Huge appetite for spending but is it working?
It seems our appetite for spending to promote our brands is still growing despite the fragmentation of channels and consumer audiences. Here are some quite staggering figures published by Neilson Monitor-Plus:
- spending in the USA has grown by 5.6% in the first quarter of 2006
- the top ten companies alone accounted for $4.6 billion up 11.4%
- during the Winter Olympics over $1.1 billion was spent on TV advertising
- Credit card advertising increased by 22%
Presumably these firms still believe in the efficacy of brand promotion. The root of this assumption must be that to gain and retain customers, their brands must be top of mind. Recognising that reaching the right people is more challenging than ever before, it is not too surprising to see that there is a huge shift towards internet channels, which shows the fastest growth of 46.6%.
Spending in the UK according to the Advertisers Association, reached nearly £16 billion in 2005, an increase of 2.1%. This represented a slower rate of increase than in the previous year where it grew by over 6%, but demonstrates nonetheless that competition is stimulating greater spending on advertising and positioning.
Corporate positioning vs. product branding
What these figures don’t reveal is a breakdown between promoting the corporate brand and promoting specific products or services. It is safe to say that high profile corporate advertising for example by IBM, M&S, most banks and mobile operators, indicates that spending on corporate branding or re-branding is massive.
Over the last year the area of Customer Experience Management (CEM) has taken centre stage in CRM thinking. A quick search on Google reveals 232,000,000 hits. So whilst thinking is shifting towards a deeper awareness of the customer’s needs, preferences and buying behaviours (and their complete experience with the firm), belief in the power of advertising is still on the increase.
No sudden shift then in spending patterns. The pendulum is still right over on the ‘company-push’ side and management still appears to be very reluctant to let it swing.
Are we living in a parallel universe?
What has struck me for some time is that companies are spending money in a disintegrated way.
On the one side you have brand development and advertising agencies using their creative powers to meet the expressed needs of their clients - ‘make us look good’, and on the other you have consulting firms and software companies trying to meet the commercial needs of their clients by designing and implementing technology ‘solutions’ within budget and on time.
I can't help wondering though, if the advisors ought not to display some duty of care towards their clients. They could do this by advising them on what is really required if they are to deliver their business goals. I cannot understand why this is not the norm of good business practice. The failure to deliver the brand promise must ultimately rest with the senior executive team of a firm or organisation, but I think suppliers could do a whole lot more to point out the dangers.
What do brand experts say about this?
Fearing that I was becoming too jaundiced, I sought the advice of some experts in the field. The first of these was Simon Knox Professor of Brand Marketing at Cranfield a consultant to a number of multinational companies including McDonald’s, Levi Strauss, JohnsonDiversey, BT and Exel, and a former practitioner at Unilever. When I expressed my doubts about this imbalance between Brand Promise and Brand Delivery, he reassured me that I was neither alone nor particularly sceptical.
Simon said that the old model is broken. By that he meant, advertising or pushing out messages to potential customers has lost much of its power. There were no longer big bucks to be made off the back of TV advertising and he cited a McKinsey study which showed that while the cost of advertising continued on an upward trajectory, its impact mirrored it downwards.
There were several reasons for this:
- In consumer markets firms are finding it hard to target and reach the nascent markets – the IPod, MP3 and internet generation. (He obviously knows my daughter!).
- Secondly, it has become much harder to differentiate products in both B2C and B2B markets and consumers or customers find it much easier today to search for alternatives and make comparisons in prices.
- Thirdly, many firms were still competing at the product portfolio level rather than building a relationship of trust between the company and its customers and other stakeholders.
- Finally, he blamed the fragmented efforts of companies where brand promise and the whole customer experience are divorced as if somehow they were not meant to be together.
Compete on value not empty promises
I asked him what successful companies were doing, and he said that they competed on value not empty promises. They had shifted their branding focus up a level to the corporation, but also, they put considerable effort into delivering a rewarding experience to customers. This required focusing: resources, assets, and capabilities to provide customers with better experiences, not just better products. The implication of this is a much deeper understanding of their customers.
Too many firms, he went on to say, lack good customer information and therefore rely on hunch and old fashion brand blasting techniques.
So the key lessons from Simon Knox would appear to be:
- Develop a deep understanding of your customers - wants, needs, channel preferences and buying behaviours which implies not only having good data, but knowing what to do with it.
- Develop an integrated approach to deliver on the brand promise. This is an enterprise wide challenge, which is why so few companies have mastered it.
If you want a stellar performance you have to plan it
The second of my experts who I'd seen perform brilliantly at the recent Strategy & Management exhibition in June, was Angus Jenkinson, whose article on creating a stellar performance you can read here.
He is one of those practical professors who like Simon Knox, spends a considerable amount of time out in the field. His company, Stepping-Stones is a consulting firm focused on brand management and integrated marketing. This means helping companies figure out what they ought to project via branding and what they need to do to fulfil such a promise. He uses a brand mapping tool shaped as a star (hence stellar performance) to help firms determine their values and identify what they must do operationally to fulfil them. He too is firmly of the belief that brand promise and brand delivery must be fully integrated. In order to achieve that it needs to be properly planned and executed.
Left to its own devices an ad agency might well come up with something very memorable, for example the Automobile Association advert which talked about it being the 4th emergency service, (after ambulance, police and fire services). From a consumers’ recall perspective this was a very successful ad campaign. However it wrongly positioned the AA as limited to roadside recovery, which now only represents a small proportion of its overall services. The impact on employee morale was terrible, until the firm re-branded itself as a company that ‘rescues people from uncertainty’. This provided the wider brand umbrella under which all the different services departments felt they could contribute, to supporting customers.
Brand is the business
My final port of call was with Michael Phillipson the Managing Director of one of the fastest growing brand management agencies in the North – Propaganda. I'd had personal experience with this company founded by Julian Kynaston, now chairman back in my former IBM days.
Julian has always felt that the brand should be at the heart of the business, and Michael joined last year from Saatchi & Saatchi, and had been head of marketing communications at First Direct and marketing director at Smile. You can read his article Brand at the Heart of Business - Actions speak louder than words for a full appreciation of his philosophy. His view and that of Julian, is that agencies typically provide what the client asks for and that is as far as it goes. However, his belief is that clients should ask themselves some tough questions about their capabilities to deliver the promised value. Under delivering can have terminal effects and breaches the customer’s trust.
Agencies which take brand building seriously should demonstrate duty of care and ask these searching questions. After all if they wish to become more than suppliers of glossy images and sexy advertising, then they must step up to a position of greater responsibility, in the real long term interests of the client.
Delivering the brand promise – it’s that integration thing again
It doesn’t seem to matter what aspect of customer relationship management we look at, they are all best explored as part of a cohesive whole. When firms treat different aspects in isolation they become disembodied or just another bolt on. This sow’s ear approach to customer management risks massively disappointing customers.
What is the point of spending £millions on branding if this creates a mismatch between the customers’ expectations and the actual experience? Successful firms, it seems to me take a rigorous and disciplined approach to the whole brand management process. At the heart of the onion and at the extremities, the brand should be ever present. As consumers we know it when we experience it, and as a result feel reassured and satisfied. This is why we come back for more.
The problem is that no outside agency exists to do the job for us; they too address only parts of the problem. That therefore puts the onus on top management to perform the necessary integration of their brand values and capabilities to deliver on that promise.
By Jeremy Cox CMC Editor Business & Strategy
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