Marketers Embark on the Post-Optimization Era

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

By Chuck Kapelke

It’s a yawning chasm throughout the marketing terrain: 85 percent of CMOs believe that big, creative ideas that build brand and emotional connections are critical for future success — but just 54 percent say they can currently deliver on those capabilities. That’s one of the key findings from the “Make Change Real 2019 CMO Survey,” released last year by the Dentsu Aegis Network.

The survey, which took the pulse of 1,000 global CMOs, enumerates the obstacles that marketers face in the “post-optimization era,” as their efforts to transform brands into engines for long-term growth are hampered by short-term planning cycles, shrinking budgets, and misaligned organizational structures.

“Marketers agree and understand that they can and should be part of the transformation, and use digital technology not just as media channels but as a source for rethinking business models,” says Dirk Herbert, chief strategy officer at Dentsu Aegis Network USA. “But even though there is the understanding of the role that marketing — and marketing leaders — ultimately should play, there are a number of barriers that make it tough for many marketers to step into that role and live up to that vision.”

How can marketing leaders overcome the inertia and move beyond short-term thinking? What does it take to balance data and creativity? Is the compulsion for ROI hampering or even stifling creativity? Some top marketers and agencies shared their insights about what it takes to keep moving forward and not get tripped up by shiny new things.

Prioritizing Long-Term Planning

The rise of performance marketing has led many companies to overvalue clicks and views at the expense of a long-term vision, the Dentsu Aegis Network report says. Short-term planning cycles are the norm: Half of CMOs surveyed had strategic plans that looked ahead for two years or less, and respondents cited a lack of long-term investment as the number one barrier to long-term, sustainable growth.

“CMOs are being held to short-term metrics like ROI and customer acquisition, and not to transformational metrics like long-term brand health,” Herbert says. “That starts to shape behavior, as CMOs will deliver against what is measured and incented against. Part of what can help marketing leaders step into a transformational role is helping understand that they should be measured across a broader range of metrics. We’ve seen in the data that CMOs in high-growth companies embrace a longer-term planning timeframe.”

The key is to use short-term goals to advance long-term strategies, with metrics for tracking both along the way. For example, Anheuser-Busch InBev (ABI) has an approach for 10-year planning, three-year planning, and one-year planning. “If done right, the longer-term exercises give you the freedom to set an ambitious vision and lay out the transformation agenda you need to follow to deliver on it without being constrained by the short-term pressure,” says Paolo Provinciali, VP of U.S. media at ABI.

At Qualcomm, CMO Penny Baldwin aligns her marketing plan and incentives directly to the company’s strategic plan. “There is no disconnect between what marketing pursues,” Baldwin says. “The incentives are aligned across the board. The bonus pools are directly tied to achieving those goals. The short-term initiatives and efforts all add up to a broader goal.”

Qualcomm even created a new VP-level position responsible for strategic planning, measurement, and insights. “We reorganized the marketing team and added new strategic planning measurement analytics,” Baldwin says. “We wanted to make sure there was one unified marketing plan for each of our goals. Every strategic plan is informed by the data and insights we’ve acquired, and there’s an iterative cycle to those strategic plans. The more insights we get, the more refined the plan gets.”

Key Takeaway: CMOs should point their C-suite colleagues toward a long-term vision for the brand, and restructure their measurement and incentives to include long-term brand growth. “You have to look at it as, here are incremental things we’re trying to change, but that still have to be in service of a longer-term vision,” says Tony Cordero, VP and head of creative at Liquid, a brand experience design firm. “Otherwise you’re just incrementally working in a circle and not moving forward.”

Melding Data and Creativity

While programmatic advertising can be a powerful tool, it’s crucial for brands to stay focused on cultivating emotional connections and customer loyalty.

Brands like Adidas have recently acknowledged that they have overinvested in programmatic efficiency at the expense of long-term brand building. “Starting six or seven years ago, less sophisticated marketers started to think that digital and performance marketing was the holy grail,” says Rik Haslam, executive creative partner at Brandpie, a strategic brand consultancy and creative agency. “They were forgetting the need to create a human connection, and creative started to soften. But intelligent marketers understand the value of brand. People have realized they’ve shifted too much spend to digital and they’re not seeing the performance they expected.”

The secret is to use data as a source of insights, and be nimble and responsive to consumer needs. For instance, when marketers for Cheetos noticed through social listening that “flamin’ hot Cheetos” was used on social media to describe make-up and fashion, they jumped on the trend by organizing a “House of Flamin’ Haute Runway Show and Style Bar” at New York Fashion Week. “It’s taking the data and looking at it as feedback, listening to how consumers want to be spoken to,” says Will Clark, EVP of creative at The Marketing Arm, an agency that partnered with Cheetos. “The algorithm is your friend. It’s a tremendous tool that can add tremendous impact and value.”

Putting the consumer first also means that marketers must rely on quantitative and qualitative data and make a case for a compelling brand purpose. “You have to put two things — your brand and your customer — in the middle of a circle, and that’s got to be the center of gravity,” says Riyhana Bey, VP of customer experience at Volvo. “We develop strong strategies and innovative creative ideas, and we use data to refine and make sure we’re tracking. We use data as a tool to say, here’s an idea, do we think we’re on to something? Is there anything in data that would tell us that will be totally off base? But everything revolves around customer needs, desires, and wants.”

Volvo takes pains to keep the “big picture” front and center. The company partners with Yale University as a source of thought leadership about innovation, leadership, marketing, sustainability, and other topics that are core to the brand, and Bey and her team regularly venture out from behind their desks for immersive learning, such as visiting customer-focused businesses like REI, Starbucks, and Ritz-Carlton. “The whole point,” Bey says, “is to start seeing the world from a different point of view, taking in a lot of stimulation and inspiration rather than waiting for a creative team to come to you with a bunch of ideas.”

Key Takeaway: Digital transformation is not about algorithmic efficiency, but finding new and better ways to connect with consumers on their terms. “Having a long-term vision is incredibly important, and so much of that is around marketing delivering incredible customer experiences and building a brand that has meaning in people’s lives,” Bey says. “It all starts with foundation blocks today. If we assume we’re just going to optimize toward the bottom line, that future gets harder to manifest.”

Altering Brand Behavior

Having the right team and culture in place is crucial for success in the “post-optimization era,” yet the Dentsu Aegis Network survey found that nearly half (49 percent) of CMOs don’t have the capabilities (e.g. people, technology) to maximize the value of consumer data. “We often think about transformation in terms of business models and technology, but there’s a human and cultural aspect as well,” Herbert, from Dentsu Aegis Network, says. “We live in a world where consumers lead and are empowered, so the role of the modern CMO is more about changing brand behavior and the organization itself than it is about changing consumer behavior.”

Senior marketers need to ensure their teams can speak the language of data and be able to discern signals in the noise. “Do not discount the critical importance of subject-matter expertise and the amount of time and effort required to be up to speed with the latest tools and nuances of the space,” ABI’s Provinciali says. “Regardless of where you stand with the ‘in-housing’ trend, bringing technical expertise on the client side allows you to have a more advanced conversation with your agency and partners and fully leverage the thought leadership they can bring to the table, pushing the level of sophistication you can deploy in everything you do.”

It’s also critical for CMOs to work with HR executives to recruit the right people and harness employees as brand builders. For example, Qualcomm has set up an Employee Advocacy Program that provides employees across the company with tools, assets, and guidelines “so they can extol what Qualcomm does” via social media and other outlets, Baldwin says. “The whole company is in it and engaged in it. It’s not required, but there are a lot of proud people who work here, so we supply them with assets and encourage them,” she says.

With a compelling vision for the brand — and the right team, processes, and plans to bring it to life — marketers can help their organizations move past short-term thinking and toward long-term transformation and sustainable growth.

“If you only optimize for short-term ROI metrics like sales and web traffic, you’re missing out on the fundamental value of marketing, which is to deliver a brand that has emotional value and equity that delivers on a promise — that centers people in a feeling, gives them a sort of irrational level of enthusiasm and feeling of desire,” says Volvo’s Bey. “Some of those things take longer to build.”