The 1991-92 recession was a boon to database marketing. Fed up with ad spending that wasn’t producing results, many brands — advertisers — turned to databases and data-based marketing to deepen their understanding of customers, and learn how to attract new customers who looked just like them.
The economic growth of the 1990s only solidified database marketing’s reputation, with its ability to produce and refine predictive models, enable better A/B and multivariate testing, and bolster acquisition, retention and loyalty business objectives. These were the days when direct marketing agencies, many acquired by the ad holding companies in the 1980s, were — at last — the rising stars of holding company stables.
Even as digital marketing was born — websites, search, email — were often described, rightly so, as “direct marketing on steroids.” Google didn’t invent analytics.
Yet how many of the traditional direct marketing methods of data stewardship, testing, research, response analysis and data-derived strategy were really ever adopted by the earliest digital darlings — with their appetite for speed, scale and Super Bowl ads? Living on VC riches, the first wave of dot.com e-business held some spectacular fails.
Enter social, Big Data and “walled gardens.” The second wave of digital disruption has indeed been successful as it basks in the spotlight — with scale, testing and ROI analysis discernible (or seeking to be) on each new wave of innovation (not always successful). Digital has been growing its share of marketing spend without interruption, at a quickening pace — displacing or discounting print, direct mail and broadcast. Ad tech, marketing tech and data are indeed today’s advertising stars.
But for how long?
In this brave new ecosystem, are brands performing much better in their business results, overall?
Michael Farmer, author of “Madison Avenue Manslaughter,” who spoke at a recent Marketing Idea eXchange event in New York, says they are not — and their ad agency partners, alongside CMOs, are paying a dear price for this lack of achievement. This domino effect screams “help!”:
“What’s going on with advertisers? Since 1980, advertisers have been governed by ‘increased shareholder value,’ which means executives must deliver results or find another job. CMOs jumped on the digital / social bandwagon and migrated media spend. At the same time, they significantly increased digital / social SOW workloads for their agencies, reasoning that digital / social work was either cheap or free compared to TV / print / radio. Lurking in the background, though, were the non-consuming Millennials, who became the largest demographic group; e-commerce (i.e., Amazon); and the financial melt-down of 2008. The net result: brand growth ceased, and digital / social spend did not provide a solution. CMOs lost credibility, and their job security declined to 3-4 years.”
So where do we go from here? How well do we advertise and sell to Millennials, Plurals and the diversity of America today? Well many brands have turned to consulting companies who have the C-suite relationships, hardly bastions of creative genius, but perhaps more understanding of how to make all this technology, process and content connect best to customers.
Can agencies get back to performance? Farmer believes scope of work reform is one place to start for agencies: they must say “no” to transactional tasking, and “yes” to strategic ideation — and insist on being compensated for it. Even if this means firing clients who balk at paying up. The race to the bottom has served no one.
“What’s going on with Scopes of Work? Digital / social marketing altered Scopes of Work significantly. A 1993 “traditional” SOW requiring 50 creatives contained about 400 executions – 8 per creative per year. By 2013, the count would increase to 600 executions, 12 per creative per year. By 2018, the integrated SOW could contain as many as 15,000 deliverables – involving email marketing, Facebook posts, and a variety of little social executions that would see a typical creative cranking out 300 deliverables per year, or one per day, with little strategic content. Predictably, few clients think that they need high-cost agencies to do this kind of work, so the SOWs are migrating elsewhere, particularly to in-house agencies and to low-cost countries like India. High-priced Chief Creative Officers have no obvious role in this high-volume world, so agencies may begin cutting them out.”
Perhaps, maybe a little direct marketing discipline needs to be discovered (or rediscovered) by brand chiefs here — who learn to become unafraid of data, data insights, data testing, data quality, data stewardship, all working in tandem with creative storytellers to produce the “big idea.” Creative storytellers working alone — without data — may produce some gems, but without achieving business objectives, these ideas are simply creative but unproductive.
Accountability in ad spend should never be out of style. It’s time for agencies to regain the strategic mantle, or indeed rest in peace.
Parting tip: Do you want to see some agency and client work that is producing business outcomes. Become an International ECHO Awards judge. Currently the Data & Marketing Association has an open call to recruit agency, ad tech, consultant, and brand professionals for judging this year’s competition (online and in New York). If you love data-driven marketing and the business results that can be achieved, then the ECHO judging experience can give you a phenomenal idea store of what’s working now, and likely tomorrow. Consider the 2018 judging application here.