The short-termism of corporations has trickled into their attitudes to marketing culture, which is losing sight of brand-building. By Marcus Rich, CEO, Time Inc. UK.
The average CEO is in the job for eight years. For CFOs it’s five years. For Chief Marketing Officers just four years. Why does this matter? Well, thanks to a new report commissioned by Magnetic, compiled by Enders Analysis, we can identify this as just one piece of evidence of short-termism that is having a potentially crippling impact on marketing effectiveness.
Enders cites the changing nature of ownership of UK quoted shares, now held by diverse interests across global markets as a key contributor to this phenomenon. This new breed of shareholder are demanding faster returns than the UK insurance companies and pension funds that owned 43% of UK shares in 1998 but now own just 9%.
This short-term outlook has also contributed to volatility within senior positions at public companies and in marketing, a discipline in which top-level talent is already thin on the ground it’s even worse, with just 2.6% of directors at the major companies monitored by Standard & Poor’s coming from a marketing background.
This wouldn’t be such a problem had companies got their trusted advisers by their sides. But again, when it comes to relationships with advertising agencies we see a move towards shorter-term arrangements. The average partnership between brand and agency fell from 86 months in 1984 to just 30 months more recently, according to the IPA. Which, alongside the need to deliver efficiencies, explains why procurement departments are now so heavily involved in marketing investment decisions.
There’s no doubting that technological disruption has also contributed to the uncertainty and prompted a shift towards shorter-term decisions about marketing investment. Growth in digital advertising anticipates the extra 21 billion hours we’ll spend online by 2020, 75% of which will be on mobile devices.
In a session at ISBA’s conference in March, Saatchi & Saatchi chairman and chief strategy officer Richard Huntington said of the industry’s response to consumers moving online: “We believe that quality of media is simply the quality of the pipe, and whether it accurately reaches someone we have predicted might be interested in us,
rather than the whole context around the message and the brand.” Coming back to the work by Enders, their report for Magnetic showed “Context and environment in digital media have not been systematically quantified as an influence on brand, on premium price positions and on a range of other marketing objectives…A related failure to measure a range of marketing risks, such as the negative reputational effects of poorly executed retargeting or the long-term implications of the radical shift in spend from brand to activation” could damage a brand forever.
The attribution models of return on ad spend have also become compromised, building the tools and analysing the results of today’s complex marketing investment is costly and takes time, which means it’s too often neglected. Consequently, there’s currently insufficient weight placed behind identifying the true context and value of marketing communications.
It’s not too late though. We can defuse the effectiveness time bomb by recognising that short-termism results in attribution and structural biases in the marketing and media industry towards ‘the last click’ at the expense of brand building. That it also leads to the neglect of creative and planning and a lack of focus on the quality of the context and environment in which marketing messages are located. Anybody looking for evidence that the advertising can really hit the fan in this climate just needs to consider the sorry state of affairs that led to a boycott of YouTube by advertisers over advertising that appeared next to offensive content.
These incidents highlight that it’s time we got to grips with the benefits and risks associated with the context in which marketing appears and its impact on building brands and delivering long term ROI. It’s worth companies focusing their resources on how each media environment provides different levels of trust, quality and relevance for both brands and audiences. That’s the most obvious and pain-free way to start reversing the marketing effectiveness decline while averting some of the brand crises that pose real threat to shareholder value.
As Magnetic chairman and chief executive of Time Inc UK, I am committed to increasing our investment and efforts in accurate measurement tools. AMP, our new audience currency, is a great start and lays strong foundations for better understanding of audience behaviour. But we also want to play our part in developing more partnerships between channels, media brands and advertisers to help quantify these complex but critical issues around context and environment.
There is plenty of evidence from the UK, the US and Australia about the long- and short-term role strong and trusted content channels such as magazine brands play, but it seems as though we will need to raise our game if we are to allay the “crack hit” that is our obsession with the last click and showing immediate returns.
*First published in Campaign