Should P&G pull creative as well as data expertise in house? (Yes)

In an interview just published in Marketing Week, P&G’s brand chief, Marc Pritchard, has revealed further details about what could probably be termed the company’s ‘readjstment’ of it digital strategy and wider relationship with its agencies.

In short this involves cutting back spend on digital, requiring that digtal investment demonstrate its impact on sales and creating more data expertise in-house so that it can’t be, as he put it “dazzled by the shiny objects”. I would say this shows that P&G is becoming maladjusted: learning to ask the right questions rather than just buying answers.

He also calls on his agencies to boost the percentage of resource invested against creatives from 50% to around 75% to 80%.

My suggestion to Marc Pritchard would be to do to creative what he is doing to data: i.e. establish more creative competence in-house so that P&G can have greater control in generating brand ideas: shifting the role of agencies so they become tasked with bringing these ideas to life. In effect, giving P&G the ablity to make brand ideas the creative brief.

Here is why. The ‘digital revolution’ has created a new marketing space. The terms of the relationship between brands and consumers in this space are different. Within this new space consumers want to be treated as individuals, rather than members of an audience. The marketing challenge within this space is real-time behaviour identification and response (not message, reach and frequency) and it is the value of individual connections that is far more important than the volume of such connections. Traditional marketing is not set-up to serve this space because traditional marketing is a volume game. It is focused on the audience, rather than the individual, simply because the channels that have been available to it have all been audience-based channels. Traditional marketing = audienced-based marketing.

However, we must not be fooled into thinking that traditional marketing is dead: it is not. Consumers are still receptive to the idea of being treated as members of an audience, indeed the continued existence of what we think of as a global brand requires that the concept of an audience of consumers be nurtured and maintained. The recent obsession with all things digital and the seduction of micro-targeting has probably caused marketers to forget this key point. After all, you can only segment an orange so much before it stops being an orange.

This is not to say that brands should simply turn back the clock and plough money into traditional techniques because the nature of audience-based marketing has also changed, largely as a result of channel fragmentation and the fact that channel selection is now much more within the hands of individual consumers.

This means that brands need to shift from ideas that are defined by the channels that they sit within, to creating ideas that define the channels they sit within. Brands need to break their dependency on channel-driven thinking. The problem with agencies is that they are channel specialists. Advertising agencies emerged to provide the specialist craft skills required to create ads and our definition of creativity became wedded to (or constrained by) its requirement to be married to particular delivery channels. Creativity became segmented because the money was segmented.

Many marketers have been aware of this issue for some time. The response has been to encourage their agencies to become more cross-channel. However, the problem with this is that the money is still channel-aligned and no-one pays for ideas. Agencies, despite their protestations to the contrary, are very bad at coming up with ideas that are not channel-aligned. They don’t have genuine cross-channel creative competencies, largely because there is not a revenue stream available against this. Having spent 20 years in a large international agency group I can tell you this for a fact.

But the issue here is, should agencies be expected to have cross-channel creative expertise? When creativity was a specialist craft skill, outsourcing it to agency craftsmen made sense. However, the type of creativity you need when you are operating cross-channel is different. It is more strategic, it is more operational and it is therefore a competence much better suited to sitting in-house.

I believe that brands teams can, and should, become more creative. Brand teams can create channel-defining ideas and agencies then be tasked with bringing these ideas to life. Bringing ideas to life is a creative task that is much better suited to outsourcing than outsourcing idea creation. The best example I know here is Red Bull. Red Bull didn’t sponsor a F1 team (sponsorship = channel based thinking). Red Bull created an F1 team. Red Bull has also created a host of other properties that then draw the channels and consumers to them. TV channels now pay Red Bull to deliver the brand to consumers, not the other way around. The idea (and thus the brand) is bossing the channel, not being bossed by the channel. I am sure that this was not an agency-driven strategy, but came from the brand team because it would not have been within the competence or interest of an agency or agency group to deliver (and thus maximise revenue opportunity) against such an idea.

I spent my agency career in PR. Good PR agencies (and unfortunately these have tended to be the exception rather than the rule) have always been much better at ideas than any other specialism. The reason for this is that PR never owned its delivery channel. It has always had to find ways of getting its ideas adopted by the channels that take it to the consumer or by the consumer directly. It is also a practice fundamentally rooted in stories – when writing a press release as a gradute trainee I can remember the constant refrain, “what’s the story”? PR people are also not traditionally seen as creative, simply because they have never had a channel craft to align ‘channel creativity’ against.

The people who make up your average PR team are not significantly different from the people who make up your average brand team. I therefore know that with some support and additional resource, your ‘average’ brand team is more than capable of creating channel-defining ideas. Having also worked with P&G I also know that P&G people are not average.

So my ‘build’ to Marc Pritchard would be to say, “invest in building in-house creative resource so that you can create, own and control ‘channel-bossing’ ideas and then task your agencies with bringing these ideas to life”. P&G needs a Chief Creative Officer.

I would also say that there is a whole other approach P&G needs to adopt to ensure that its digital activities are aligned against creating value from harnessing the power of connection rather than the power of distribution – but that is a whole other blog post.

 

 

 

A not-for-profit Facebook: now there is an idea

The recent fuss about Facebook and the ownership and usage of its data highlights some important issues.

Laying aside the data breach / trust issue, what Facebook does with its (users’) data as part of its day-to-day business is not unique, not is it currently illegal. Every online platform and app does the same thing. If you have a gmail account, Google ‘reads’ all you emails – albeit this is an algorithmic form of reading, which, as Google will be at pains to point out, is not exactly reading in the way  we currently understand the term.

Understanding is the problem. Very few people – the users of Facebook, or the regulators of Facebook – understand algorithms. Algorithms, or the organisations that design and unleash them, are not like spies – seeking to build an extensive data file on individuals. The ultimate objective of an algorithm is to have almost no data about an individual, but none-the-less be able to infer a very great deal about them in terms of an ability to predict a particular characteristic or behaviour. The data the algorithm uses to do this could come from almost any where, any person, any thing. Algorithmic ‘surveillance’ is a very different form of surveillance and most of the regulatory protections we have devised concerning data and privacy don’t work against it. Critically, as we will shortly discover, trying to provide forms of protection by locking-up data and placing restrictions upon its usage is an exercise akin to trying to hold back the tide.

The focus needs to be upon the motivations and behaviours not so much of data owners, as data users. This is where Facebook has a problem. In order to generate the revenues necessary to sustain its current valuation it needs to use the data it has in ways that are not supported by the informed consent of its users. And as users become more informed that consent is likely to become increasingly withheld. It is a problem of business model.

Facebook currently has a PE (price to earnings) ratio of 26. Alphabet (Google’s holding company) is trading at 32. By contrast, Apple Inc is trading at 17 and the Ford Motor Company at 6. A PE ratio represents investors’ expectation of future revenue potential. The levels for data companies, such as Facebook or Google, are astonishingly high – probably unsustainably high when looked at in a historical context. And this drives huge pressure on these organisations to increase earnings. Currently the only way they can do this is by developing algorithms which are then fed with users’ data.

You don’t have to follow the thread of this thought too far before arriving at the conclusion that it is impossible for an organisation like Facebook to exist with any form of public consent, unless it fundamentally changes its business structure and environment within which it operates. This could involve steps such as charging users or becoming a highly transparent, not-for-profit organisation. There is probably a blockchain application in the mix here as well, but if you start thinking about the future too hard you will inevitably start to see a blockchain application. If making this sort of transition is not possible for The Facebook (which is likely) we can predict that A Facebook will emerge that has these requirements incorporated in its foundations. Perhaps, as we enter the Age of the Algorithm, our thinking about data, algorithms and social permission needs to be linked to thinking about business structures in a much more fundamental way.

The futurist Gerd Leonhard has today announced that he is #deletingfacebook while also proposing the idea of a paid-for, non commercial platform. He conducted a quick poll of 82 people and found that only 13 per cent of people were totally opposed to the idea with the rest interested to a certain extent and 21 per cent saying it was a great idea. 

Could this be an indication of the future? Gerd, after all, is a futurist.

 

 

Is Mark Ritson right about marketing training?

Short answer – yes. As someone who also has a dog in the training game, via The Oystercatchers I can’t disagree with his assault upon the Philistines who question the value of marketing training, published yesterday in Marketing Week.

However, I take issue with his interpretation of the very interesting, and worrying, graph on the effectiveness of marketing campaigns he included in his article.

ritzon-graph

This graph, produced by the researchers Peter Field and Les Binet for the IPA, shows the overall effectiveness of British marketing campaigns over the last ten years. Field and Binet cite the reason for the downwards trend from 2012 as being short-termism, overly tight targeting and an obsession with tactical activation. Ritson proposes a ‘lurking variable’ responsible for these sins: the lack of marketing training.

I don’t think this has anything to do with lack of, or failure of, training. It is more about a failure of thinking and the profound inability of most in the marketing community – trained and self-taught alike – to get their heads around the fundamental changes taking place in the communications and media environment brought about by the emergence of new social digital space.

Traditional marketing is a distribution game: channel and message, reach and frequency. It is a game which has an audience of consumers at its centre. Digital marketing is a connection game. It has the individual at its centre and its primary challenge is not reach and frequency but behaviour identification and response. This is a totally different game and you can’t play it effectively by simply taking channel-based, distribution type strategies and tactics and attempting to give them a digital face-lift – which essentially is what most brand digital strategies involve. This includes even supposedly cutting-edge digital approaches such as programatic advertising. Programatic (i.e. algorithmic) is something that has huge implications for marketing – but why limit its application to advertising or any form of content distribution. This is a failure of imagination akin to attaching an internal combustion engine to a cart on the basis that a cart is what we use to carry things around in and therefore if we combine the proven transportation capabilities of a cart with the speed and endurance capabilities of an engine then everyone’s a winner.

Yuval Noah Harari in his book Homo Deus makes the brilliant observation that the most important discovery of the Scientific Revolution was the discovery of ignorance: a recognition that knowledge wasn’t fixed and that there was much more out there to be discovered. The year 2012 was roughly marks the point when most brands started investing heavily in their digital (face lift) strategies. I think it is the failure of these strategies that accounts for the downturn in overall marketing effectiveness. I also think the savvy marketers are beginning to realise this: to discover their own ignorance. Witness the famous Mark Pritchard of P&G speech of last year.

Academics, marketers and trainers all need to stop and think. What is happening now is the biggest shift in information and communication since Gutenberg. We can’t expect to have all the answers, but it is essential that we get to grips with how the rules of the game are changing.

Below is the conclusion of an article I wrote 10 years ago. I would still stand by it.

We are just starting to recognise that we standing in the twilight of a world that has lasted for 500 years. It is a world which has become shaped by the institutionalisation of the information that flows between individuals. The world we are moving into is one where new technologies are making the process of institutionalised mediation obsolescent. Information can flow between one individual and all of the potential individuals for whom that information might be of relevance, without any form of institutionalised intervention except the provision of a freely available technological infrastructure.

It is unlikely that power and influence in the world that is now forming will lie in the control of channel. Instead it will be vested in forms of community, which will have a tendency to exclude any forms of institutional interference, control or ownership. This new world is in its infancy, but its principal characteristics are starting to become apparent as is the significant transformational challenge for organisations that wish to manage the transition from one world to the next. It is only by understanding the shifts that are taking place and switching investment from channel based assets and competencies into assets and competencies that reflect the collaborative, collective and communal characteristics of the post-Gutenberg world that organisations will be able to protect themselves from functional obsolescence.