2006 Marketing Management Survey: Marketers are under constant pressure to innovate, and the new-media environment has created an extra domain for them to grapple with. All the while, they strive for integration when there is no one-size-fits-all method of doing so.
Disney has a hugely diverse range, from the ABC television network to its theme parks and merchandise. The products range from occasional, big-ticket purchases such as vacations, to free-to-air TV programming. McDonald's purchases are all fast-moving and, for many customers, daily, while Toyota's only occur once a year at the most for the majority of customers.
What they all have in common, however, is recognition among their peers that their marketing is impressively integrated.
For the first time, the PRWeek/ MS&L Marketing Management Survey polled marketers on how they rate the integration efforts of their peers. On a scale of one to five, with five being “seamlessly integrated,” only three marketers earned an average score of four or above – Walt Disney Co. and McDonald's, which both scored 4.1, and Toyota, with a rating of 4.0.
“What great integrated marketers have in common is a corporate commitment to view a marketing challenge as a single [one], and then spend their resources where they will have the most effect,” says Mark Hass, CEO of MS&L. “It's mostly about being organized the right way inside the company and understanding that PR, direct marketing, interactive, or advertising can each, in different circumstances, play the pivotal role in an integrated plan.”
What those three companies bring specifically, says Rich Honack, the assistant dean and CMO of the Kellogg School of Management at Northwestern University, is “great value, as their customers trust them and feel secure when dealing with them.” They also have clear advertising messages with either memorable taglines (“I'm lovin' it”), icons (Mickey Mouse), or product messages (Prius' supremacy in the hot hybrid market).
The survey polled 266 senior marketers, of which 19.2% are CMOs, 32.7% are marketing VPs, and 21.8% are directors or associate directors of marketing.
What was surprising was some of the marketers that came in far below the top three. For Procter & Gamble, only 41.7% of respondents gave it a four or five, and its average score came in at 3.7. P&G has worked hard on turning integration into a science, and the measurement and marketing mix modeling it has been investing in over recent years is well-documented – and likely to be much emulated. Its relatively low score may possibly reflect a diluting effect due to the vast range of product categories in its portfolio, but Honack simply thinks that perhaps not all marketers get it.
“I think P&G is among the best in the world at what they do,” he says. “It comes back to the consumer. P&G is looking through the eyes of the consumer, and satisfying the brand need.”
Only 28.9% of marketers gave General Motors a score of four or five, and its average rating came in at 3.2 – behind the 3.4 score both DaimlerChrysler and Ford Motor Co. received.
GM and its brands have taken many hits in recent years and it has worked hard to try and fix its marketing ills by reshuffling the structure and makeup of its mar- keting and communications team. Still, those efforts have perhaps yet to bear fruit in terms of how its marketing output is viewed.
Hass, who has worked with GM for many years, argues that the car company's marketing is better now than it was last year, and that a reason behind its low score is very possibly its size.
“Ford and Chrysler did better as they're smaller,” Hass explains. “There's fewer products, so they are less complicated. I've seen a profound change in how GM is doing its marketing.”
GM itself boasts of its integration efforts. Says Mike Jackson, VP of marketing and advertising, “For us, integration is always very focused around changing the opinion that consumers have of our company and our brands.” He cites the success on the West Coast of turning some of GM's brands into a desirable property among the Hollywood influencer community, which was a cross-functional effort between PR, marketing, and design teams.
PR as branding tool
Surveys from previous years have sometimes shown a disconnect in terms of what marketers feel PR can be used for, and how the discipline is actually used in their marketing mix.
But the results from this year's new question – how is PR used within your company? – are particularly encouraging. The two “traditional” PR areas – media relations and crisis and issues management – came second and third, respectively, with 75.2% and 44.4%. The top answer, with 76.3%, is corporate and product branding.
This isn't just a statistical blip, says Hass. “More and more of our people are involved in important strategic conversations with the senior marketing people at our clients than ever.”
PR pros have become adept at working with a fragmented media, giving PR the capability to achieve the kind of niche targeting that had previously been more the domain of the direct marketing discipline.
Especially for marketers with smaller budgets, PR is seen as the most nimble and all-encompassing of disciplines. When Sunkist VP of marketing Robert Verloop theorizes about which external agency partner he could choose if he could have only one for his small budget, he picks PR.
“The core skill set for most PR people is elastic,” he notes. “They have the teams on the creative and strategic sides, and they also have the flexibility.”
Another factor in the number of marketers who use PR for branding is the practice of amplifying a big-bang ad campaign with plenty of PR follow-up.
This has often been painted as a negative thing in the PR industry – it harkens back to a time where, apart from crisis communications, this was almost all PR was used for. But it can be a valuable multiplier to a media buy, and for one, Jim Farley, VP of marketing at Toyota, channels a lot of budget into using PR to get a second bite, such as he did during the Super Bowl.
“We did a Hispanic Camry Hybrid ad, and we could quantify that the PR coverage alone justified the media spend,” he says.
The proven amplification power that PR has also encouraged Farley to be more experimental with all his marketing tactics, as he knows there's a good chance they will also have PR value. Toyota found this when it launched its compact Yaris, and became the first advertiser in the US to use mobile-phone “mobisodes,” which were written about in many mainstream media outlets.
“You can take risks,” he says, “because those new approaches to media were creative messaging. PR will amplify that investment.”
The best one for the job
The survey unequivocally points to the fact that marketers aren't just using specialized agencies to complement the mix; they're an integral part of it.
Respondents were asked to pick which disciplines were most suited for various tasks, and advertising was not the first choice for any. PR was the discipline of choice for product launches, generating word of mouth, building corporate reputation, managing a crisis, and changing perceptions. Direct marketing was the preferred tool for ongoing product promotion, targeting niche audiences, and increasing sales.
In an ad-bashing era, it's easy to forget that it is the discipline that still commandeers the overwhelming portion of the marketing spend. Indeed, for a company like Toyota, which has become known for innovative marketing for such brands as Scion and Prius, there are some brands that are too big for anything other than a strong ad campaign with the right media buy.
“For a mass-media product like Camry,” says Farley, “[advertising is] the most critical portion. [Camry's] a known commodity, it's just exposing the newness in the product. We roll up our sleeves, and get the efficiencies, the programming, and the media usage right.”
Of course, advertising is not just about TV or print anymore. Online ad spending in the US rose to $12.5 billion in 2005, according to a study by the Interactive Advertising Bureau and independent auditor PricewaterhouseCoopers.
Says Michael Mendenhall, EVP of global marketing for Disney Parks and Resorts, “For me, if you're saying advertising is paid search, and partnering with Google, I'd say that advertising is totally important to [any communications] plan, equal to PR.”
Meanwhile, the importance of direct marketing in ongoing product promotion speaks to the focus marketers are putting on keeping close track of the customer at every part of the buying cycle. The discipline is also benefiting from getting more information from engaged consumers, as well as increased efficiencies in mining it to shape programs.
Mendenhall, for example, says that rather than talking about CRM (customer relationship management) he talks about customer-managed relationships. The company also has an open-data environment, that allows it to, say, transfer data from cruise customers to other resort divisions (within privacy limits).
Loyalty is of increasing importance to the direct marketing function, too, now that consumers have a wealth of product information at their fingertips and are more critical and analytical about their choices.
Kim McCullough, corporate manager of marketing communications at Toyota, tracks and models current owners year-round. She works with Farley to put a lot more emphasis on loyalty as they evolve Toyota's marketing.
“That's going on every single day of the year,” she says. Adds Farley, “The team has done a great job of modeling the consumer behavior. It's also very trackable.”
The rise of new media
The most significant change over last year's agency mix is that the number of marketers using Internet/new-media agencies has nearly doubled, from 9.8% to 19.2%.
The marketing industry as a whole has made huge leaps in using Internet-based communications, and indeed, three-quarters of marketers are exploring online activities as alternatives to traditional advertising.
But while one would expect to see many people using Web sites as marketing tools (73.3% are doing so), it is astonishing to learn that 19.9% are podcasting – a discipline and a technology that barely existed two years ago. A quarter are using viral Web campaigns, while 21.4% of marketers are creating blogs.
Internet technologies, such as RSS feeds and blogs, show a fundamental shift for the communications world: that consumers are more empowered than most could ever have anticipated. When your brand is as big as Disney, that adds up to a significant audience that must be heard.
“There are 800,000 to 900,000 blogs out there about [Disney Resorts],” says Mendenhall. “It's important we understand those channels, and begin to look at ways of reaching those people. It's really about giving permission for conversations between past and future guests to take place.”
GM, a company who enjoyed a reputation as a leader in corporate blogging with the success of its Fastlane blog, says that as a giant company, the pressure to innovate online is self-induced.
“Part of our strategy is to differentiate our eight divisional brands,” says Jackson. “That's not just in product design and marketing, but using media to drive differentiation… We've broadened our thinking, so we've ended up with …Fastlane. We're launching a similar blog now around news. As we're launching a corporate, GM-branded marketing campaign, we're announcing that via the newsblog. We haven't done that before.”
As for whom marketers are getting to help them with this work, 39.8% say they are doing it themselves, with just over half – 52.6% – using external agency partners.
Hass balks at the number of marketers doing it themselves: “The expertise really resides in the agency world,” he insists. “The edgiest stuff, in a lot of cases, is being supported by agencies, and the thinking is being driven by them.”
Not surprisingly, Internet/new-media agencies are the first choice to be external agency partner for marketers who want help with Internet-based work. However, if marketers could use more than one agency for new-media help, PR agencies came in second to new-media agencies, with 31.6%.
This is a crucial question for PR firms. New-media specialist agencies have their disadvantages, as they tend not to offer strategic or tactical help beyond the online world. Ad and PR firms, have worked hard in recent years to offer exciting, effective, and measurable work in the online realm, and many have services that overlap.
The survey's results bear out the fact that there is no one obvious agency to turn to, so when marketers are not sure which of their agencies has the best expertise, they will likely turn to the one with which they have the best relationship.
Nearly half of respondents have had their new-media budget increase over the past 12 months. So, what is driving this increase in support for new-media campaigns? More than half say they are driven by a desire to be innovative and ahead of the curve. That the CMO is constantly under pressure in the job is no secret; many studies point to the declining length of tenure of CMOs in their positions.
“CMOs get the decline in credibility of traditional marketing and advertising,” says Hass. “They know everyone is rushing toward the same online future, and the desire for innovation and being competitive is driving everything. It's fear both of competition and of the unknown.”
While the most high-profile new-media campaigns are increasingly rooted in the creative, with viral work gaining much recognition and buzz, survey results clearly indicate that marketers using new-media campaigns are taking advantage of the built-in measurement capabilities that this method affords. When asked how they measure the impact of new-media work, two-thirds (66.9%) measure it on financial impact, with 47.5% stating mindshare as a measure.
“It's so easy to measure,” says Hass. “The click-through is easy to measure compared to other types of campaigns. You can really determine which sales were driven by these kind of campaigns, as they come from a Web site of some kind.”
However, it's not always so straightforward. While online advertising can be measured by clicks, online influence is less apparent and needs more sophisticated analysis.
This is one reason why Scott Parker, VP of marketing at Jenny Craig, concedes that he's not an early adopter in the online space.
“We rely so heavily on analytical measurement of what drives our leads and sales,” he explains. “We're just now getting to the point as an industry, and as a company, that in utilizing some fairly typical Web techniques – keyword search, banner ads – we're just beginning to measure with the granularity of the individual person how they came to Jenny Craig, what their conversion was, and how they behaved.”
The problem, he continues, is that some technologies are too young to measure.
“Podcasting is an intriguing idea,” notes Parker, “but we need to figure out how it becomes measurable [and] how it fits into the analytical model.”
That's not to say that such measurement-minded marketers will not do something until they can apply a formula to it.
Adds Parker, “There are things [we are doing] that are good for the brand, some creative PR things that are not so easy to measure, but we know they're good for the brand.”
Disney takes such risks. “It's important for us to understand consumer behavior, where they are, where they're looking for information on vacation planning, for example, and how do we become relevant in [the new-media] channel,” says Mendenhall. “For many of these channels, it's hard to get sophisticated metrics to get an ROI. We can't wait, though, for some of that research that will build effective modeling for each of these channels to take place. So we must take some risk. We set up tests that allow us to internally, based on our own metrics, look at whether they're successful or not.”
The power of influence
New-media marketing tools are the most popular ad alternatives to marketers, with 74.8% using them, while influencer marketing is the second most popular, with 57.9% using them. The latter can be directly correlated to the former, says Hass.
“Skilled use of new media has allowed the PR business to identify influencers at many levels,” he says. “A couple of years ago, when we talked about influencers, we spoke about grasstops guys, those leading culture. Now, influencers are very much grassroots, local, and relative to a small group.”
Some companies are more predisposed to influencer marketing, as their model is a more one-on-one entity, with highly visible proof of the product benefits. Such as Jenny Craig, which uses customers' successful weight loss stories not only in official, company-organized marketing, but also as grassroots influence.
But even companies whose items produce less obvious and dramatic effects understand the power of influence.
“P&G is the most interesting client to talk about in this context,” says Hass, “as they really like doing this. They're excited about it and put budgets behind it.”
One particular program was for Mr. Clean Auto Dry, a car-washing product which represented a new product arena for P&G. It was launched to online influencers in the automotive space, and P&G and MS&L found them more than willing to talk about the product.
Why? Says Hass, “By approaching people who are influential in a relatively small area or geography, you reinforce their influence… there's flattery involved. And also they legitimately feel that they need to take the role seriously. You talk to any serious blogger about why they do this, as it's hard work, and they never say, ‘Because one day someone's going to buy advertising on my blog.' It's because they're part of a community, and the community depends on them.”
What powerful consumer influence also means for marketers, of course, is that consumers are dictating how they spend their marketing dollars.
“There are a lot more tools now,” says Farley, “[so] the real big thing is the customer is driving media usage changes. We all talk about it, and have for a long time, but it's happened now. It's starting to really affect how the dollars go. You have to have an integrated campaign.”
So what is an integrated campaign? Defining integration has always been a tricky proposition, however, the survey points to a clear definition, with an overwhelming majority – 65% – declaring that “All disciplines work together as a team, meet/ speak regularly and ensure alignment between disciplines.”
This is a working model with which most people in the marketing industry will be familiar. Hass says there are two ways clients can aim for seamless integration. “The first is you put all the budgets into a single pot and get a CMO who controls everything. But that tends to weaken the corporate communications function in all but the most enlightened organization. Or you have a situation where most of the budget resides with marketing organization, but the communications folks are participating at the top level of the organization.”
Hass cites the so-called loop team for the Philips account as a perfect example. “These are agencies that come from different places,” he says, “but you put corporate communications, marketing, product communications, advertising, direct marketing and PR together around the table. It begins with a common brief; each agency and group internally are involved in shaping the brief, then they act off the common brief. Then each team goes off and plans, then that comes back into the group so everyone's fully integrated.”
But there is room for improvement: Only 18% of respondents boast seamless integration. While 74.4% say they are “somewhat” integrated, many marketers and their teams have worked hard to create the right model for achieving that singular voice.
For many, internal structures need to change first. GM's corporate advertising is a good example. A year ago, says Hass, it seemed “marketing spun.” But today, he adds, it's more on-message, smart, and convincing.
“The reason is because the message and process is now given jointly,” he continues. “Before, corporate advertising was driven by the marketing group, and there's visible evidence of this change. It's also happening at the product level.”
Sunkist's Verloop believes clients must be clearer about who's the boss. This rears its head when it comes to agencies who regularly try to persuade the marketer to tweak the budget in favor of their discipline. “That's not an agency decision. It's mine,” he says. “What gets rewarded is innovation, bringing value to the equation. If the ad agency always brings radio and billboards to me… what [it's] telling me is … you don't understand my brand. [Agencies are] not allowed to grandstand, or put a play in for more budget.”
Another path to integration is through the numbers. Jenny Craig's Parker has a background in data mining and direct response, and so uses a number-based method. Parker's multiyear models look at allocation of media and tell him what elements of the media mix are most correlated to peaks in his business. It gives him an optimized allocation of how much should be spent in each medium, and which outlets.
“So much of our business is direct response,” he says, “so we are measuring the effectiveness of creative response every week. We've identified how much we should spend and what the resulting cost per lead should be. Then we dynamically adjust our media spend on an ongoing basis.”
The holding companies
Another first in the survey this year is asking respondents to measure the advertising holding companies against one another. Respondents were asked which major holding companies did a good job of offering integrated marketing strategies. The top company was Omnicom, though it only scored 17.3%. Indeed, the top answer by a long stretch, at a whopping 68.8%, was “none of them.” Only 7.5% said holding companies were more effective at offering integrated strategies than independent firms.
Tom Harrison, president and CEO of Omnicom's Diversified Agency Services, says the holding companies can do better at talking to clients about putting companies together to suit their needs.
“When a client hears that, what they really hear is, ‘Are they just putting companies together to take more of my marketing dollars, or are they concerned about issues my brand faces?'” he says.
The solution is to be sure to communicate a client-centric service model, rather than an agency-centric one, such as Omnicom's “strategic alignment” positioning. “Strategic alignment is looking out to the brand, and saying that we understand the issues that you and your brand are facing,” Harrison adds. “Allow us to align two, three, five, seven companies around the issue. They'll solve it, then the companies will for the most part, go away. Then we'll come back and realign another group the brand needs.”
Disney's Mendenhall says that alignment comes from within. Because of that, smart companies don't need a holding company relationship. “Some of the best strategists and planners reside here in the company,” he says.
But the rise of corporations going to holding companies and asking them to package a total solution for them is no coincidence, and many marketers see a clear advantage to that. GM uses two (Interpublic Group and Publicis Groupe), and, Jackson, says, “We think size and scale are important. To be focused on leveraging size and scale, we think it's an advantage.”
While Hass concedes that holding companies (including his own parent, Publicis Groupe, which got just 7.9% of the vote) need to take this opportunity to educate clients as to their benefits, the desire for integration should be driving clients' pursuit of these relationships. After all, only 18% of marketers describe themselves as seamlessly integrated. “You want an integrated team where there are no financial issues that divide them,” Hass says.
Blurring the lines
One way marketers have gotten creative about getting products in front of customers is through media integration – from straightforward product placement in entertainment properties (such as Ford's Land Rover LR3 in Mission: Impossible III, or iRiver in The Sopranos), to more complex content-creation projects (such as First Descent, the snowboarding documentary created by Mountain Dew).
But the rise of ad-driven editorial content in both broadcast and print media has led, some say, to a fuzziness of the line separating advertising and editorial. There is a difference between inserting a product into an entertainment property and paying to secure a mention of a product in a more sterile editorial environment – such as a newspaper – says Hass. He notes a survey by sister media firm Starcom MediaVest which found that 65% of consumers thought editorial mentions of a product had been paid for.
For the first year, this survey asked marketers their thoughts on paid placement, and the results were fairly evenly divided between those that had and had not. Of the 136 marketers who hadn't paid for placement before, 46% say they'd consider it. And of those who wouldn't consider it, the key reason is that they did not feel it would be ethically right.
“This is troubling to me,” admits Hass. “While just under half have ever paid for editorial or broadcast placement, half [of the remainder] are willing to try it. It's dangerous for our business. If people with these big marketing budgets think they can buy a story, it rubs against the premise of earned media – the notion that people read a paper and believe there is some objective brain there filtering the information.”
The Kellogg School's Honack says that the difficulty comes in separating the good from the bad, and deciding what disclosure should be present for either case.
“I'm seeing more product placement in movies, TV, and video games” he says. “Now, the question comes: Do I need to tell the consumer that the reason the person is drinking product X in a movie is paid advertising? I personally would like to see something in the credits that said, ‘This movie was sponsored by…' because, from teaching my classes, many people don't realize the amount of product placement that's going on in media.” n
The 2006 PRWeek/MS&L Marketing Management survey was conducted by PRWeek and Millward Brown. E-mail notification was sent to approximately 18,000 client-side marketing executives and 266 completed the survey online between April 7-23, 2006.
Mean revenue of the responding companies was $75.7m (15.8% under $1m; 8.3% $1m-$10m; 8.3% $10m-$50m; 3.4% $50m-$100m; 4.1% $100m-$200m; 6.8% $200m-plus, 53% didn't know/declined to answer). The respondents' mean marketing budget was $4.51m.
Results are not weighted. Based on the sample size, the results are statistically tested at a confidence level of 90%. This report provides selected highlights.
Full results – offering additional data – are available in PDF format for $150. Please contact firstname.lastname@example.org .
Level of integration
How effective are the following companies at integrating their marketing strategies?
Company % that is “very” or “seamlessly” integrated Score out of 5 for integration
|Walt Disney Company||58.3||4.1||
|Toyota Motor Corp.||47||4||
|Johnson & Johnson||45.9||3.8||
|Procter & Gamble||41.7||3.7||
|General Electric Co.||38.3||3.6||
|Ford Motor Co.||32||3.4||
|Nissan Motor Corp.||31.6||3.5||
|General Motors Corp.||28.9||3.2||
|Sears Holding Corp.||16.5||2.9||