Magnetic commissioned independent digital and media industry analysts Enders Analysis to compile and a report looking at the notion of short-termism and its impact on the advertising industry.
Enders spoke with experts in the advertising value chain approaching advertisers, investors, agencies and a range of media owners. In addition, they interrogated existing research within the industry, including examination of a range of marketing case studies.
- Corporate short-termism is evidenced in the rise in performance-based pay for CEOs from 61% of S&P 500 companies in 2011 to 81% in 2016. Furthermore, 80% of CEOs* said they would decline to make an investment to fuel innovation if it meant missing one-quarter of earnings results.
- The average tenure of a CMO is four years, compared to eight years for a CEO. With marketing still not represented at board level, as only 2.6% of S&P directors** have marketing experience.
- In 2016 91% of advertisers formally involved procurement in their agency decisions, up from 51% in 2003. Indeed, overall 23% of media agency negotiations are undertaken entirely by procurement. As a result, media that demonstrates a short term ROI is more highlighly valued. This is evidenced by a shift from a 40:60 direct response/brand display split, to a 50:50 one.
- When a particular brand ceased their brand marketing entirely in favour of direct advertising, there was a 43% decline in the volume of searches for their brand keyword.
Implications for Advertisers
- Brands need to recognise the limits of attribution and the structural biases that are inherent to different mediums ahead of investment. Alongside this, brands must recognise that experienced judgement is not the enemy of data and evidence
- Context and environment is important for brand safety and the industry needs to size the benefits and risks associated with different media platforms
- Planning and creative need to be valued again and integrated into campaigns where possible. It is an agency’s job to educate procurement on the less easily quantifiable factors
- Brands need to be working with quality response signals, it is not enough to record response rates and assume response failures are neutral. Successful brands will use a combination of short-term and long-term measurement
- Brands need to ensure transparency in contracts and be clear where money is made and accept value chains need profits
“The data available through digital has given us a false sense of confidence in how well things can be measured. In practice, in an omni-channel world, measurement is complex and should be not only be measured on a short-term monthly or quarterly basis. The successes seen through use of quality content such as magazine media can lead to long term brand equity but this is being ignored in favour of chasing success on a quarterly basis.”
Douglas McCabe, CEO of Enders
“I agree with Enders’ recommendations to rectify the apparent imbalance in brand and activation advertising. The industry needs to find a way to appreciate the value and risks of context and environment and to place a real value on creative and planning. Magazine media is the perfect antidote as it offers brands the reassurance of editorial controls and a strong audience understanding that works to deliver long term brand recognition. This issue is one for the whole industry to address and I invite willing participants, whether they be brands, media owners or agencies to join a coalition to deliver on the recommendations made by Enders.”
Sue Todd, CEO of Magnetic
* Rana Faroohar, Makers and Takers, pp.98
**65,00 S&P directors measured over a 6-year period
*For more information regarding ‘Short-termism: Causes, Consequences & Remedies’ please get in touch at email@example.com