accountability in marketing · independent research exploring the demand for accountability in...

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ACCOUNTABILITY IN MARKETING

LINKING TACTICS TO STRATEGY, CUSTOMER FOCUS AND GROWTH

XAXIS PRESENTS

November 2017

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Dear reader,

We are proud to have worked with the Economist Intelligence Unit (EIU) to produce this independent research exploring the demand for accountability in marketing and what matters most to CMOs. The report provides a fascinating insight into marketers’ priorities and the challenges they face, emphasising the importance of having the right KPIs, platform and knowledge to really drive accountability in the marketing function.

At Xaxis, we understand that accountability is vital for marketers using digital advertising in general, and programmatic advertising in particular. Done well, data-driven programmatic advertising can help brand marketers increase conversion rates, cut wastage, and make a measurable contribution to their company’s bottom line, while making advertising more relevant and welcome for consumers.

Marketers know this too: according to IAB Europe, the total programmatic display advertising market in Europe has been growing by double digits yearly since 2013 and last year totalled €8.1bn, with just over half of display ad spend trading programmatically.

But many brands are still faced with challenges around the accountability of their digital media investments. At Xaxis, we draw on seven years of experience in the programmatic space, which has given us an expert understanding of how marketers can leverage data and technology, to deliver measurable results.

We aim to drive better media outcomes to help advertisers overcome their accountability challenge, and achieve strategic and tactical goals for their business.

I hope you enjoy reading this report as much as we have enjoyed working on it. In the end, our common goal should be to delight consumers with fewer, but more relevant and creative ads, for everyone’s benefit.

Warm regards,

FOREWORD

NICOLAS BIDON GLOBAL PRESIDENT XAXIS

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Darrell Sansom became Chief Marketing Officer (CMO) of AXA UK in April 2017. After a review of his role, however, he was renamed Chief Customer and Innovation Officer to signal his strategic role in the business. As with the ‘chief growth officers’ at Coca-Cola, Kellogg’s Company and Mondelez International, his new title reflects the wider range of responsibilities now being assigned to marketing chiefs.

In addition to their outward, customer-facing activities, marketing executives are working more closely with chief executives to help fulfil strategic targets, deliver innovation, and focus on using data and analytics to segment and target the consumer base. They are also increasingly accountable for overall business growth.

However, a lack of visibility across both tactical and strategic activities is undermining the ability of marketing chiefs to meet their goals, according to a survey of 250 CMOs and senior marketing executives across Europe.

METHODOLOGYThe research was conducted by The Economist Intelligence Unit (EIU) and sponsored by Xaxis. Respondents were drawn from organisations in Denmark, Finland, Germany, Italy, Norway, Spain, Sweden and the UK, spanning a broad range of sectors. The study looks at how far marketing executives have progressed in achieving accountability both for their tactical activities, such as short-term campaigns and initiatives, and for their contribution to their organisation’s overall strategic aims.

The survey data reveal that while marketers recognise the need to achieve visibility of their activities to demonstrate return on investment (ROI), they are often restricted in achieving their aim. Among the obstacles they encounter are a tendency to focus too much on the tactical at the expense of the strategic, a lack of data integration, and inadequate data analysis skills.

INTRODUCTION

GONE ARE THE DAYS WHEN MARKETING CHIEFS FOCUSED SOLELY ON THE CLASSIC 4PS: PRODUCT, PRICE, PROMOTIONS AND PLACE – THEY NOW MUST TAKE AN INTEGRATED APPROACH TO DRIVE COMPANY GOALS.


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Marketers are expected to demonstrate their contribution to strategic goals. More than eight out of ten respondents say their department is held at least partially accountable for its contribution to strategic goals, and 46% have their performance assessed on that basis. Meanwhile, 60% say improved accountability would enhance marketing’s contribution to the organisation’s strategic goals.

Tactical accountability is blighted by poor data analytics capabilities. Over half (55%) of respondents report that their marketing platforms are fragmented and do not offer a comprehensive overview of tactical marketing investments. About the same percentage say that their organisation’s data analytical skills are weak and data analysis is unfeasible.

Ineffective tactical accountability can undermine marketers’ ability to demonstrate their contribution to strategic goals. A strong focus on tactical objectives is the biggest challenge in establishing marketing’s contribution to strategic goals, according to 31% of respondents. Worryingly, only 30% say core marketing performance indicators are defined in terms of the organisation’s strategic goals, and 27% say that tactical marketing objectives are not aligned with these goals.

KEY RESEARCH FINDINGS Specifically, this executive summary highlights the following survey findings:

IMPROVED ACCOUNTABILITY WOULD IMPROVE MARKETING’S CONTRIBUTION TO THE ORGANISATION’S STRATEGIC GOALS.

Strongly disagree Strongly agree

Italy 18%30%6% 32%14%

Source: The Economist Intelligence Unit.

United Kingdom 52%28%14%6%

Germany 22%22%16% 36%4%

Spain 12%10% 28% 18% 32%

Nordics 16%22%8%4% 50%


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Marketing activities are traditionally divided into ‘strategic’ or above-the-line (ATL) and below-the-line (BTL) activities. ATL activities are targeted at large numbers of people using mass media, such as television, radio, digital and out-of-home advertising, to promote brands and to reach the target consumer. BTL activities are more one-to-one initiatives, such as roadshows, email campaigns, leaflets and the post, to promote a product or service. Measuring return on investment (ROI) is often more difficult for strategic than for tactical marketing. But with the advent of the internet and other technologies the boundaries are beginning to blur: attribution is becoming more and more available and eventually turns into a requirement for most brands of the future.

AXA UK’s CMO, Darrell Sansom (interviewed for this report), sees three emergent categories: “Traditional ATL; a middle ground that includes digital, programmatic and display advertising; and day-to-day execution.” For the purposes of this research, we have differentiated between strategic and tactical goals, as listed below.

Strategic goals Tactical goals

Growing revenue from existing products and services Improving customer satisfaction

Growing revenue from new products and services Driving engagement, e.g. with social messages

Increasing profit

Digital key performance indicators, e.g. increase in click-through rates, visits to site, brochure downloads, registrations, time spent on site, conversion rate, lead generation etc.

Increasing share value Brand favourability/consideration

Expanding into new geographical marketsPositive press coverage and share of voice

Digital transformation Membership/subscription rates

Increasing scale through mergers and acquisitions Reduced customer acquisition costs

Returning value to investors through acquisition by another company

Organic traffic

Sustainability/corporate social responsibility New client(s) acquisitions

MARKETING GOALS EXPLAINED

60% SAY IMPROVED ACCOUNTABILITY WOULD ENHANCE MARKETING’S CONTRIBUTION TO THE ORGANISATION’S STRATEGIC GOALS.


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Gone are the days when marketing chiefs focused solely on the classic 4Ps of marketing: product, price, promotions and place. They must now take an integrated approach to drive company goals. The pressure to link activity with tangible business results and deliver growth as a CMO is becoming an essential part of the job. Moreover, as trusted CEO advisers, their remit extends from research and development (R&D), innovation, pricing and packaging to partnerships, joint ventures and improving the customer experience across the purchase funnel, both online and offline.

The new marketing chiefs are expected to show not only that their activities provide a return on investment (ROI), but also that they help the organisation achieve its strategic ambitions. “Irrespective of the job title, the role is all about how business strategy can be delivered through marketing to best serve the customer,” says Darrell Sansom, Chief Marketing Officer (CMO) of AXA UK. “You need to be able to articulate, whether for a single year or over the lifetime of the customer, how marketing is adding value to the strategic aims of the business, which in part have to be financial.”

60% SAY MARKETING MUST DO BETTERYet 60% of respondents say improvements are needed if marketing is to make a better contribution to the organisation’s strategic goals. This view is much more common in the UK (80%) than in any other region – especially in Spain (44%). Increased marketing accountability is cited as a primary marketing priority by 20% of respondents, not far short of improving customer loyalty (24%), customer experience (23%), customer engagement and reach of marketing channels (22% each), and brand favourability (21%).

Simon Sproule, Vice President and CMO at luxury sports car manufacturer Aston Martin Lagonda, says he is “100% accountable” for marketing activities and adopts a ‘top down’ approach. “Ultimately, the measure of marketing success is the achievement of the business plan, both in terms of sales and profitability. How many cars do we need to sell to create a profitable business? We work back from there when deciding how to spend our pot of marketing money,” he says.

FROM TACTICIAN TO STRATEGIST: THE 21ST-CENTURY CMO

ULTIMATELY, THE MEASURE OF MARKETING SUCCESS IS THE ACHIEVEMENT OF THE BUSINESS PLAN, BOTH IN TERMS OF SALES AND PROFITABILITY

Simon Sproule, VP and CMO Aston Martin Lagonda

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TO WHAT EXTENT IS THE MARKETING DEPARTMENT IN YOUR ORGANISATION HELD ACCOUNTABLE FOR ITS ACTIVITIES AND INVESTMENTS?

MARKETING IS...

30%27%

6%

11%

15%

11%

Fully strategic

Partially strategic

Not strategic

Not tactical Partially tactical Fully tactical

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56% [OF MARKETERS] AGREE THAT EFFECTIVE STRATEGIC MARKETING ACCOUNTABILITY CANNOT BE ACHIEVED WITHOUT ACCOUNTABILITY FOR TACTICAL INVESTMENTS Darrell Sansom, CMO Axa UK

Strategic goals are of paramount importance to CMOs – 27% of survey respondents are held fully accountable for strategic goals and partially for tactical, compared with just 15% fully accountable for tactical and only partially for strategic. The most common form of accountability among British, Nordic and German respondents is accountability for both tactical activities and strategic contribution (UK 40%, Nordics 32%, Germany 28%). Among respondents from Italy and Spain, it was more strategic than tactical (Italy 38%, Spain 24%).

However, the survey suggests that ineffective accountability for tactical marketing initiatives is hampering respondents’ ability to demonstrate their strategic contribution. Indeed, 56% of respondents agree that effective strategic marketing accountability cannot be achieved without accountability for tactical investments.

There is no shortage of mechanisms for measuring the impact of tactical investments. Only 10% of respondents say there is no method or system in place to measure marketing productivity and ROI. Just 13% identify no link between the marketing department’s metrics and the financial metrics of the organisation, and only 16% admit to having no process for measuring the valuation of customer retention and engagement levels.

PROVING THEIR WORTHHowever, in many cases this tactical accountability does not help marketing executives prove their contribution to strategic aims. For example, 27% say tactical marketing objectives are not aligned with the organisation’s strategic goals, while only 30% say key performance indicators (KPIs) are defined in terms of the organisation’s strategic goals. When asked what would be most useful to achieve marketing accountability over the next 2–3 years, 30% cite marketing KPIs that reflect strategic goals.

This situation is exacerbated by the fact that according to one-quarter of those surveyed, there is a lack of understanding of what the organisation’s strategic goals are. A focus on tactical KPIs is not a problem so long as they are in line with strategic goals, according to Mr Sansom. “Providing that your day-to-day activity is in concert with your longer-term strategic ambition, it is fine. Both have a role to play, but they need to be in balance. The customer experience must be consistent, whatever the engagement, whether online, in-store or a campaign on TV, radio or billboards,” he says.

The biggest single challenge for companies, says Mr Sansom, “is moving from a product-orientated organisation to a customer-orientated organisation.” At AXA, this means encouraging people to live healthy lifestyles by promoting fitness and well-being rather than the traditional insurance approach, which is more about supporting people when they become ill. For example, the company is working with Doctor Care Anywhere to deliver a ‘virtual GP service’ for businesses that provide their employees with symptom tracking, medication reminders and other patient self-management services. “We are still focused on insurance as one of the largest providers in the market, but the proposition needs to extend to that health and well-being position as well.”

STRATEGIC MISALIGNMENT

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BLINDED BY METRICS? But for many respondents, the need to focus on everyday tactics is a barrier to more strategic accountability. When asked to identify the biggest challenge in establishing marketing’s contribution to strategic goals, the most common answer, cited by 31% of respondents, is an overemphasis on tactical marketing investment. This view is especially common among respondents from Germany, Italy and the Nordics (36% each).

The tendency to get more tactical and lose focus on strategy can increase when people are under pressure or there is a need to sell a particular product, according to Mr Sproule. “Or tactical marketing might just focus on the wrong things, so it doesn’t really feed into strategic. Every business faces that challenge. Most commonly, it is about not building or enhancing the brand.”

WHAT ARE THE BIGGEST CHALLENGES IN ESTABLISHING ACCOUNTABILITY FOR MARKETING’S CONTRIBUTION TO STRATEGIC GOALS?

A lack of understanding of the department’s potential contribution to the organisation’s strategic goals. 24%

Marketing has no influence in shaping the organisation’s strategic goals. 20%

Strong focus on tactical marketing can lead to neglect of strategic accountability. 31%

We have no problems in establishing strategic accountability. 23%

A lack of understanding about the organisation’s strategic goals. 25%

There is no culture of accountability in marketing. 8%

Tactical marketing objectives are not aligned to our organisation’s strategic goals. 27%

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Another concern highlighted by our research is an apparent lack of cohesion and integration across various marketing activities – 55% of survey respondents say that marketing platforms are fragmented and do not offer a comprehensive overview of tactical marketing investments. More than half admit that the organisation’s data analytical skills are so weak that data analysis is unfeasible. This calls into question whether the mechanisms underpinning tactical accountability are effective.

Meanwhile, when asked what would be most useful to achieve marketing accountability over the next 2–3 years, 36% cite improved use of data analytics, with UK respondents especially keen (42%).

Interestingly, this is a much more common answer among respondents who say their marketing department is held accountable for both tactical activities and contribution to strategic aims (56%) than among those who are mostly tactical (26%) or mostly strategic (28%) in their accountability. This suggests that data analytics is of particular use to marketers that are expected to provide a holistic view of the impact of their activities, from top to bottom.

At Aston Martin Lagonda, the annual budget process draws on a quite granular analysis of the impact of its various marketing channels. “It gives us the ability to track prospects through their purchase cycle and look at the interaction we had with them to gauge whether the various activities we were doing were successful in converting them to become customers,” Mr Sproule explains. “So, when we come to set our budget for next year, we can base the decision on what was most effective last year.”

ANALYTICAL FOCUSA degree of marketing effort is wasted because it is largely a “pebbledash, scattergun” approach, says Mr Sansom. “There’s a lot of data out there; the trick is getting it in the right place, in a consistent manner, to allow people to analyse it effectively to gain insight on the customer and then to execute on it. Data is useless without the ability to analyse it and gain insight that lets you talk to the right customers at the right time and makes you more likely to be effective.”

Like most organisations, says Mr Sansom, AXA is scrambling to improve its use of data and analytics. “We could do better in terms of understanding specifically the impact a marketing campaign has relative to day-to-day activity, but we’re on the right path.”

Regarding the skills shortage, he says schools and universities should rise to the challenge. “Education needs to support the future labour market. The requirement for data scientists and analytics as a skillset will become increasingly prevalent, and this needs to be reflected in the education system.”

THE NEED FOR DATA ANALYSIS TOOLS AND SKILLS

DATA IS USELESS WITHOUT THE ABILITY TO ANALYSE IT AND GAIN INSIGHT THAT LETS YOU TALK TO THE RIGHT CUSTOMERS AT THE RIGHT TIME AND MAKES YOU MORE LIKELY TO BE EFFECTIVE

Darrell Sansom, CMO Axa UK

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Ultimately, technologies such as artificial intelligence may help address the skills shortage, says Mr Sansom, whose responsibility for innovation is explicit in his job title. Machine learning is already being used at AXA to analyse pricing and underwriting, customer trends and performance. “It has still more potential to be deployed for delivering customer insight and determining how the company engages with customers from a marketing point of view,” Mr Sansom notes. He also helps to foster innovation and agility by identifying potential partners or acquisition targets in areas where the company is not an expert – particularly in service and support.

WHAT CHALLENGES DOES YOUR MARKETING DEPARTMENT FACE IN ACHIEVING VISIBILITY ON TACTICAL MARKETING INVESTMENTS?

55% OF RESPONDENTS SAY MARKETING PLATFORMS ARE FRAGMENTED AND DO NOT OFFER A COMPREHENSIVE OVERVIEW OF TACTICAL MARKETING INVESTMENTS.

There is no method or system in place to measure marketing productivity and ROI levels. 10%

There is no link between the marketing department’s metrics and the financial metrics of the organisation. 13%

There is no process in place that measures the valuation of customer retention and engagement levels. 16%

Marketing platforms are fragmented and do not offer a comprehensive overview of tactical marketing investments. 55%

The level of data analytical skills in the marketing department is weak and as a result, data analysis is unfeasible. 51%

Other (please specify) 8%

Senior marketing executives are keenly aware of the need to deliver growth and demonstrate accountability, not just for their day-to-day activities but for their contribution to the bigger picture, too.

The main obstacles to achieving these objectives are a tendency to focus on tactical activities at the expense of strategic goals, a lack of integration and alignment across tactical and strategic KPIs, and a scarcity of data analysis skills.

Understanding customers will never be an exact science, says Mr Sproule. “The problem is that consumers don’t behave rationally, and there is not usually one reason for a purchase.” Instead, a company must have a clear idea of its strategy and define its KPIs accordingly, he explains. “In the end, the business plan is the truth. All our KPIs ultimately have to be directly connected to that.”

Mr Sansom agrees: “While the overall strategic ambitions must have a financial element, the reality is a lot of AXA’s KPIs are increasingly centred on customers, such as how many products each individual has – an expression of loyalty and engagement.”

AXA also uses independent customer satisfaction measures such as Trustpilot and net promoter scores. “They’re not in isolation, but all linked, because if customers are happy you gain more of them, and they engage more with your products,” Mr Sansom says. “Then your financial performance improves, and you are on track to achieving your strategic goals.”

As organisations such as AXA and Aston Martin Lagonda are discovering, ensuring that tactical marketing investments are designed and measured according to their contribution to the company’s strategic goals is the best way to guarantee that the marketing department’s value is recognised and realised.

CONCLUSION: MARKETING’S CONTRIBUTION TO THE BIGGER PICTURE

ABOUT THE SURVEY

In August–September 2017, The Economist Intelligence Unit conducted a survey of 250 marketing executives in Europe. The countries represented were the UK, Germany, Italy, Spain and Nordics (Denmark, Finland, Norway and Sweden) at 20% each. Fifty percent of survey respondents were CMOs; all respondents were from the marketing function.

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