Wunderman’s Lesson: Marketing Isn’t a Product, It’s a Partnership

Over the past few years, relations between ad agencies and clients have been in an even greater state of flux than usual. The nature of just what a marketing agency is and what it does has many definitions. But the key issue is whether the agency, internal or external, is a strategic partner or just another supplier.

Over the past few years, relations between ad agencies and clients have been in an even greater state of flux than usual.

The nature of just what an agency is and what it does has many definitions. But the key issue is whether the agency, internal or external, is a strategic partner or just another supplier. Occupied with headcounts and finance, the suits in the C-suites often don’t understand the difference. And that spells trouble and bad work ahead.

I well remember a client lunch many years ago.

The location was a private room in an excellent restaurant in Lille, France. At the head of the table sat the president of La Redoute, France’s dominant mail order catalog company. Alongside were his recently appointed commercial director and some associates. Facing him from the other end was Lester Wunderman, flanked by Jean Larue, the CEO of the Wunderman French company, and myself. The atmosphere was polite, but tense.

La Redoute was our largest French client, by far; and until the arrival of the new commercial director, relations had been excellent and the measurable results of the work above anyone’s expectations. Drunk on his new power, the new commercial director, an ex-underwear buyer for a competitive mail-order company, was threatening to put the La Redoute advertising business up for review and search for new agencies he insisted “would be less expensive.” No doubt, that’s how he bought underwear. Our problem was that if we lost this business, we would essentially have to start the agency over, from scratch.

The arguments in French and English went back and forth over dessert and cheese, and were getting contentious — until Lester Wunderman held up one hand to silence the room and spoke for the first time. La Redoute, he said, was one of his favorite clients, because they had had the courage to invest in an innovative strategic partnership with the agency and great creative work. It had paid off handsomely.

“Now everything seems to have changed” he said. “We are no longer being seen as partners and are being treated no differently than the hundreds of salesmen for suppliers (fournisseurs) of goods, who pitch their products to the company every day.” Then, switching to French, he pronounced emphatically: “Nous ne sommes pas des fournisseurs!” (We are not suppliers). He then thanked the La Redoute president for hosting the lunch, rose and headed for the door.

Before he could reach it, the president had jumped up, taken him by the arm to sit next to him and, full of warmth and Gallic charm, asserted that there was obviously a misunderstanding, which he would personally and immediately put right. Summoning a waiter, an excellent Cognac was rapidly ordered and served.

The lesson was lost on no one.

Creating marketing excellence lives in a different universe than purchasing paperclips or underwear. In today’s fast-changing and highly competitive commercial environment, replete with excellent metrics, cost is only one factor in the multiple equations that measure success or failure. Head counts are no doubt very important, but companies and agencies would do well to chase value — rather than delude themselves into thinking they are saving a few pennies.

How does the CEO or finance chief know whether what they are paying for is worth the price? There is no easy way to tell, until the return on the marketing investment (ROMI) has been determined. The La Redoute president saw in Lester Wunderman’s demeanor and words about not being a fournisseur, that genius, pride, and integrity had a value that was unquantifiable.

Relations between agencies and their clients have always been sensitive, and moving the work inside the client company may superficially solve certain problems — but probably won’t. “Who knows best is a constant battle, which pits egos and backgrounds against one another in sometimes near-lethal confrontations. Imagine the argument over strategy between a 20-something data maven and a 40-something traditional creative director.

Agency reps who had never heard the word “data,” and whose attitude to “below-the-line” was, at best, dismissive, have been driven by technologies that are profoundly changing the whole concept of advertising, whether they like it or not. Below the line, as evidenced by the absorption of prestigious brand agencies like J. Walter Thompson into direct marketing groups like Wunderman, is more and more where the action is.

Many major companies have tried to solve this problem by building internal agencies with special skills dedicated to their businesses — with varying degrees of success. According to Forbes, ”64% of corporate America have in-house agencies today. Just 10 years ago, that number was 42%.”

The challenge will be if CEOs and finance chiefs can put their macro equations on performance aside and concentrate on building marketing excellence. If they do, they will no doubt see improved ROMIs, whether their marketing is internal or with outside agencies. Or probably better, with both.

Help! I’m Being Stalked by a Bathtub!

As a marketing agency, we’re always recommending different media channels to our clients depending on the product, the target audience demographics, marketing goals, etc. And, like many of you, I thought online retargeting was a clever way of “helping” to remind browsers that since they had been interested in a product/service at one point, they might still be interested in making a purchase from that site, so a little tap on the shoulder seemed like a clever way to stay top of mind. Until it happened to me.

As a marketing agency, we’re always recommending different media channels to our clients depending on the product, the target audience demographics, marketing goals, etc. And, like many of you, I thought online retargeting was a clever way of “helping” to remind browsers that since they had been interested in a product/service at one point, they might still be interested in making a purchase from that site, so a little tap on the shoulder seemed like a clever way to stay top of mind. Until it happened to me.

Retargeting, for those of you who may not know, involves having an advertiser drop a cookie into the consumer’s browser which enables the advertiser to follow that consumer around and display an ad for the advertiser after they’ve left the original site.

The logic is sound, the process is relatively simple, and it seems to make good marketing sense. Before it happened to me, I equated it to shoe shopping. I visit a store and see a pair of shoes I like. I try them on, but since I haven’t really looked in a lot of other shoe stores yet, I decide to put off the purchase until I’ve looked at all my options. But in the back of my head a little voice keeps whispering, “Those black patent kitten heels were perfect—even if they were $100 more than you wanted to spend.” I may or may not go back to that first store to get them but I do think about those shoes for quite a while—and with my luck, I return to the store only to find they are now sold out in my size.

But if I was shopping online and the shoes I liked were at Retailer A, I’m now seeing ads for those shoes no matter where I cruise on the Internet. Yep. Those black patents are now stalking me. Not whispering, but shouting out to “come back!”

However, I must confess that my recent stalking incident was not about shoes at all, but about bathtubs.

My husband and I are remodeling a bathroom, so I’ve spent quite a bit of time searching for the perfect bathtub online. Yesterday I actually placed an expensive bathtub in my shopping cart and proceeded to check out, but at the 11th hour started thinking that maybe my contractor could purchase the same tub for a better price. So I abandoned my cart. And in the process, it seems, launched obsessive tracking behavior that could only be rivaled by a professional stalker.

No matter what site I visited while researching client-related work, bathtubs kept appearing. Some were in the upper right hand corner of the page, so as I scrolled down the page they would disappear from view. Whew!

Others seemed to travel down the page with me … tumbling tub over tub with prices flashing, offers blazing and the lure of a long, hot soak compelling me to glance … nay linger … on the designer tub dangling within the reach of a mouse click.

But since I had no intention of completing the purchase transaction without the nod from my contractor, the ads seemed to get more annoying than helpful as the day went on. At one point, a colleague was looking over my shoulder while we were reviewing some online research. After looking at the page for about five minutes, she pointed to the tub ad and commented, “That tub reminds me—did you finish remodeling your bathroom yet?”

Intellectually I understand why retargeting is so valuable. Statistics show that 95 percent of users leave a site without making a transaction, and the ones retargeted are 70 percent more likely to complete a purchase, so it makes perfect sense to retarget.

However the default setting for most retargeting platforms is 30-90 days, so if you’re planning to include retargeting in your marketing mix, think carefully about cookie duration and ad fatigue. Because right now, my fatigue is only off-set by the dream of a long, hot soak in my new tub—cookie-free.

How Performance Marketing Accelerates B-to-B Prospecting

Every time you turn around, a new “performance marketing” opportunity turns up for B-to-B marketers. What a treasure trove! And on the face of it, a real boon, because you only pay when your prospect takes the action you’re looking for—the click, the download, the purchase, whatever. But there are some potholes to consider. Let’s look at how marketers get value out of this approach to finding new customers.

Every time you turn around, a new “performance marketing” opportunity turns up for B-to-B marketers. What a treasure trove! And on the face of it, a real boon, because you only pay when your prospect takes the action you’re looking for—the click, the download, the purchase, whatever. But there are some potholes to consider. Let’s look at how marketers get value out of this approach to finding new customers.

To back up, what is this performance marketing thing, anyway? It generally means that the media channel owner conducts a campaign and charges the marketer an agreed price for every respondent, according to predetermined criteria. There are scads of ways performance marketing is being applied across the B-to-B go-to-market spectrum. So far, this is what I know:

  • Pay per click. The grand-daddy of performance marketing, the system that sent Google’s fortunes into the stratosphere. You only pay when a prospect clicks on your selected keyword(s). The secret to success here is choosing the right keywords and sending the clicker to a brilliantly written landing page, where you have a prayer of converting them from a mere clicker to something else, like a prospect with whom you can continue a conversation. Some banner advertising and email rental lists are sold this way, as well.
  • Pay per lead. This highly popular technique was pioneered by trade publishers looking for ways to extend the value of their customer access. Ziff Davis and TechTarget are leaders in the tech industry world, using “content syndication,” distributing marketers’ white papers and research reports, and charging by response. MadisonLogic offers pay per lead programs via banner ads to a network of 300 publishers, with particular strength in the HR and technology sectors. Another player is True Influence, which uses email to its own compiled database of business buyers.
  • Pay per appointment. Hiring a telemarketing shop to conduct appointment-setting programs for sales reps is a long-time staple of the B-to-B marketing toolkit, and often priced by the appointment. Myriad call centers offer this kind of pricing.
  • Pay per PR placement. Several PR agencies have taken the big step of pricing their services on a pay-for-placement basis. Amid much hand-wringing among PR professionals, the model’s strong appeal to marketers is likely to mean continued experimentation.

Is the next logical step some kind of pay-for-performance results guarantee from creative agencies? I doubt it. I posed that question recently to Warren Hunter, Chairman of DMW Direct, who said firmly, “No way.” Since they are a direct marketing agency and thus used to delivering highly measurable results, I thought there might be a shot. But here’s how Warren explained his position. “If you give me control of the creative and the media, sure. Without that, there are too many variables that impact the results.”

The newest entrant in performance marketing is the daily deal business, pioneered by Groupon and Living Social. You might call this “pay per new customer.” In the B-to-B space, some experiments are underway like BizyDeal and RapidBuyr, but they don’t appear to have really taken off yet. Except for very small business, this is not how businesses buy.

My net takeaway on this subject is the old adage that you get what you pay for. When you think about it, the performance model has an inherent bias against quality, so marketers need to do the math. Avoid this model unless you have good data on conversion rates—conversion to qualified lead, and then conversion to a sale. With that data in hand, you can determine a profitable price and buy leads and appointments till the cows come home.

Based on my experience using PI (Per Inquiry) deals with cable TV operators years ago, I know that the “pay per” model works best if both sides have a track record with that offer in that medium. The media owner knows what kind of response it’s going to get, and the marketer knows the lifetime value of the new customer. So one way to increase the likelihood of success is to run a campaign using traditional pricing and then convert to performance-based pricing after generating some experience.

Where is performance marketing in B-to-B headed? Erik Matlick, founder of MadisonLogic, shared a few observations with me recently:

  • Marketers will get savvier about recognizing the importance of nurturing these contacts and converting them to eventual revenue. The new trend is assigning separate budgets, one devoted to generating “net new” leads and another to nurturing them to the right level of qualification.
  • Suppliers of leads should begin to offer account-level services. Most marketers need to reach multiple contacts in a target account to influence the various buying roles.

I would add my own prediction: The sky’s the limit for creative ways vendors can craft new performance-based marketing programs. Marketers have plenty to look forward to.

A version of this post appeared in Biznology, the digital marketing blog.