CFOs…They’re Just Not That into You

It is often said that those in the finance department and those in the marketing department come from two different planets! Because of long standing accounting principles and practices, marketing is often relegated to being just a cost line item rather than a value-generating activity.

Natalie Mizik, former Associate Professor of Marketing at Columbia Business School, now at Kenan-Flagler Business School, and Doron Nissim, Professor of Accounting and Finance at Columbia Business School, took a closer look at the implications of current accounting models and their representation of marketing activities. In their article, Accounting for Marketing Activities: Implications for Marketing Research and Practice, Mizik and Nissim found that common accounting principles and practices have led to distortions of marketing contributions in financial reporting. In addition, some experts feel that marketers don’t adequately communicate how their expenditures benefit the bottom line. Together these factors affect perceptions of marketing’s value, which can impact everything from marketing budgets to influence and practice.

To mitigate the negative light financial reporting can cast on the perception of marketing, Mizik and Nissim recommend marketers play a more active role in the financial reporting debate. According to them, providing “consistent, observable, quantifiable and verifiable information” on marketing spend and its results, and sharing financially-based performance metrics can improve the process of evaluating marketing efforts and lessen the conflict between the finance and marketing worlds.

A recent study released by the Center on Global Brand Leadership and the New York American Marketing Association (NYAMA) confirmed the need for a robust set of ROI measures to improve  marketing’s standing within a company. The BRITE-NYAMA Marketing Measurement in Transition Study, Marketing ROI in the Era of Big Data, found that 70% percent of marketers say that their marketing efforts are under greater scrutiny than in the past. ROI metrics are critical to addressing the concerns about the contributions of marketing initiatives. However, more work is needed to develop a common understanding of ROI metrics even within marketing departments. The study revealed that although marketers see the value of ROI measures, there is confusion about the meaning and significance of ROI among marketers.

Marketers will need to continue to refine their understanding of ROI and develop consistent metrics, often specific to their own organization, in order to get CFO’s turned on to the results of marketing efforts.

BY KIM SHIFRIN

Why Bob Garfield Is Channeling Shakespeare

Not just a famous Shakespearian quote, “To thine own self be true,” according to Ad Age editor, Bob Garfield, is a maxim to which marketers should adhere.

Garfield, host of NPR’s On The Media and author of the forthcoming The Human Element, explains that in this new “Relationship Era,” it’s critical to “look inward” rather than mold your business to the public’s “often fickle, shortsighted tastes.

In a recent Ad Age article, Ignore the Human Element of Marketing at Your Own Peril, Garfield claims that marketers in the “Consumer Era” strove to get into the heads and hearts of consumers by asking them what they wanted, attempting to deliver it, and seducing the target audience to buy it through advertising. However, in today’s world, companies need to continually communicate their “essential self” or brand purpose via relationships with all stakeholders.

Garfield calls these relationships the “human element.” In this new era, customers (as well as vendors, stockholders, and employees) are not “conquests” but rather members of a community, looking to a company’s inner reason to decide if it merits adoration (or, potentially, hatred). The digital revolution has ushered in an age in which consumers are evaluating companies all the time across numerous conversations that go well beyond the latest advertising slogan. According to Garfield, these conversations “are about your brand’s essential self—which behooves you to think very hard about your essential self.”

See Bob Garfield speak about the Relationship Era and the Human Element at our BRITE ’12 Conference (March 5-6, NYC).

REGISTER NOW! 

BY KIM SHIFRIN

Pop Tarts’ Online Fan Base Comes to Life

Welcome back for fall. I hope all readers else got some time off to recharge, as I did.

As summer came to its inevitable close, I was interviewed by Reuters TV about the new Pop Tarts World Store that just opened near Times Square in New York. Customer flocked to the opening of this store for an immersive brand experience, complete with Pop Tarts store design and merchandise, a “Varietizer” to create customized boxes, and singular treats like Pop Tarts sushi (hold the wasabi, please).

With the retail sector still suffering through a sluggish economy, what would lead a company like Kellog’s to launch a flagship store for a brand like Pop Tarts?

Kellog’s actually got the idea for its store from its Facebook page, where a network of over two million customers have “liked” the brand, and wall updates generate dozens to hundreds of responses each.

Pop Tarts’ customers are creating their own online content too, including numerous amateur videos and songs dedicated to the sugary treat. In fact, both the brand’s Facebook page, and its YouTube channel (nearly 2 million views) focus almost exclusively on content created by their customer network – rather than recycling advertisements, pumping out corporate communications, or striving to manufacture a “viral” video by their marketing department.

While there has been much discussion of how brands and organizations can best cultivate “online communities,” the truth is that the most active and energizing communities (whether music fans, political supporters, or business partners) tend to be groups that interact with each other both online and in person.

So it behooves a brand like Pop Tarts, with such a large and passionate following online, to generate opportunities for them to meet and engage with the brand offline too – whether at special events, or retail spaces.

Even in a recession, marketers need to be willing to invest in their brands, especially those with loyal followers that make for a valuable long-term relationship.

Click here to watch the video on Reuters.com

BY DAVID ROGERS

This post originally posted by David on the DavidRogers.biz blog at: http://www.davidrogers.biz

Lessons from the Summer’s Biggest Brand Stories

Warm days, blue sky and a little vacation (hopefully) lead to reflection.  So here we take a look back at lessons learned from three of the biggest brand stories of the 2010 summer.

The BP Spill

There’s nothing like a strong dose of crisis to test a brand positioning.  After a decade-long run as an exemplar of how to develop a re-positioning strategy, BP (nee “Beyond Petroleum”) faced a tragic oil rig explosion in the Gulf of Mexico that grounded our mental flights of “beyond” and left us with just “petroleum.”

There were some quick and highly visible reactions: a fake twitter account (with 10 times as followers as BP’s official account); not one but two BP logo redesign contests; and calls for boycotts, direct protests, and defacements of BP gas stations.

BP’s stock price has wavered between about half and 2/3rds of what it was before the spill, and there have already been a few estimates of the sinking brand value of BP. Some people, including several BP gas station owners, have even suggested changing the BP name entirely in the US.

Where will this all fall out for the future of the BP brand?  Payments by the company to those affected by the catastrophe, and an eventual “crisis fatigue” in the press will almost certainly have some positive brand impact. So it is not surprising that a recent AdAge poll came out perfectly split when asking readers whether BP could salvage its brand.

If you are looking for tips on how to survive a brand crisis, we recommend a recent article in the MIT Sloan Management Review that applies relevant research on persuasion from Prof. Gita V. Johar (Columbia Business School), Matthias M. Birk and Sabine A. Einwiller.

The World Cup

It’s the biggest sporting event in the world and despite some frustrations with the drone of the vuvuzelas and bad referee calls, the 2010 World Cup achieved record TV ratings in the US and many other countries. And that, of course, doesn’t include numerous additional viewers (e.g. us) watching in pubs, online and even on their phones.

One “big vuvuzela” story demonstrates the need to work with all stakeholders (not just customers) when planning your marketing activities. Hyundai, a 2010 FIFA World Cup sponsor, was banned by the Cape Town City Council from blowing the 35 meter long vuvuzela (video) it constructed over an unfinished highway overpass. It was supposed to mark the opening of all the games in the stadium, but it was so loud the Council was concerned it might cause traffic accidents. We find this a bit ironic, considering FIFA President Sepp Blatter’s culturally-sensitive decision not to ban the African plastic horns inside the stadiums.

Event sponsorship is another key brand building tool at the World Cup. But Nielsen noted that some “ambushes” from ad campaigns launched by non-sponsor brands wound up creating more online buzz than the Cups’ official sponsors. The combination of sporting fever and great creative content is very powerful, and Nike hit it big by hiring acclaimed director Alejandro Inarritu to craft a three minute commercial video. While the ad was trimmed for TV, it has now gathered over 20 million views in its full length version on YouTube.

Old Spice Guy

If you read any ad-related US press in mid-July, you already heard how Wieden+Kennedy and Proctor & Gamble created an online hit by adding social media interaction to its Old Spice TV ad campaign. Within one week of its launch, there were over 35 millions views of the 186 personalized web response videos from the Old Spice Guy himself, actor Isiah Mustafa.

Even before the sales impact of the web videos could be fully assessed, both BrandWeek and AdAge had articles looking at how the overall “Old Spice Guy” campaign might be affecting sales. The AdAge article brings up a particularly salient point by noting that multiple promotional efforts were taking place simultaneously with the campaign, thus “muddying” clear attributions to sales figures. If you have the budget to afford it, there is good reason to consider a marketing mix model for analysis.

David Rogers has penned an excellent piece on the lessons mass consumer brands can learn from the campaign’s interactive success, and how it excelled at connecting and engaging its audience.

BY MATTHEW QUINT

Open vs. Closed Innovation: How Much Evil Is Just Right?

I had a great time running an executive program last week for Aalto University (formerly Helsinki School of Economics).

One of our liveliest discussions was on the subject of open vs. closed models of innovation. We examined the contrasting approaches of Google vs. Apple.

Google (“don’t be evil”) represented an open innovation culture, with its flat organizational structure, employee autonomy, fairly transparent communications, iterative approach to products (“beta, beta, beta”), and embrace of open platforms like Chrome and Android.

Apple (“be a little evil, and they’ll love you for it”) represented a contrast to that Silicon Valley conventional wisdom, with its hierarchical organization, charismatic hands-on leader, radical secrecy, disavowal of customer input, and embrace of proprietary platforms like iTunes and the iPhone App Store.

While partisans often take a strong position on “open” vs. “closed,” both companies have shown the potential benefits of their own approach to innovation. Google has grown thanks to the platform of the open Web, and proven incredibly innovative with a freewheeling, iterative, and decentralized approach (including its famous “20% time” for employees to initiate their own projects). Yet, Apple has likewise thrived under Steve Jobs, proving the power of vertically integrated innovation—linking web apps, installed software, and hardware—to create a transformative product like the iPhone.

With the recent news that Android phone sales have overtaken the iPhone in the U.S., Google’s open approach may be emerging as a winner in the smartphone space. After all, the Android operating system has managed to duplicate much of the magic of the iPhone, while allowing for more customization, greater product variety, availability on every network (not just AT&T), as well as an app store that doesn’t block submissions on sometimes mystifying grounds.

Of course, “open” and “closed” are really just extremes on a spectrum. The whole success of the iPhone came when Apple shifted, in its second model, from a fully closed system to a much more open platform for independent app developers. And, as a recent post by Nik Bhattacharya indicates, Android is not as purely open source as we may assume.

In an age of tight margins and competitive markets, open approaches to innovation are being adopted not just by Silicon Valley companies, but by governments, nonprofits, and traditional corporations like Procter & Gamble. The possibilities for reduced cost and broader sourcing of ideas often outweigh the risks to competitive surprise and exclusivity. It may be that the more traditional “closed” innovation is becoming a luxury that only a high-margin market leader like Apple will be able to afford in the future.

BY DAVID ROGERS

This post originally posted by David on the DavidRogers.biz blog at: http://www.davidrogers.biz

Image credit: Wired magazine