Developing commercial skills

The CIM is concerned that marketers are placing too much emphasis on creative ideas at the expense of sound business sense, and has launched the Infinity Model to help them assess whether their campaigns can contribute real corporate value.

Marketers are known for their “lightbulb” moments of inspiration when it comes to creative campaigns but it appears that their business savvy is less respected. Marketers are being accused of struggling with sums and focusing on the light and fluffy side of their job.

The Chartered Institute of Marketing (CIM) fears that the lack of financial rigour in the profession is so bad that it has created a new model to help marketers makes sure they avoid campaigns that might be the zenith of creativity but are commercially rotten.

Along with The Chartered Institute of Management Accountants and the Direct Marketing Association, the Infinity Model guides marketers step by step through a process they and the finance team should follow before dipping into the budget.

The Infinity Model forms part of a larger report by these industry bodies, called Return on Ideas, which centres on a method of assessment that the CIM says marketers from SMEs to large corporations can apply in order to understand if their ideas will result in commercial advantage.

The Infinity Model claims to set out the processes that marketers should use to ensure the right business ideas leave the building and the unsuitable ones get left behind.

But are things really so bad that marketers need a how-to guide in order to be taken seriously? David Thorp, director of research and ideas at the CIM is scathing about the value

of many marketers’ ideas: “An idea is only a good idea if you make money out of it, and I’m not convinced that’s the first criteria when marketers are coming up with ideas for potential projects.”

The Infinity Model checklist recommends a rigorous system to help marketers test the reasons for idea generation. For example, it asks marketers to consider whether they have optimised the strategic use of existing budgets or if the idea actually offers value to customers and shareholders before going any further.

If the concept gets through this initial scrutiny, the model takes the idea to the next level, which asks marketers to predict the value of a proposition. Author of the Return on Ideas report, Professor Robert Shaw, says he doesn’t expect marketers to get this absolutely spot on, but having an impression of the return an idea might generate can determine whether to take the idea to market.

Thorp adds that this process isn’t “rocket science” but by adding a bit of methodology, bad commercial ideas can be filtered out. “Once you’ve come up with specific ideas you need to be able to predict the commercial impact of the ideas,” adds Shaw.

He cites a company that launched a snack product for £1.69 with beautiful packaging that wasn’t selling well. The company had failed to research the competition, which was selling a similar product with less attractive packaging for 99p. “They just hadn’t done the basic research. There’s often a resistance to do simple research and testing.”

Research shouldn’t stop at the point of sale. Assessment should continue throughout the marketing activity. The Infinity Model tells marketers to demonstrate an effective return on ideas in order to adjust future spend. Keeping a record of evidence showing a sales increase, for example, will help marketers generate future commercially successful ideas by learning from this example.

The Infinity Model is not simply a matter for marketers, however. It requires them to work in partnership with other departments, especially finance. The finance and marketing departments have long been seen as enemies at loggerheads over budgets and not natural friends when it comes to business. One global brand’s marketing director recently confessed with glee to Marketing Week that he never consults his finance department before launching a marketing campaign. Unsurprisingly, he was not willing to have his name revealed.

And Marketing Week’s Secret Marketer alludes to the tensions between finance and marketing in last week’s column (MW 9 July).

He says: “On the subject of finance, I found myself sat next to a very grand, retired, publicly listed company finance director at an industry dinner this week. He took great pleasure in reminding me that the legal responsibility of a company is to make a profit. Fairly obvious, one might think, but I fear the very sight of the title ‘marketing director’ on my name badge prompted great suspicion in his mind.”

The relationship between all departments has got to improve in order to yield good business results, argues Professor Shaw. He believes if marketers and financiers continue to approach each other with suspicion, business will suffer. 

Shaw attributes part of this relationship breakdown to a lack of business-minded marketers in the workplace. He observes: “There seems to be growing concern that marketers are less and less numerate, which raises concerns in other departments within the business.”

A study of the language used to employ marketers appears to back up Shaw’s concerns. Of more than 3,500 recruitment ads where the words “commercially astute” and “executive” were mentioned, less than 25 were marketing jobs compared with 2,000 sales jobs and 1,500 finance jobs. A further survey on how other departments rate marketing found that almost no company feels that marketers are leading business strategy.

Shaw adds: “We spoke to a big consumer goods company which admitted that it had never hired someone in the marketing department with a business degree. That’s a large marketing department in the UK with no business qualifications.”

This lack of commercial skills in the marketing department is resulting in budgets being taken away, he suggests. Since 2001, marketing spend has steadily decreased, despite ups and downs in the economy. Shaw believes this slide in the marketing budget “seems to parallel the steady slide in perception of the skills of marketers”.

The amount of data available to marketers should be helping them determine what direction to take their strategy. However, it’s not an issue of the quantity of data, argues Shaw. Everyone he spoke to in the study had some sort of research to hand and many had great masses of information supplied by market research agencies. Rather, the problem arises when it comes to making use of the numbers.

“The data is seldom analysed in a way that can throw light on whether the marketing is effective or not,” he suggests. “I think the finance department needs to do a better job of helping the marketers gather the right data.”

Shaw says those companies that have recognised the need to make improvements and have become more methodical about where they spend cash, have since reported profit uplifts of 10-30% and savings of the same percentages.

Global energy company BP agrees that using more rigorous assessments in judging campaign results has helped improve the reputation of its marketing department.

The company wanted to understand where marketing had an effect on the business. Using the Infinity Model cited in Return on Ideas and other assessment methods, it studied the effect of marketing in 60 countries, looking at several different segments of the business.

David Harris, former planning and assessment manager at BP and now a freelance consultant trading under the name of Refreshing Business, says the business wanted to treat marketing as a proper investment looking at where the budget should be allocated. “We wanted to move away from working out the marketing budget purely on the amount of money spent the previous year, then adjusting depending on market conditions.”

He adds the benefit has been that marketing has become accountable and therefore part of a core business strategy, with marketing directors and finance directors working together better. He explains: “It was starting to change the language that we used about the marketing world in an organisation which, like many, thought marketing was often about the softer things in business.”

Rather than marketing being about promotional activity alone, it has started to be recognised as core to the development of a customer-centric strategy. But Harris warns: “Until you have the right financial framework around marketing you can’t have that kind of authority.”

Paul Dickinson, marketing director at Virgin Atlantic, agrees. He warned in a speech at Marketing Week Live! earlier this month that marketers need to be able to justify their spending in order to keep their budgets. “Yes, have great creative and media planning, but if you’re not holding on to your budget, you have nothing at all.”

He admitted that his own company has had to put more metrics and assessments in place in order to understand exactly what effect marketing spend has on the bottom line.

“We’ve increased our measurement on the effectiveness of our campaigns through metrics, ad tracking and marketing research because that gives us a lot of confidence in whether or not we should invest.

“We basically came into the recession with a head start over some advertisers, knowing an awful lot about what we would expect our advertising to generate.”

Shaw says that while it’s impossible to take the risk out of marketing altogether – and indeed, this would leave the industry without its vital creative spark – a keener eye on the bottom line will help those “lightbulb moments” generate cash.

He cautions: “I wouldn’t for a moment say everything is predictable and testable. But an awful lot of what we see that hasn’t succeeded would never have got through if people had taken the trouble to do some simple predicting.”

These harsh observations might leave some executives feeling anxious about their own opera­tions, but following a model that aims to bring more commercialism to creativity can only improve the reputation of marketing. After all, a lightbulb “Eureka” moment is only worth it if it ends up illuminating a growth in your bottom line.

the infinity model checklist
how to get return on your ideas

Marketers can significantly increase the value of a company through commercially minded ideas. In order to test whether an idea is a good one, the CIM has come up with the following checklist for marketers to consult.

Imagine
Having a creative mind is an essential part of being a marketer but it can’t be for its own sake. Ideas must have a financial value.

Imagination checklist

- Are we confident that we are being imaginative enough in determining and applying our marketing spending activity?
- Do we manage our new marketing ideas as a risk-reward portfolio?
- To what extent have we optimised the strategic use of our existing marketing budgets?
- Are we doing enough to rejuvenate our existing value proposition by creating lots of ideas that offer new value to our customers and to our shareholders?
- Do we have the appropriate number of operational activities that drive our strategy: not too many to be managed effectively, nor all our eggs in one basket?

Predict
Ideas need to be assessed for their financial worth to the business. These predictions need to be made by marketing and management accountants working in partnership.

Prediction checklist

- Do we insist on rigorous predictions of the financial contributions of all new marketing ideas?
- Do we look for analogies with existing situations to provide clues about how the future will unfold?
- Do we do enough to test and experiment with new ideas rather than discarding them as too wacky?
- Do we observe, record and analyse customers’ behaviour enough and research their preferences and intentions, to understand their likelihood to adopt new products and new marketing?
- Do we do enough to analyse historical cause and effect patterns as a basis for extrapolating the future?

Demonstrate
The finance and the marketing departments need to work together to find evidence in order to assess the success of an idea put into practice and provide feedback for future ideas and predictions.

Demonstration checklist

- Do we maintain effective records of marketing activity attributes?
- Can we accurately assign costs to these marketing activities and attributes?
- Are we collecting data from customers that provide evidence of marketing’s value?
- Are we using good practice analysis methods to link marketing activity to customer activity?
- Do we gather a chain of evidence linking marketing activities to financial results?
- Have we gathered evidence of how other factors have impacted our results - do we know the effect of competitors, market trends and consumer behaviour on our results?
- Do we have financial models linking customer activity to sales and profit figures?
- Do we insist on post-implementation reviews of every marketing prediction?
- Do we investigate cost efficiencies and drive down waste, scrap and re-work?

The infinity model

The infinity model

Viewpoint: Marketing does add up

David Kean

David Kean

Marketing is not suffering from a numerical malfunction, rather from an insecurity complex caused by negative attitudes, argues David Kean, co-founder at business consultancy the Caffeine Partnership.

These attitudes are being perpetuated by the Return on Ideas report, he says: “There’s a horrible tendency to regard marketing as a Cinderella, badly treated by its big stepsisters in accounting, finance and sales. I think it is an inferiority complex that marketing has about itself.”

Kean claims that the majority of companies globally, and especially those in the UK, appreciate the contributions made by marketing. He doesn’t believe the CIM report reflects the attitudes of most businesses in the UK.

“Tesco is run by a marketer and is arguably the most successful UK business. There are other companies such as Innocent Drinks where marketing is at the forefront of business strategy,” he says.

Having draconian processes and models in place can prevent marketers from really making a difference, he suggests: “You’ve got this paradox of trying to harness something intuitive and creative and innovative with systems, processes and protocols, and they don’t always live very happily together.”

He thinks that it is not negative for marketers to use intuition to react quickly and develop timely new campaigns. He says: “Sometimes someone has to exercise good old-fashioned judgement. The more you rely on things like ratios and utilisation rates, the more you will suffer as an organisation, especially as it takes forever to do it.”

Kean says that there are already enough robust assessment models available to marketers. He tells marketers to fight off their insecurities.

He adds: “This is just a report on common sense. Surely marketers can go beyond this?”

Case study: UKTV

How creative thinking combined with commercial skills inspired UKTV’s rebrands

Dom Joly

Dom Joly

When broadcaster UKTV decided to revamp its channel brands, it was keen to ensure its creative ideas would have sound commercial models to attract viewers, advertisers and create new sponsorship opportunities.

With so many digital channels now available for viewers to choose from, UKTV needed to find a way to stand out from the competition. Rather than battling quietly for ad revenue during a period where TV ad revenues were dropping overall, UKTV decided to reposition in order to command greater attention and revenue.

The broadcaster started by rebranding its UKTV G2 channel to “Dave: The home of witty banter”. The name “Dave” was chosen to reflect the desired male audience and what UKTV perceived to be the most important social cement for blokes: wit.

UKTV marketing director Tom Lucas says that while the creative side of the rebrand “captured the imagination of the media planning and buying community”, it was careful business modelling that added £25m in ad sales to the UKTV bottom line in 2008, according to his figures.

Following this initial triumph, the whole UKTV portfolio was reviewed. The idea-generating process began with an open-door policy. The company’s staff met on away-days in an effort to find the right combination of programming for each channel. “Some completely wacky ideas came out of those away-days,” laughs Lucas.

But a series of viable ideas also emerged from this process, which were then tested by the commercial team to ensure they had the potential to be financially successful.

Despite the research and planning, one major launch did not work. Chat show favourites Richard and Judy didn’t draw in the audience expected

Agency Redbee Media worked along­side UKTV to rebrand the channel portfolio. Charlie Mawer, executive creative director at the agency, says the comprehensive planning process was the backbone to the rebrand.

He says: “The creative process was about the strategic team. It’s sometimes rare for creative people to heap praise onto the planners, but they made the job very easy once they had defined a very tight positioning.”

UKTV predicted how much revenue would be generated from the rebrands in order to justify the process to the board. These predictions enabled its board to have faith that the ideas behind the repositioning were financially sound.

“We predicted that we would increase the entertainment suite of channels by 12% between October and December 2008 after the rebrands, and that prediction was spot on,” say Lucas.

Continual assessment of the launches has enabled UKTV to adjust the offering. Despite all of the research and planning, one major launch did not work. Chat show favourites Richard and Judy didn’t draw in the audience expected after they moved to newly created channel Watch. “It’s bizarre because it had a big launch campaign behind it and it generated a lot of PR,” notes Lucas.

The ratings told UKTV that while the idea might have been a good one, the reality wasn’t so sweet. It moved fast to adjust the channel’s content, introducing more mainstream family entertainment shows such as Torchwood and the US version of Total Wipeout.

Redbee Media’s Mawer cautions against media channels jumping to rename channels without undertaking a similar process to UKTV’s. “I’d caution people that you’ve got to do the strategic and commercial rigour before renaming or rebranding.”

For UKTV, following this process has increased its commercially attractive ABC1 audience by 47% and attracted a range of new ad deals. It appears that winning the ratings war relies on more than simply a good script these days.

Timeline

- 1997 UKTV launches with four channels - UK Gold, UK Horizons, UK Style and UK Arena
- 2001 UK Food launches
- 2002 UK History launches
- 2003 UK G2 and UK Bright Ideas launch
- 2004 UK Horizons is replaced by UKTV
Documentary and UKTV People; all nine channels prefixed with UKTV.
- Oct 2007 UKTV G2 rebranded as Dave “the home of witty banter” to target 16- to 34-year-old men.
- Oct 2008 a new entertainment portfolio is launched. UKTV Gold becomes G.O.L.D: “Go On Laugh Daily” and UKTV Drama becomes Alibi: “The Deadliest Place on TV” alongside newly created channel, Watch: “See it. Love it. Share it.”
- Jan 2009 UKTV Documentary is rebranded as Eden: “One Amazing World. One Amazing TV Channel”.
- Feb 2009 UKTV People is rebranded as Blighty: “One Nation Under a Channel”.
- Mar 2009 UKTV History is rebranded as Yesterday: “Where the Past is Always Present”.
- April 2009 UKTV Style rebranded as Home: “There’s No Place Like It”.
- May 2009 UKTV Gardens is rebranded as Really: “You Couldn’t Make It Up”.
- June 2009 UKTV Food rebranded as Good Food: “We Have Fun with Food”.

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