses this path, aligning objectives and ensuring open, transparent dialogue about what’s working well and what can be improved are imperatives.
Before handing over the keys to your team, make sure they have the capability to separate real market signals from the noise. Their tools must highlight statistically significant differences in marketing impact. While marketers are sometimes forced to make decisions on “directional” information, the reality is if it’s not significant, there may be no impact on sales. While it certainly helps to have analytics experts in-house for questions, all marketers need to understand statistics fundamentals to enable solid decision-making every day.
To obtain your goals, you must clearly define your common measure, share progress against these goals throughout the team and enable distributed action.