Over 20 years ago, I started my marketing career in corporate events. While that provided some amazing travel opportunities across Europe for an early 20-something, it soon became clear that event management wasn't my cup of tea. The geek in me wanted to know the impact of my efforts and with events, I was never able to prove attribution (especially in the world of Investment Banking where relationships are everything and sales cycles are long).
So I moved into branding and advertising. My wiser, more cynical self now sees the irony in that. Little did I know at the time that I'd face similar challenges with this marketing discipline. These were the early days of digital, when print still dominated (especially in B2B).
A lot has changed since then. The pace of digital has meant that marketers have had to constantly up-skill to stay relevant. I've broadened my experience and deepened it in areas that I think form better and more direct connections with customers. I've lived and worked in other countries and returned home to NZ.
What surprised me when I came home after 15 years abroad was just how fixated Kiwi Marketers are on advertising, at the expense of almost every other marketing channel.
Don't get me wrong, we are good at advertising. We're a nation of creatives, innovators, non-conformists. We're so good that we often do it for big businesses abroad to help them with cut-through in their big markets, using their even bigger advertising dollars. Way down here in this corner of the world, we create. We inspire. We connect. That's something I'm proud of.
For those companies, it makes a lot of sense to leverage our skills and creative flair. To get the best in the business for less cost than in their home markets. But I question whether it's as relevant now for us in New Zealand.
We're a small nation of ~4.7m people. It's a relatively even split of male to female, with a median age of ~37yrs and ~1.7m occupied private dwellings (households). According to Neilsen, NZ's advertising spend is $2b annually. That's just the media. You've then got to consider the cost of creation, measurement, optimisation, headcount, wastage, fraud...
I've struggled to find NZ-specific data that goes into any useful level of detail for non-advertising marketing spend. So, let's assume that our enterprises behave like our North American and UK counterparts who, according to Gartner's Annual CMO Study 2019-20, spend 10.5% of company revenue on marketing. Statista's 2017 Leading Advertisers report indicates the average advertising spend across NZ's top ten advertisers is ~$54m each which represents an average ~14% of their marketing budgets for the same year (when you apply the 10.5% revenue rule).
That feels about right. But, when you then consider the cost of the things I mentioned earlier - creation, production, measurement, monitoring, optimisation, headcount, wastage, fraud - they start escalating and before you know it, over a third of your marketing budget could easily be advertising related. For all you advertising advocates out there, I agree, this is still not an unrealistic or disproportionate number, given the likely reach.
Advertising allows you to reach the masses in terms of tv, radio, out of home and print. It also enables you to be more targeted in digital and print channels. While there's definitely a role for both, when executed well, the latter is obviously going to deliver less wastage (not considering ad fraud).
Right now, it's also probably the cheapest it's ever been. So for some, advertising is absolutely an appropriate channel. Advertising enables brand build and demand generation, both of which are fundamental to your marketing strategy. But they are just a couple of the many objectives marketers should be accountable for. Is advertising delivering a third of all your marketing goals?
So here's my issue...
With such a small market available to us and with marketing budgets dwindling in the current environment, do we still need to be spending this proportion of our marketing budget on advertising? With all the advertising we've been doing, by now you'd expect to have contact details for and insights about most of the people and households you want to be speaking with. Given the size of our market, don't we already know who we're talking to by now and why aren't we having more personalised conversations?
I deal with enterprise marketers constantly and if you ask them what they're working on, I guarantee most of them will tell you about their latest mass market advertising campaign. When asked about the size of their customer database and anticipated growth as a result of the campaign, it's pretty rare to get an accurate answer first time.
I'm not having a go at enterprise marketers - I used to be one and I completely understand the challenges they face in just getting a campaign out the door, not to mention attempting to prove attribution. I'm just trying to highlight an issue with focus and an opportunity to do things differently. If I've learned anything about the past five weeks in lockdown, it's that we can't go back to doing what we've always done.
There's an entire customer lifecycle available to marketers. We don't need to limit ourselves to just the acquisition side of it.
Some ads today are like that bragging friend at a party - the name dropper who goes to the opening of an envelope but never really has anything of substance to talk about. You might buy into what they say at first, but then you'll politely excuse yourself to grab another drink and move on. Good brand ads are more like the person who seems really interesting and maybe even a little inspiring. You enjoyed meeting them at the party and they said they'd like to catch up again for a coffee but sadly, they never came back to you to arrange it.
Don't be that person. If you haven't mapped your customer experience yet, now is the time to do it. Understanding the journey enables you to engage your customers in more meaningful ways, more cost-effectively. It identifies opportunities for 'surprise and delight' moments, areas of improvement, alternative channel strategies and automation. It helps you get to know who you're targeting on a much deeper level and why. It ensures that if someone finds you interesting at the party, you don't let them slip through the net. All of this is ultimately going to make your marketing efforts (including advertising) even more powerful.
You only have to look at middle-market and smaller businesses punching well above their weight with limited marketing budgets to see how effective this can be. They don't need big advertising budgets to deliver acquisition and loyalty. They've had to be more creative with their budgets and as a result, they've stolen market share by competing on experience.
Advertising just doesn't deliver the personalisation consumers have come to demand. It has a role and it's an important one. I just think it's time we spread our attention across the entire lifecycle and diversify the capabilities in our marketing teams to be truly multi-channel.
I reckon your customers will reward you for that. Your CFO might just do the same!
*Unless otherwise stated, all stats provided are sourced on the NZ Statistics website and based on 2018 census data or the annual enterprise survey (2018).