The Plague And The Impending Creative Renaissance

plague

Painting by Pieter Brueghel the Elder (1526/30–1569), The Triumph of Death (c 1562), oil on panel, 117 x 162 cm, Prado National Museum, Madrid, Spain. Wikimedia Commons.

It struck the news cycle like a bolt of lightning. I’m talking about the blow dealt to Heinz-Kraft in the form of a $15 BN write down in February of this year. In the months following, the company’s valuation continued downwards to reach an all time low in August. The stock trading in the mid 20s, down from $95 only a couple of years earlier. Yes, you read that correctly. Roughly 80% of its market capitalization. Gone.

But how?

The verdict by many (outside of Heinz-Kraft): a long period of underinvestment in brands, such as Oscar Meyer and Kraft.

The “zero-based budgeting” put in place by Heinz-Kraft’s owners, the investment firm 3G Capital, in which the company reset their yearly budgets instead of incrementally adding on to the prior year’s spend was implemented to boost profits by cutting “expenses”, such as brand building. Conversely, it eroded key brands, hence the market’s reaction.

As recently as last month, Adidas admitted that the company’s focus on efficiency rather than effectiveness had led it to over-invest in digital and “performance marketing” at the expense of brand building. Adidas had taken its eyes off the ball, becoming too preoccupied with the ad delivery system, rather than what it was actually delivering through that system.

Last week, it was Gap’s CFO who made a similar confession: “We have frankly become too heavily dependent on messaging around discounting as opposed to the bigger picture brand messaging.” The statement went on to say that the company recently increased its marketing investments with a renewed focus on brand building activities.

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It’s anyone’s guess who it’ll be next week, and the week after next. But there’s not a trace of doubt in my mind that the domino effect has been set in motion. As more and more companies discover that they’re underinvested in brand and over-invested in promotional tactics, we’ll slowly but steadily enter a new period of renaissance for creativity in advertising.

We should expect significant inertia coming from platform companies wanting to keep today’s marketing body at rest, exactly where it is: over-invested in short-term tactics. But our empirical evidence that prove the business effects of long term brand building will inevitably mount a counter force capable of overcoming this inertia, setting the ad industry in motion in a direction towards brand building creativity once again. Accelerating this shift will be the increasing scrutiny of digital bogus metrics used for campaign evaluation.

In the case of Adidas, the company has been working since 2015 to correct the error of its ways with renewed emphasis on brand desire in its marketing. And if you’ve followed the brand in culture and its valuation over the past few years, you know that it’s been working for them.

Before 2015 – while operating under the efficiency doctrine – the company had a “performance budget” linked to e-commerce in the belief that digital ads drove digital sales. The company was focused on driving online sales because it is the most profitable part of its business.

But once Adidas took a closer look, what it found was that its business units were not just driving their own sales. Up until that point, Adidas had viewed its advertising efforts from a product tactical perspective, thinking that football advertising was driving football sales, basketball advertising was driving basketball sales and so on, but found in reality that all advertising drove general Adidas sales. This was an organizational epiphany.

While the company had been convinced that only “performance marketing” drove e-commerce sales, it learned that it was actually brand activity driving 65% of sales across wholesale, retail and e-commerce. This was a big problem for the company because at the time, Adidas’s advertising split was 23% into brand and 77% into “performance”. (Source: Marketing Week)

Every marketer who hasn’t had his or her head in the sand over the past few years will know that the split should be around 60:40 in brand’s favor, thanks to the rigorous work by Field and Binet.

I find it ironic that Adidas’ over-reliance on “performance marketing” was what actually made it realize that “performance marketing” wasn’t performing. Not in the absence of adequate brand building support. The term “performance marketing” itself is undoubtedly the most brilliant nomenclature in all of marketing history, as it effectively claims to be the kind of marketing that’s performing, while subtly implying that everything that isn’t it isn’t, well, performing. Genius.

If you are moderately interested in history, you may be aware that between 40-60% of the European population was wiped out by the Great Plague in the 14th century. Before this highly contagious disease was properly understood, diagnosed, and could be nipped in the bud, it had festered and quickly spread across all of the Old World for a period of about ten years. Imagine ten long years of torment and death. Ahem.

Survivors became acutely aware that rats, fleas and germs – carriers of the plague – should have been better contained and ideally exterminated to avoid the disease’s dire consequences. Clearly, a 40-60% value loss on Wall Street stemming from brand ignorance cannot be compared to the loss of human life in the same percentages. This goes without saying. But I still can’t help but think of “performance marketing” – and mainly the underlying short-termism that’s led companies to over-invest in it – as a form of plague. Granted, it’s a much less deadly kind of plague, but a plague nonetheless.

The problem now is that many companies are in the exact same situation that Adidas and Gap recently found themselves in – they were infected – while others have not only misallocated between emotional brand building activities and promotional tactics, but have also significantly cut overall marketing spend, not unlike Heinz-Kraft.

As Wall Street is seemingly growing ever more impatient for its ROI, organizational patience for marketing returns extending over two quarters seems virtually nonexistent. Short-term thinking, short term objectives and short-term activities have become marketing’s plat du jour, and you and I have not voiced our dislike loudly enough for the chef to take notice. There is no vaccine against the value eroding plague that is short-termism, but there are a few concrete things we can all help with in our daily work to affect change and prevent further misallocation of resources, and instead help usher in a new creative renaissance.

1. Unlearn and relearn.

As we’ve seen, common sense isn’t common sense. The industry is full of nonsense theories turned practices. So, we the industry need to educate and re-educate ourselves and everyone around us on how advertising actually works, the different ways in which it works. We all have a responsibility to help pave the way for a new, evidence-based effectiveness orthodoxy across our industry. Only then can we expect creativity to once again be seen as the most valuable asset available to business, and only then will it command the value it rightfully brings to the businesses smart enough to leverage it. And only then will we stop focusing exclusively on the pipe and instead start paying serious attention to what we’re putting through it.

2. Shout it all out.

We need to take every opportunity we can get to act as evangelists and proponents for long-term, emotional brand building for which creativity is the core pillar. We need to talk to everyone who will listen: colleagues, bosses, clients. And we need to make sure that every marketer on the planet has seen and understands the significance of the chart below. This is the most important chart for marketing today. It may also be the most ignored. Hence, it can never be referenced too much. To echo Professor Mark Ritson’s words in response to criticism of the imperfect data used for this research: “Binet and Field’s research may not be perfect but that doesn’t make it wrong.”

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3. Call bullshit on bullshit.

Until the value of creativity is given the proper love and respect it deserves again, we need to call bullshit on short-termism in all the places it rears its ugly head. Again, tactics and activations have an important role to drive business in parallel to brand building activities, but we need to unite and call bullshit on it every time it starts masquerading as brand building, and every time it’s encroaching on the 60-40 spend split.

Wall Street will thank us for it later.

Fredrik Särnblad

 


 

Seeing the bigger picture…

 

meta

I came across this rather interesting meta approach for Oatly (an oatmeal drink) that definitely cuts through the conventional. While these posters won’t strike anyone as visually impressive – which is most certainly intentional – I think there is a lot to like about the thinking behind them, such as the recognition that the consumer gets advertising and is in on the rules. And that the objective of these posters clearly is to make people want to find out more, not by conveying a set of facts about the product, but by recognizing the power of difference in terms of how the brand shows up.

This kind of work won’t come about through a process that’s rigid, linear and formulaic, which, quite frankly many agency processes are.

While I believe it’s often very helpful for agencies to have a consistent methodology and framework, such as TBWA’s Disruption, I fundamentally believe that whatever methodology, framework or process you have, it must never be the only way to think about and ask questions about a marketing problem. You have to allow for ample flexibility and at the outset assess whether the methodology you have can accommodate the task at hand.

Every marketing problem is unique and needs to be treated as such.

Oatly’s creative work above is undoubtedly the result of a flexible and collaborative creative process, far from what I consider to be a template advertising process: “Brand X’s unique selling proposition is______________”, or “The purpose of Brand X is_______________, therefore__________”.

Don’t get me wrong, a consistent, marketable process can be highly practical, but having a creative philosophy – a POV on the type of creative work that you believe in – is rudimentary for any agency with its heart set on greatness.

Every agency needs to have a POV on the kind of creative work it believes in. One of my favorite examples of this is BBH’s belief that truly great, effective advertising often comes from a place of “irreverence”. John Hegarty does a wonderful talk on this, making numerous references to irreverence and its power throughout history. Watch it on youtube when you have a minute.

Photo credit: Leon Phang.

Feeling Is Believing

Volvo has just released another 4-minute film, and it has allegedly run in its entirety on Swedish television, all four minutes of it. Bravo Volvo!

This time the theme is about revisiting one’s roots in order to find a new beginning. Swedish DJ/Artist/Producer Avicii is the protagonist. This film, like the one before it, is underscored by the line “Made by Sweden”.

While I don’t like this film nearly as much as “Vintersaga” (see below), I do like the fact that these films stem from an advertising philosophy that’s different from the one that’s come to dominate Adland’s view of what makes effective advertising, and subsequently the creative process in ad agencies across geographies, not least here in the US: Rational persuasion is central to the creation of messages and narratives, which often manifests itself in the perceived need for a ton of RTBs. If you don’t work in Adland, that’s short for ‘Reason(s) To Believe’. (I know, that’s how lame our acronyms are)

Central to this model is the idea that in order to be successful, any ad must be ‘believed’ and ‘understood’. But in commercials like this one, focus isn’t placed on getting us to ‘believe’ anything. There is no overt ‘promise’ or selling proposition here. Rather, the intention is to bring about a positive feeling and establish a point of view that we can identify with and make our own. That’s it.

It’s subconsciously seductive more than it is rationally persuasive.

It’s been suggested by Robert Heath and Paul Feldwick in their paper ’50 Years Using the Wrong Model of TV Advertising’ that “clients and agencies must take on board the obvious but oft-denied truth that much effective advertising contains no ‘message’, ‘proposition’, or ‘benefits’, and that attempts to impose these or post rationalise them generally reduce effectiveness. Creative departments will have to abandon their obsession with simple, functional briefs, and creating ‘impact’, in favour of creativity that builds relationships with the audience – which in truth is what the best creative work has always done, normally in spite of prevailing theory rather than because of it.” 

Everyone ought to read this paper. And if you’re anything like me, you’ll feel good having your intuition and gut-feeling vindicated by the thorough work of these two gents.

I’ll leave you with Volvo’s ‘Vintersaga’, made for the Swedish market. This commercial captures the feeling of melancholy, sprinkled with a sense of longing for brighter and warmer times that all swedes experience during the long, dark and harsh Swedish winters.

You may not be Swedish, but you’ll see in this film that there is more to relate to and ‘identify with’ for the audience than there is to, so to speak, be ‘persuaded’ by. But of course, you can always rationalize the logic that Volvo performs flawlessly in the harshest of winter conditions. And that’s probably exactly how the commercial was sold in. Because I suspect Volvo executives, just like most of Adland, still haven’t given up on the delusion of rationality.

I’m not saying RTBs are irrelevant; I think they can often help create the necessary ‘back stories’ consumers often need to convince themselves that it’s OK to buy (what they feel like buying). But what I am saying is that RTBs are given way too much importance in the agency process, often preventing a brand from leaving a lasting (emotional) impression on its audience. And as a result, big brands are pissing away their money on ineffective advertising.

As a result, big brands are pissing away their money on ineffective advertising. What Adland needs is the kind of copernican shift that Behavioral Economics has meant for Economics at large. But I’m afraid it’s going to be a while before we’ll see any real change at scale. And it certainly won’t happen until we as individuals stop seeing ourselves as rational beings, and insisting on making advertising the perfect science that it never will be.

Brands don’t talk; people talk.

Since my last post, I have changed both agencies and continents, moving from the black sheep agency, BBH in Singapore to the ‘Unbound’ agency, Mullen in Boston. But that’s not why I’m posting. This post was actually triggered by a Facebook update this morning in which I said: “When you hear agencies talk about managing brands’ conversations on social media, you know that it’s code for running ‘call centers’ on Facebook.” I guess I’d just grown tired of hearing agencies spout vacuous, self-important statements that seem detached from reality.

I then followed up with an (obvious) point: “Brands don’t talk; people talk.”

This, in turn, triggered a few comments and questions, such as: “Brands dont talk? So why do we catalyse ‘brand conversations’? Why do we have a ‘brand language’? If a brand is built around a relationship, doesnt silence make that relationship flat and one dimensional if not a monologue?…. Discuss….”

That comment alone most certainly sent the man pictured above out on a mission, but I took the opportunity to elaborate on my rather blunt statement:

We definitely rely on metaphor a lot to describe how brand comms should look, feel and behave, as we say. A little too much sometimes, I think. You’ve probably heard Bullshit Man hovering just below the ceiling in meeting rooms. But what employees say about companies/brands on social media is not the same as saying that this is the ‘brand’s voice’. Rather, it’s the voice of employees – people working for companies  – answering questions about brands just as they would in a call centre. (The difference being that everyone is able to listen in.)  Brands are not people. They don’t talk. People talk. 

When call centre businesses realize there’s money to be made from answer questions on Facebook on behalf of businesses (and not just over the phone) they’re going to get many a social media agency a good run for their money.

People are people, even in social media

In the Digital Life 2011 survey from TNS released recently, we learn that almost two thirds of Britons don’t want to interact with brands on social networks. The survey states that mountains of digital waste, from friendless Facebook accounts to microsites that no one visits are polluting the digital space. No surprises there.

Most brands, it seems, are getting the fundamentals wrong. Especially in social media.

Supposedly blinded by the lure of glittering technology and visions of future earnings, many appear to have lost sight of how this wonderful digital stuff now available to us is actually being used by real people. Huge amounts of wishful thinking is (still) driving the creation of social campaigns. And the waste mountains just keep on growing.

People in Adland shouldn’t be surprised that “people don’t want to interact with brands in social media”. It would seem a rather odd expectation to believe that people actually would. The word ‘social’ provides a decent clue as to why. Sure, people including myself will respond to content from brands in this space, but to talk about interaction? Let’s not delude ourselves with jargon.

What people want from brands in simple terms are utility and entertainment. In a social context, one such utility is, of course, a brand’s role as a means for self-expression. Forgive me for using the tired term ‘social currency’ here. Embracing this reality is the condition of entry for any brand in the social space.

It’s about looking at brand content as a means for social interaction, rather than as a destination in itself.

Here’s the thing: People don’t really want to interact with brands if we’re being strict about it; people want to interact with people, which is precisely what people want out of social media. We don’t socialise with brands; we socialise with people. Hence, the thing brands should focus on in social media is to help conversations between the people there become better, richer, deeper and funnier. The conclusion that “Britons want brands to stay off social networks”, would suggest that their experiences in this space thus far haven’t added much value to their social interactions, but have presumably been perceived as interruptive, broadcastesque visual noise, irritating their eyeballs.

Brands should broadcast to people when people want to be broadcast to – in front of the telly – and they should help people be, well, more social in places where this is what they’ve come for.

Marketers need to understand that approaching social media with a broadcast mentality is utterly futile. What they need, ironically, is nothing different from what great brand building and advertising have always been based on: a profound understanding of people and what motivates us. The obvious addition being that brands now also need an understanding of human behaviour and interaction in the digital space, as well as creativity and the right digital capabilities to exploit it.

For a majority of organisations, it’s safe to say that this requires ‘unlearning’ of old habits to varying degrees in order to create space for a new, social approach to brand building to move in. Technologists are an absolutely critical part of this equation. But as they move in, it is paramount that their skills can effectively marry advertising’s cornerstone: a profound understanding of human nature. Because in silo, digital know-how offers little or no value.

Whilst the industry is ostensibly grappling with this ‘new’ reality, I can’t help but feel that the more things change the more they stay the same. Because at a fundamental level, the hallmark of great brand thinking hasn’t changed in the slightest: it remains rooted in an understanding of people. And more often than not it is this understanding that unlocks the Big Idea  –  substance for people to talk about and be social around. Irrespective of channel.

As posted on campaignasia.com on December 8th, 2011

Story Matters

Lately, it feels there’s been a resurgence of people in Adland talking about the importance of storytelling. We’re going back to basics, literally. I have no issues with this, I think this is great. What irritates me is people talking about it as if it’s groundbreaking stuff. It’s what it’s always been about, isn’t it? This is echoing the sentiment in Rob’s post from a couple of days ago. Ironically, I do think that the importance of storytelling may actually sound like groundbreaking thinking to a lot of brand managers and agency people, which is rather alarming. But it may help explain why so much of the advertising out there is so utterly bland and uninteresting.

Storytelling is the backbone of culture, any culture. It’s a necessity for people to feel a sense of belonging to any group or context, including brand. We simply need stories as human beings to create meaning. And great stories need great ideas. A really bad analogy (- I can’t think of a better one right now -) would be to think about an idea as a book cover; what holds the chapters that tell the story.

Now, I realize I run the risk of sounding like one of those people who annoy me when I say that storytelling is important.  But I don’t pretend there is anything new in what I’m saying here. All I’m saying is that a great story is as relevant as ever. I’ve posted on this topic a couple of years ago and you can read it here.

Whilst on the topic of storytelling, I thought I’d share this fairly recent RSA animation of Sir Ken Robinson’s story. It tells a great story. And because of how it’s told: the words, the pace, the timing, the analogies, the visualization, it is both persuasive and engaging. Not to mention how fundamentally important it is for all of us.

The best stories are the ones people want to share, the ones people want to hear over and over again, the ones people want to believe in. These are the stories that live on.

My sharing this clip is hopefully proof that Sir Ken’s story is one that will spread and live on.