Response 25 - Social
Response Issue 25 - International marcomms insights from Ebiquity
International marcomms insights from Ebiquity
Issue 25 - Q4 2016
ANA media transparency guidelines
The turning point for advertisers?
Ebiquity’s Group CEO Michael Karg explains why the recent K2 study and guidelines from the U.S. Association of National Advertisers (ANA) mark a potential turning point for the advertising industry worldwide.
It is estimated that the advertising industry contributes around 20 percent to U.S. GDP, with annual media spend now in excess of $200bn. Increased complexity in the media landscape, particularly in digital, has made the market significantly less transparent.
Concerns over a lack of transparency have been voiced with increasing frequency in recent years. This culminated in former Mediacom CEO Jon Mandel telling the ANA’s spring 2015 conference that media agencies were not living up to their fiduciary duties to clients and that rebates and kickbacks were widespread in the U.S. industry.
The ANA then commissioned K2 Intelligence – an independent, industry-leading, investigative, compliance, and cyber defense services firm – to conduct a study into transparency in the U.S. media industry. Published in June of this year, the K2 study found compelling evidence that non-transparent practices were pervasive among the sample of media industry representatives they interviewed. This matters greatly to advertisers because it limits visibility into how marketing spend is allocated and the effectiveness of marketing investments. This comes at a time when shareholders, regulators, and boards that govern corporate America are all demanding increased levels of accountability. I wrote about the implications of the K2 study in the last issue of Response.
As a follow-up to the K2 study, the ANA commissioned Ebiquity and FirmDecisions to develop tangible recommendations for advertisers to achieve greater transparency and accountability in the U.S. media industry. This report was published in the middle of July.
We believe that the current ANA media transparency initiative marks a potential turning point for the industry. It provides advertisers with the knowledge and the practical tools they need to reassert control over their advertising spend and, in so doing, to define how they want to engage with the various players along the value chain. The K2 study and the ANA recommendations go way beyond rebates, including such practices as ‘opt-in’ agreements and their impact on media planning and strategy. What’s more, the recommendations are highly relevant for advertisers the world over, not just in the U.S.
Our joint report for the ANA is called Media Transparency: Prescriptions, Principles, and Processes for Advertisers. In the report, we identified five areas where we believe advertisers should focus their energies: internal governance, the management and ownership of data, contract management, audit rights, and a code of conduct. I’ll now look at each of these in more detail.
Advertisers need to put the right level of governance in place so that they can answer shareholders’ and regulators’ demands for increased corporate accountability.
Internal governance and oversight need to be in proportion to media spend, not the agency fees. Currently, more than 20 global corporations – most of them headquartered in the U.S. – spend over $1bn every year, and many more spend hundreds of millions of dollars annually. Marketers should consider improving internal governance and who, of their CFO, CEO, and Audit Committee of the Board, should be involved in the approval process of the media agency contract.
What’s more, governance is not a one-time event, but an ongoing process that needs to be reviewed and improved continuously. Advertisers should enforce their contractual rights by implementing internal systems and processes to ensure strict accountability, compliance, and governance.
Management and ownership of data
To stay competitive in the digital media ecosystem, it is incredibly important to be able to deliver ever-more personalized messages, services, and products. Brands need to learn constantly about their customers to deliver better experiences, and this requires access to and mastery of the vast quantities of data generated in the process of engaging with consumers. It is through data, therefore, that brands can seize market opportunity. As a result of inadequate contracts with participants across this ecosystem, advertisers’ access to some of this data may be restricted, potentially limiting their ability to fully understand their customers’ journeys and deliver a more personalized service. This is to advertisers’ distinct competitive disadvantage.
Advertisers should have clarity and full access to all data being created on their behalf. What’s more, they should take ownership of this data and exert their control over media planning and how technology is used on their behalf.
The contract is the defining basis for the relationship between an advertiser and its media partners. This is especially true of the contracts between an advertiser and its media agency of record, as this is where most spend is typically managed. But the same applies for all contracts an advertiser holds across the increasingly complex media ecosystem, including multiple adtech and martech vendors.
The contract needs to define the precise nature of the advertiser/agency relationship, particularly when many media agencies have now blurred the lines and act as both agent and principal. Where the agency acts as principal and the advertiser is happy to agree to this status, the advertiser needs to take additional steps to prevent potential conflicts of interest. What’s more, a recent study by our contract compliance business, FirmDecisions, found that many advertiser-agency contracts actually remain unsigned – as many as 30 percent of more than 300 contracts reviewed by FirmDecisions in 2015 – and this requires special attention.
"Advertisers should have clarity and full access to all data being created on their behalf. What’s more, they should take ownership of this data and exert their control over media planning and how technology is used on their behalf."
Many existing contracts predate the rise of digital advertising and, because the media landscape is in a constant state of change, contracts should be updated frequently. A single person or department – ideally the CFO or finance – needs to be the signatory across all media agreements and sub-agreements taken out on behalf of the advertiser. And all contracts should be reviewed and countersigned by the agency’s CFO, peer to peer. In the case of a large advertiser, this should be the CFO of the agency holding company.
FirmDecisions’ experience over the past 15 years suggests that, while many advertisers have the right to audit how their advertising dollars are spent on their behalf, in practice those rights may be less extensive than the advertisers believe them to be or advertisers are not fully enforcing those rights. This represents, in part, a failure of oversight by advertisers’ own corporate governance systems.
Insufficient or inadequate audit rights are potentially damaging to advertisers’ interests in two ways. First, they can prevent visibility into the effectiveness of their media investments. And second, they may stand in the way of advertisers answering the ever-louder demands for accountability from shareholders and regulators. Accordingly, it should be the advertiser and the advertiser alone who sets the scope of what may be audited. It should also be the advertiser’s sole decision as to which firm or type of business – including an advertiser’s own internal audit team – is appointed to undertake the audit. After all, it is the advertiser’s money that funds the entire media ecosystem. We would always recommend that an advertiser chooses a specialist with specific media expertise to conduct a contract compliance review, but the decision should rest entirely with the advertiser.
Code of conduct
In addition to committing to regularly reviewing and updating the contracts that define their relationships, advertisers and agencies should sign up to a code of conduct to guide their day-to-day behavior. The code of conduct should be upheld across all relationships and activities between both parties and be signed by them as an addendum to the contract. The agency of record needs to ensure that all the parties they manage across the ecosystem on behalf of the advertiser are also aware of and adhere to the code of conduct. This is why we believe that a code of conduct is required in addition to a regularly reviewed, fit-for-purpose contract. The code of conduct is designed to outline optimal and desired behaviors for all vendor teams in a tangible and practical way.
A brighter future
The advent of digital advertising has, so far, failed to deliver against its promises of increased transparency and accountability. This is not because transparency and accountability are impossible here, but because they have not been the guiding principles underpinning the development of the emerging media ecosystem. As this develops, the complexities are only going to increase, as data and technology driven advertising penetrates traditional media (e.g., programmatic moving into TV) and digital and mobile advertising spend rapidly increases.
We have now reached a potential turning point. The K2 study describes the shortcomings in current practice, and the joint ANA, Ebiquity, and FirmDecisions recommendations show the way forward. By addressing the areas of internal governance, the management and ownership of data, contract management, and audit rights – and by supporting these changes in a mutually binding code of conduct – advertisers and agencies have the opportunity to rebalance the industry. The time is now – in the U.S., in Europe, and right across the world. To prepare for the future, we need to set the foundations today to cope with an ever-more complex tomorrow.
In the months since the report was published, we have held a number of seminars and webinars with advertisers directly and in partnership with industry bodies including the World Federation of Advertisers and ISBA. The steps we believe advertisers should take for successful media management are detailed in a separate Response article by Laetitia Zinetti, Ebiquity’s Managing Principal, Media Management.
At a glance
 Economic Impact of Advertising in the United States, ANA, The Advertising Coalition and IHS Economics and Country Risk, March 2015 https://www.ana.net/content/show/id/37681
 eMarketer, Spring 2016
Michael Karg became Ebiquity’s Group CEO on January 1, 2016. He was previously CEO International for Razorfish, the digital business transformation agency of Publicis, and has held senior international leadership positions with both Razorfish and Digitas over the past 15 years. A native of Austria, he has been based in Boston, Paris, and London and was responsible for Razorfish’s and Digitas’ growth and strategic development across global markets. He advised clients globally on marketing and digital strategies, working closely with technology partners, and led the integration of acquired businesses. Michael holds a degree in Finance and Accounting and a doctorate in Management from the University in St. Gallen, Switzerland, and was a visiting Fellow at Harvard University from 1999 to 2000. He is a member of the Board and Chair of the Compensation Committee of Travelzoo.
Client insights: L’Oréal
Part conductor, part adjudicator: meet the modern Chief Media Officer
Following the publication of the Ebiquity and FirmDecisions report for the U.S. Association of National Advertisers (ANA) in July 2016, we’ve been talking to many of our advertiser clients about how they get the most from their media and marketing in the most transparent and accountable ways possible. In the first of a series of interviews with marketers in APAC, Ebiquity’s Chief Strategy Officer Nick Manning spoke to Lyndall Campher, Media Director at L’Oréal Australia & New Zealand.
NM: Can you describe your role and responsibilities at L’Oréal Australia & New Zealand?
LC: I have two primary functions. First I act as an in-house media consultant across all of our 25 brands, which include Maybelline, Garnier, Lancôme, YSL, Kérastase, Redken, and La Roche-Posay. Each brand has its own needs and requirements.
My second function is to help set the strategic direction for media that L’Oréal as a group needs to take. Brands – quite naturally – tend to think and operate in their silos, whereas my role requires me to take a bird’s eye view and recommend teams do this or that for the good of the company – for Group benefit.
I have lead responsibility for our relationship with our media agency, Carat. In this capacity, I also play an adjudicator role and provide guidance if and when my colleagues or the agency need help – on remuneration, or on tasks that are in or out of scope.
NM: Does your role provide a bridge between marketing and procurement, or replace some of their traditional responsibilities?
LC: Historically, procurement has had limited involvement with media. In the last couple of years, the media team has started to work more closely with procurement on an as-needed basis – to help us deal with agency contract, performance, or remuneration issues. I see myself as a conductor of the whole team, bringing in experts as and when they’re needed.
NM: What are L’Oréal Australia & New Zealand’s key priorities in media and how do these contribute to business success?
LC: On the whole, the Group, brands, and products don’t need any introduction, but the media and advertising needs of our different brands are not the same. While it’s true that as a branded goods company there are common needs across the brands, there are also some profound differences between them.
We have set up separate units within the agency to look after the different brands and to ensure that they all get attention from the agency. Our mass market brands require the most time, but we also need to ensure that our Salon Professional and Luxury brands get appropriate agency airtime.
NM: What outputs do you look for from online advertising and, specifically, programmatic?
LC: At L’Oréal Australia & New Zealand, we currently buy no digital media programmatically. We ran an experiment for six months and found that we were losing at least a third of our media spend on technology costs, overheads, and ‘other’ costs. As a result, we decided to focus on the two major players and built direct relationships with both Facebook and Google. Our ability to do precision-targeting with Facebook is exceptional, so right now we don’t feel the need to work with lots of smaller sites programmatically when we can get such good results ourselves. What’s more, as a branded goods company, we’re not looking for direct customer acquisition, and we also have our owned media channels for building communities and affinity.
NM: Our report for the ANA recommended that advertisers should appoint a Chief Media Officer – a relative rarity these days, particularly in the U.S. market. As someone with that role, how do you feel about the media transparency debate?
LC: You can never get completely on top of transparency, and it is a serious issue for the media industry. I sit in on all major presentations from the agency, and I always have my teams take me through their media plans. I’ve helped develop their skills to ensure they interrogate all the data as much as possible, to ensure that we receive the right counsel for L’Oréal. We need to be sure we’re getting and implementing the right strategies for us, not what’s right for the agencies or the agency groups. Having worked agency-side, I know what to look out for.
NM: So what challenges did you initially find when making the transition from agency-side to client-side?
LC: I was lucky. I’d run the L’Oréal Australia account for six years and understood the culture and corporate structure. I had a great relationship with all my key stakeholders, who became my colleagues. If I’d gone to a bank, say, it would have been very different. And it helps that L’Oréal is very entrepreneurial and feels and acts like an agency.
NM: And finally, what would you like to see media agencies start and stop doing?
LC: I think that agencies can provide many great benefits when they deliver genuinely objective counsel for their clients. Ensuring open and honest conversations happen at all stages of a project is key for us and what we look for from our agencies. In addition, building up the middle level of agencies is something I think is important for them to keep focused on.
Nick Manning is Ebiquity’s Chief Strategy Officer. Nick has spent 30 years in the media industry, principally having co-founded Manning Gottlieb Media (MGM) in 1990. MGM became one of the most highly respected and fastest-growing Media Specialist agencies before becoming part of Omnicom in 1997. His most recent position was CEO of OMD’s operations in the UK. Nick also co-founded OPera, the media negotiation arm for OMD and PHD, with billings of £1 billion. He joined Ebiquity in October 2007 as Chief Operating Officer with special responsibility for the Analytics division before becoming President, International, in overall charge of Ebiquity’s non-UK based operations. Nick is now Chief Strategy Officer, with responsibility for developing and implementing Ebiquity’s strategy across its three business segments.
Steps to successful media management
Ensuring the best possible control of media investments
The recent high profile debate about media transparency has encouraged advertisers to take a more active role in the stewardship of their media programs. However, while achieving media transparency is important, it is only one component in a broader approach to media stewardship which maximizes media performance.
Here, Ebiquity’s Managing Principal, Media Management, Laetitia Zinetti, outlines the steps advertisers should take to ensure the best possible control of their media investments; in combination they will provide a better return on that investment and lead to strong, sustainable client/agency partnerships based on mutual trust and respect.
Ensure impartial strategy and planning excellence
There has never been a better or harder time to achieve highly effective media strategy. There are virtually unlimited options in combinations of paid, owned, and earned media, where the whole can be greater than the sum of the parts with the right approach.
Research and data exist in abundance, and customer journeys can be tracked as never before to provide a basis for planning. Sophisticated optimization tools are starting to harness the vast amount of data continuously produced, and accurate cross-media attribution looms as a real possibility as the tracking technology improves.
However, success in media strategy and planning can only truly be achieved through an impartial pursuit of effective brand connections. It requires an objective approach to integrated channel choice, with independent research and data rigorously employed.
Advertisers should develop direct relationships with media agencies’ and media owners’ tech partners, sales houses, and adtech providers to ensure that they are familiar with the full range of media options available to them and the depth of research and data routinely used by media owners to measure both audience and advertising effect. They should also favor those media proprietors who are taking action to address the issue of ad blocking.
Advertisers should ensure their media strategy and planning produces the best possible cross-media consumer impact through the most accurate research and data, including the prior history of ROI by medium. They should ensure that all strategy and planning is conducted independently of media trading considerations and incentives to avoid conflicts of interest.
Get internal resources right
With multiple channel and content options, and often multiple agency partners, advertisers need to juggle many balls. Successful integration is hard to achieve, so having the right internal configuration to facilitate seamless multichannel brand communications is vital. Internal resources should be deployed in the most conducive way to reflect the need for consistent integration between paid, owned, and earned channels.
Advertisers should consider insourcing certain key functions where they are business critical, such as search. Advertisers should exercise ownership and control over data and technology, and this requires relevant in-house expertise.
For many advertisers, the various aspects of media governance are allocated between marketing and procurement. Given the complexity and breadth of needs in media, advertisers would benefit from appointing a Chief Media Officer (or equivalent) to work with other stakeholders to ensure the best possible media stewardship. This role provides consistency across multiple brands and business units and a concerted approach to media, with in-built efficiencies.
Advertisers should configure their organization and working processes to provide the best possible multichannel execution of their media investments, and incorporate specialist expertise in media to manage the complex needs of multiple brands and stakeholder groups.
Traditionally, most media functions were performed by the advertiser’s media agency. While this will often be the case in order to maintain integration, advertisers now have much more choice in specialist support services, such as specialist programmatic agencies.
Given the breadth of services and skills required to cover all of a client’s many needs, selecting and managing the right agency partners requires a forensic approach to the advertiser’s needs and a thorough search and selection process. Once the right set of partners has been assembled, a rigorous and continuous assessment process should be put in place to ensure a consistently high level of performance.
"The world of media never stands still. While there has been massive change, nothing can be taken for granted, so advertisers should ensure that they continuously test and learn. "
Central to this are compensation structures that reward superior performance based on clear KPIs, ideally linked directly to client performance. The amount that the advertiser pays its agency partners should be directly related to the agency’s scope of work and based on full transparency. This requires a robust approach to fee setting and a finely tuned rewards program that incentivizes the external parties for meeting the right business KPIs.
Advertisers should select and manage external partners through a thorough, custom-built process and with a transparent compensation structure that rewards and incentivizes the agency partners’ contribution to business success. Agency service and performance should be continuously assessed as part of the reward process.
Control the right data and technology
With data playing such a crucial role in today’s media landscape, it is vital that advertisers ensure ownership and control of – as well as access to – the data that fuels their marketing activity. This is especially the case for first party data.
Having the right data, correctly analyzed and reported, is essential. Advertisers need a data management strategy to provide the right information, accurately captured and analyzed, for optimization and investment decisions. They should take control of the data capture, warehousing, analytics, and reporting functions, working directly with the relevant external partners.
Advertisers should also be actively involved with the online advertising process, with oversight of each step of the trading cycle. This includes having full visibility of the trading mechanisms flowing through the Agency Trading Desk (if employed), Demand Side Platforms, Ad Exchanges, Ad Networks, and Supply Side Platforms, including data and financial transactions. Advertisers should have direct access to the optimization and business intelligence tools being deployed on their behalf.
In online advertising, advertisers should employ independent ad verification partners to measure and improve viewability and invalid traffic (e.g., ad fraud), with systematic reporting of the ‘scores’ produced by publisher, device, and ad unit. This data should be available to all parties, and targets should be set for improvement. Advertisers should set threshold criteria for viewability and invalid traffic based on effective criteria, as well as enforcing media trading policies based on those criteria.
Advertisers should adopt a data management strategy that affords them ownership, control, and visibility of the data they need to make the best investment decisions, and over the necessary technology. They should understand or control the technology needed to optimize their online advertising and meticulously analyze online performance.
Always be learning and developing
The world of media never stands still. While there has been massive change, nothing can be taken for granted, so advertisers should ensure that they continuously test and learn. This can take a number of forms, from having a testing process for media through to an education program for people at all levels of the organization.
Advertisers will find it hard to take and maintain control of their media programs unless they immerse themselves in the media world, on issues as diverse as digital implementation, the fine print of agency contracts, and which media technologies to use. So a program of knowledge gathering and sharing is essential within different disciplines and at all levels of the organization.
Advertisers should devote sufficient resources to ensure that they stay updated on all aspects of media so that they have a strong enough grasp of all aspects to exercise the necessary level of media stewardship.
Paid media is a very significant investment for many businesses, and it warrants a structured program which maximizes results. The program set out here is multifaceted, but it is not exhaustive. A thorough program for media stewardship can be a full-time job, but one which will unquestionably pay back in terms of the time, effort, and cost involved.
In Q3 2016, Ebiquity launched a Strategic Media Consultancy practice specifically to advise advertisers on the steps they need to take for more successful media management.
This covers data and ad tech, organization and operations, training and development, selection and management, contracts and rewards, measurement and evaluation, and planning and strategy. For more information click here.
Laetitia is Managing Principal, Media Management at Ebiquity, and has over 14 years’ media and marketing experience. She joined Ebiquity in 2010 as Managing Director of the company’s French operations, moving from multinational automobile manufacturer Nissan, where she was European Media Manager for more than four years. She then became Group Strategy Development Director at Ebiquity in 2014 where she was responsible for future-proofing products for the media practice.
Agency contracts in the spotlight
A focus on the legal issues in media contracts
Stephen Broderick, CEO of FirmDecisions, argues that advertisers should take action to ensure their media agency contracts promote their best interests.
In June 2016, the U.S. Association of National Advertisers (ANA) published the findings of a research study it had commissioned into the transparency of media buying behavior of media agencies in the U.S. marketplace. It was carried out by K2 Intelligence, a leading global, independent investigations consultancy.
The K2 Study found evidence of non-transparent, incentive-led media trading practices among media agencies operating in the U.S. market. These practices may be pervasive across the industry and around the world, including in the big media agency networks. The findings were detailed in Ebiquity Group CEO Michael Karg’s article in the previous issue of Response.
Further into the summer, the ANA published a companion report to the K2 Study, prepared with input from both Ebiquity and FirmDecisions. This report contains a series of recommendations and guidelines, and is titled Media Transparency: Prescriptions, Principles, and Processes for Advertisers.
These recommendations are designed to help advertisers make better decisions on how to structure their relationships with their media agency partners. They focus on how advertisers should implement these decisions to ensure that their contracts deliver genuine transparency, data, and audit/review rights at every step of the increasingly complex advertising ecosystem.
The fluid nature of the emerging advertising market – especially within digital – means that media agencies may be trading in new ways or in ways not yet covered by existing contracts.
To ensure that contracts are current and future-proof, they need to accommodate both established and potential new media agency trading practices. For now, and the foreseeable future, this will include a focus on ‘proprietary/inventory media’ and programmatic media buying. It will also include ensuring complete data and audit/review rights across the ever-more complex chain of adtech affiliates required to deliver digital media campaigns.
Indeed, perhaps the best way to test how good or otherwise a contract may be is to conduct a media compliance review and use the findings as the basis for contractual review and renegotiation. Over the years we have seen numerous examples, in the U.S. and the rest of the world, where an advertiser’s interpretation of its contractual audit/review rights has differed from the agency’s interpretation of those same provisions. This is why it’s so important to test the terms with a review.
"The fluid nature of the emerging advertising market – especially within digital – means that media agencies may be trading in new ways or in ways not yet covered by existing contracts."
Indeed, we advise advertisers to test the terms of their existing media agency contract before even considering whether the appropriate next step is to open negotiations with their agency on updating their existing contract or drafting a new one. Correct contract terms and compliance reviews are two sides of the same coin, for even the best contract in the world may not deliver compliance if it is not enforced.
It’s no longer enough to provide advertisers with ad hoc advice and so, to help advertisers navigate the complexities of media agency contracts in the ever-changing media industry landscape, Ebiquity and FirmDecisions have partnered with leading global law firm and industry specialist Reed Smith to provide advertisers with contractual legal advice.
As Douglas Wood, partner at Reed Smith, says: “Relationships between advertisers and their media agencies have become increasingly complex and opaque in recent years. For too long, these have been delegated to executives who may not be familiar with the industry. It’s time this changed. Advertisers need to elevate responsibility and accountability for their media contracts to the C-suite.”
By demystifying the lack of transparency prevalent in the U.S. media buying industry, the K2 Study for the ANA has highlighted the remedial action advertisers need to take if they are to make better decisions on how they choose to structure their relationships with their media agency partners.
In the increasingly complex marketing ecosystem – driven by the rapid rise of digital, and often featuring chains of numerous affiliate and specialist companies working with media buying agencies – this is not a one-time play. It requires a permanent change of attitude, behavior, and skillset among advertisers. Relatively modest investment in best practice contracts and enforcement can lead to significant cost savings in the near and medium-term future.
Stephen was the co-founder of FirmDecisions Europe and the US in 2000. He became CEO in June 2004 and subsequently Managing Partner when FirmDecisions and ASJP merged in July 2007. He went on to manage the sale of FirmDecisions to Ebiquity in 2012. Stephen continues to run the company as CEO and ensures alignment within the Ebiquity group.
Client insights: McDonald’s
Test and learn - the key to digital expansion for McDonald’s Australia
In our second interview with APAC media experts, David Brocklehurst, Managing Director for FirmDecisions APAC, talks to Chris Graham, Head of Media ANZ for McDonald’s.
DB: Tell me about how you split your time as Head of Media at McDonald’s.
CG: My role is all about making best use of our marketing funds to grow sales, and I do this in three ways.
First, I play the role of an internal media consultant, working with everyone in the marketing organization from the Assistant Brand Manager right up to the CMO. Together we address any questions they may have, on process, media recommendations, media negotiations, transparency; nothing is off-limits. But I’m not a controller, or someone who needs to be in charge of everything, and so I don’t have to be involved in every conversation – just where I’m needed and can add value.
Second, I’m deeply involved in agency performance management – media, to be sure, but also creative, social, and merchandizing agencies – looking to get the best performance possible from all of our agency partners. This includes formal performance evaluation done twice yearly, as well as ad hoc meetings for which marketing colleagues seek my support.
And third, financial management – setting and tracking budgets and recommending where savings can be reinvested to ensure that every dollar is well spent, or even returned to the business at year end.
DB: What’s the global/local split?
CG: Naturally we’re involved in local activation of global campaigns, like the Olympics and the FIFA World Cup. But there’s a good degree of autonomy and freedom within the framework, allowing us to make local decisions – for example, seeking out local expertise on social. Australia is a big market for McDonald’s, with 950 stores and more than 250 licensees, so we’re very much on global’s radar.
DB: Can you tell us a bit more about working with franchisees?
CG: As much as we’re a global brand, we’re also very local too. Our licensees are very much involved in the development of the marketing plan and media recommendations, and they all have strong and valued opinions. Some are very tech-savvy and digital first, and when we experiment with new media channels and choices – as we often do, because they have a good return for us – we’re challenged and get push back to prove their worth and impact. We definitely spend a lot of time working with our licensees – the more they understand what we are doing and why, the easier it is to help them grow their businesses.
DB: What’s your approach to measurement and evaluation?
CG: Measurement and evaluation are vital – the more objective we can be, and the less subjective we can be, the better. That’s why we’ve implemented the use of market mix modeling and econometrics into our marketing processes to assess the return on investment, and it’s paying dividends. It’s really hard to have proper conversations – about types of campaigns or media channels, day parts or flighting of a campaign – if you don’t have the numbers to demonstrate whether or not something is working. Marketing effectiveness analytics is now baked into everything we do, and our marketing colleagues and agency partners really value this approach.
DB: Does programmatic work for McDonald’s?
CG: Programmatic for McDonald’s is all about targeting audiences in a smarter way, interacting with them where they’re consuming media content, and doing this in an automated way. I’m happy with the present of programmatic and optimistic about the future. Keener targeting is all about removing and minimizing wastage and delivering better ROI by not targeting those who aren’t interested in our products or messages. At a macro level, we’ve now got a really good understanding of how digital works for us; at a more granular level, we know how to leverage different social channels and how best to use video and mobile. At the same time, we also acknowledge that these channels and platforms are rapidly evolving, so we cannot get set in our ways.
DB: Do you deal direct with the major platforms or via trading desks?
CG: Both, and for different reasons. The great thing about a brand like McDonald’s is that we’re seen by media owners as great partners to test and experiment with – they want to try out innovative solutions with us, because of our unique scale and reach. And because we’re a thriving brand, we’ve got the appetite to innovate. So that’s why we deal with the Googles and Facebooks of this world both directly and via our agency.
DB: Are transparency and trust big issues for McDonalds?
CG: With questions like this, I always start by asking myself what the goal of the relationship is. For me, working together with our agency partners really does demand an active partnership: working together, cooperatively, to do the best possible job for each other. And to achieve that, you need mutual respect and trust and transparency. Sure, that can be written into contracts, but it also needs to infuse the spirit as well as the letter of the relationship.
The foundations of a trusting relationship are being clear about the goals, knowing what’s in scope and what’s out of scope, and agreeing what we will and won’t pay for. A good, honest dialogue is where that begins.
David Brocklehurst is Managing Director of FirmDecisions APAC. A qualified Accountant and Chartered Secretary, David has had many years working in agencies (including O&M, BBDO, and Luscombe & Partners). He established and chaired the Advertising Federation of Australia’s Finance Forum where all agency Finance Execs would meet regularly to discuss issues pertinent to the ad industry. David established FirmDecisions in Melbourne, Australia, in 1997, to provide clients with the chance to ensure their agencies are complying with their contracts.
Women in innovation
Understanding the barriers and opportunities
Ebiquity’s Head of Reputation, Catherine Griffin, finds room for optimism in a recent analysis of what’s holding British women back from participating more fully in innovation.
Innovate UK is the UK government’s innovation agency, committed to helping people develop and commercialize innovative ideas, products, and technologies to help the economy grow. For some time, the agency had been concerned by the under-representation of women applying for innovation funding. It wanted to understand the reasons behind this phenomenon and then use this evidence base to drive strategy, campaigning, and communications.
Analysis of the agency’s own requests for funding showed that women were lead applicants on just 14 percent of applications. This is disproportionately low, even considering that women are under-represented in many occupations at the heart of innovation, a trend most marked in careers requiring training and qualifications in the so-called STEM subjects – science, technology, engineering, and mathematics. This context is illustrated in figure on the right.
What’s more, third party research indicated that women in the UK represent a powerful yet untapped pool of talent, and that there is a significant opportunity to boost the UK economy by involving more women in innovating in business. This is particularly relevant today and in the coming years, following the uncertainty caused by Britain’s decision to leave the European Union.
“At the moment the system is heavily weighted against women and we are predominantly pitching to men; there is a lack of diversity within the finance sector.”
FEMALE INNOVATOR, MICRO BUSINESS
Innovate UK approached Ebiquity’s Market & Stakeholder Research division to help the agency understand the barriers and challenges to women’s involvement in innovation. By understanding what holds women back and stands in their way, Innovate UK would be able to better support women in innovation.
We used both qualitative and quantitative techniques in the research. First, we interviewed 20 female innovators in-depth to uncover perceived challenges and barriers to accessing innovation funding and support. We then quantified the findings with a quantitative survey of more than 200 female innovators, by phone and online. The sample included a cross-section of UK female innovators from different industry sectors and types of organization. The study was the first of its kind to explore these issues.
Almost a third (31 percent) of female innovators said that being a woman has negatively impacted their career in innovation. Examples cited include being required to pitch to all-male panels, their ideas being dismissed because of their gender, and being seen as “not sure what I’m doing.” By contrast, 41 percent believed that their gender made no difference, while 14 percent felt being a woman had had a positive impact on their career.
Gaining access to and securing funding is the most challenging stage of the innovation process for female innovators, especially for those in small businesses and start-ups.
“Everyone should get their job based on their skill, not their gender, but it’s about how worn-down women get when they are fighting a battle all the time to have an equal voice.”
FEMALE INNOVATOR, MICRO BUSINESS
Convincing others, finding partners, and being taken seriously are challenges for female innovators. As Facebook’s Sheryl Sandberg argued in Lean In, men are used to stepping up, while women may not feel they have the right to be there. Barriers are summarized in Figure 3 - see over.
Innovation funding organizations play a crucial role but organizations are too often perceived to be male dominated – a “boys’ club” – while funding competitions are seen as opaque. Female innovators view the application process as laborious, bureaucratic, and daunting, and the chances of success are perceived to be small.
By understanding the reasons behind women’s relative under-involvement, Innovate UK had the evidence it needed to validate the launch of its new annual infocus Women In Innovation Awards program, distributing its first grants in 2016. The awards are supported by a new ambassador program, pairing established female innovators to the innovators of tomorrow.
“Lack of support in such a male-dominated field; voice is more difficult to be heard.”
FEMALE INNOVATOR, LARGE BUSINESS
This new evidence base has also given Innovate UK the confidence to take positive action, including:
- A commitment to simplifying the funding application process
- Sharing success stories and promoting female role models
- Offering focused support services and mentoring
- Improving diversity within its own organizational structure
- A drive to reach female innovators of today and active encouragement for more women to enter careers in innovation
Additionally, our research helped Innovate UK identify news hooks for its media outreach. The report has been used as a platform for communications on this issue, and has been successful in securing Innovate UK exposure on BBC Radio 4’s Woman’s Hour and coverage in key media outlets.
Dr Ruth McKernan, Chief Executive of Innovate UK, said: “Through this piece of research we have looked at the challenges specific to women in innovation. We have already taken some positive action to address some of the other findings in this report by Ebiquity, from our awards to our ambassador scheme. We are using this work to find women with great potential and exciting ideas.”
Harnessing research to shape strategy
Research for its own sake can only take an organization so far. With rigorous planning and application, research can help develop and drive organizational strategy and communications. Our work for Innovate UK demonstrates how this approach to research can help organizations achieve their objectives by delivering evidence-based and genuinely actionable insights – an over-promised and under-delivered commodity in research today.
To download a copy of the full research findings, find out more on the UK government’s website.
To what extent do you believe that gender determines how successful you are in business?
- Not at all
- A little
- All the time
Catherine Griffin oversees Ebiquity’s market and stakeholder research team and is responsible for managing a wide range of global communications and reputation research programmes for clients including Johnson & Johnson, GSK, and Roche. Her award-winning work includes a study for GSK on international patient advocacy (winner of the Platinum AMEC award). She has more than 20' years research experience and is a member of the Market Research Society.
Australian Federal poll
Negative messages win the campaign – but not the election
Ebiquity Australia/New Zealand’s CEO Richard Basil-Jones shares lessons learned from the advertising run before this year’s Australian Federal election.
Sometimes, the role and importance of advertising goes beyond driving brand awareness or stimulating increased product purchase. Its role in promoting important social welfare causes is well documented. So, too, is the part that advertising plays in swaying voters at elections. Two prime examples from 2016 have been the EU referendum in the UK and the Australian Federal election.
Australian election campaigns typically last five weeks. But Prime Minister Malcolm Turnbull’s announcement on May 8 – that a Federal Election would happen on July 2 – kicked off the longest campaign since the 1960s. We began monitoring all political advertising on mainstream media to document which ad campaigns were breaking – when, where, and delivering what messages. We were also particularly interested in assessing the impact of positive versus negative campaigning.
There are only two parties in Australia with a realistic opportunity of winning an election outright: the Liberal Party (also known as the Coalition Party, thanks to an ongoing grouping with the National Party) and the Labor Party. So it’s only the Liberals and Labor – typically – that spend big. By monitoring all key media – TV, radio, print, outdoor, and online – we provided daily updates based on all new ads appearing, as well as rolling metrics including...
- Trends in daily ad spend and campaign activity
- Share of voice between major parties
- The proportion of messaging that was positive or negative
From monitoring previous elections in 2010 and 2013, we knew that most ad spend – projected to be around 70 percent of the total – would occur in the last fortnight of the campaign, to reinforce or change voters’ political party preferences, allegiances, and decision-making as election day approached. The 2016 election was true to form, as illustrated below.
The incumbent Liberal Party was re-elected by the narrowest of margins, and media commentators have now published campaign reviews, many of them rich with the benefit of hindsight. Four of the main issues raised were:
1) Negative vs positive campaign messaging: what was more effective and did the two major parties get it right? The Liberal Party struggled to respond to the ‘negative’ campaign run by Labor.
2) Truth in advertising: should political party ads be subjected to the same rules as regular advertisers? Obvious as it sounds, this is not the case currently, just as the UK’s Advertising Standards Authority doesn’t have jurisdiction over claims made in UK political advertising.
3) The electronic blackout of TV and radio advertising: 48 hours before the election day, no ‘electronic’ advertising is permitted, and yet somehow online/digital advertising is allowed.
4) Speed of results: the country needs to move to some sort of electronic or digitized voting system so the public is not forced to wait a full week after the election to know which party has won.
The power of negative messaging
Opposition parties typically use more negative messaging than the incumbent – ‘they’ve done a bad job, and it’s time for us to put it right’ – and the weight of opposition ad spend is biased strongly toward negative campaigning. These ads typically attack, discredit, or criticize other political parties or politicians.
In the 2016 election, the opposition Labor Party spent 75 percent of its total budget on negative campaigns, kicking off from day one with the creative ‘Malcolm Turnbull – Seriously Out of Touch.’ This compares with the Liberal Party, which spent 45 percent of its budget on negative messaging, and this only came in with any real weight in the last two weeks of a two-month campaign; the first negative Liberal ad appeared halfway through the campaign. See Figure 2.
The Labor Party focused its messaging efforts in the last three weeks around a single key issue – the Liberal Party’s privatization of Medicare, Australia’s public health system. Three different campaign messages were run in the three weeks prior to polling, all on this one issue. Despite the Liberal Party continuing to protest that privatization wasn’t on the agenda, negative ‘Mediscare’ messages persisted and very nearly took the opposition into government.
The outcome of the Australian 2016 Federal election was the narrowest of victories for the Liberal Party. In some ways, the outcome was similar to the UK’s Brexit vote, with opinion polls suggesting a knife-edged outcome. Advertising was a critical component deployed across both campaigns to reach the voters at scale, and it’s interesting to draw the parallels on campaign tone from opposite sides of the earth. In both Australia and the UK, the movement that marginally lost the election – but arguably won the campaign, including in the eyes of the pollsters and bookmakers – spent more of its total budget on negative campaigning. And although questions have been raised about the truthfulness of both winning campaigns’ creative executions, a more positive worldview only just won the day.
Political commentators and strategists now maintain that the Liberal Party should have run more negative advertisements and that they should have responded to the mud being slung at them more quickly with their own, negative messaging to combat the Labor Party onslaught. It is generally agreed that the creative message and the electorate’s mood for change have a significant bearing on the impact of these kinds of messages; a negative ad won’t persuade voters to unseat the incumbent unless it’s the right message, delivered to the right people, at the right time.
The experience of the Australian Labor Party – as well as Britain’s Remain campaign – is like that of a challenger brand criticizing the market leader: “That diet soda is full of dangerous chemicals that will slowly rot your teeth and guts. Drink ours instead.” Negative campaigns often draw attention to themselves, make news, and generate social chatter. Both the Labor Party and Remain came within a whisker of applying the psychology of motivation to electoral success, and both campaigns underlined how important it is to balance the positive with the negative.
Which of the following statements best describes your opinion about political advertising ?
- Positive messages about an alternative way of running the country are the most effective
- Negative messages about how the current government is running the country are impactful
- There is no role for negative messaging in political advertising
- Positive and negative messaging both have role to play in political advertising
Richard is CEO of Ebiquity Australia/New Zealand. He is a business leader with more than 15 years of Managing Director experience and a strong background in Media Measurement and Information Management. He spent over 20 years with The Nielsen Company and, in his last role at Nielsen, he was responsible for the growth of the company’s media businesses in 12 countries across the Asia Pacific region. Earlier in his career he was a pioneer in the introduction of the electronic TV Ratings service as well as developing services in international markets. Richard joined Ebiquity in 2012. He graduated from the University of New South Wales with a Bachelor of Commerce (Marketing) degree in 1982.
Bunnings arrives on UK soil
Home improvement brand Bunnings’ arrival on the UK DIY scene
Lauren Fitzgerald, Strategist in Ebiquity’s Communications Insight team, examines the likely impact of Aussie home improvement brand Bunnings’ arrival on the UK DIY scene.
In February this year, Australian conglomerate Wesfarmers acquired Home Retail Group’s Homebase chain of DIY sheds for £340 million. All Homebase stores will be replaced by Australian home improvement brand Bunnings over the next three to five years. Past behavior from this disruptive brand on home turf suggests it’ll shake up the market.
Bunnings in Australia: a pillar of the community
Established in 1886, Bunnings is the leading retailer of home improvement and outdoor living products in Australia and New Zealand, with a revenue last year of A$9.5bn. With 330 stores and an aggressive expansion strategy, the brand controls 17 percent of the home improvement market in Australia. Indeed, Bunnings’ role goes beyond that of a simple DIY retailer – in 2015, the brand was ranked eighth in Ipsos’ Most Influential Brands report, based on a ranking of 100 Australian brands by consumers.
What best explains the profound impact Bunnings plays on Australians’ lives? As Gillian O’Sullivan, Executive Director at Ipsos Marketing & Health, says: “Bunnings has a strong philosophy that it’s part of the community and makes a lot of investment in grassroots – and that’s really important.” Its heavyweight bricks and mortar presence, coupled with an engagement with communities at the hyperlocal level, gives Bunnings a firm footing in everyday Australian culture.
Brand identity and communications strategy
Bunnings’ brand identity is built on three core areas: low price, broad product portfolio, and exceptional customer service, with the tagline ‘the lowest prices every day’ – a guarantee the brand holds with pride and confidence. Its communications strategy positions this low price offering at the heart of the brand’s messaging, with advertising leveraging value for money through a mainstream and attainable positioning.
Bunnings holds its extensive product offering as a compelling selling proposition, communicating a clear intention to be the go-to destination for all things DIY and home improvement. TV and Press creative showcases the sheer range of products available at Bunnings, while content on the brand’s YouTube channel features a video series called ‘What’s new in our aisles?,’ promoting the latest products to hit the shelves. And all at the lowest prices, of course.
This focus on price is actually disingenuous. Mystery shopper reports consistently reveal that Bunnings is, in fact, more expensive than competitors such as Mitre 10 on a number of items. Bunnings has made a point of boosting its perception of competitive price and, by both shouting loud about low prices and steadfastly honoring its price-match pledge, has built the perception that it is, indeed, the cheapest shed in town.
Targeting strategy: no-one is safe
It is clear right across Bunnings’ activity that the brand targets three distinct audiences – namely women, families, and DIY enthusiasts – adapting its communications tactics to achieve a broadened appeal.
The brand hosts Ladies DIY Nights in stores twice a year, creating an environment in which women can come together to learn new skills without being intimidated by the typical male DIY machismo. What’s more, its activity on Pinterest generates further appeal toward this target audience, with guest pinner Shaynna Blaze (an Australian TV personality) adding an aspirational appeal.
Bunnings also creates experiences that parents and children can enjoy together, with in-store playgrounds ensuring that the children are entertained while mum and dad shop for their DIY needs. The brand also hosts a Kids DIY YouTube series featuring videos that are educational and fun.
This all-inclusive approach integrates a number of strategies, but running through them all is the theme of education. Bunnings continually offers tips, advice, and ‘how to’ guidelines on completing DIY projects, particularly on its digital assets. That said, there are some less-well-developed aspects of Bunnings’ digital activity that could be exploited by UK competitors looking to fight back.
Digital: a weak link?
Bunnings is certainly active on key digital channels – its YouTube subscriber fanbase is bettered only by B&Q in the UK. That said, this dedication to digital is not seen across all channels. Bunnings’ Twitter channel is more totemic than functional. It was only launched in 2012 with just a single tweet sent since. Other UK sheds are streets ahead here.
Bunnings will also need to make more of its website when it makes its presence felt in the UK. Although consumers can make ‘wishlists’ of items on its Australian site, there is no e-commerce functionality – a critical differentiator. Bunnings will need to expand and invest in its digital strategy if it wants to gain traction with UK consumers.
Bunnings in the UK: a bold move from an aggressive brand
Bunnings’ move to the UK is a gamble, and one for which the odds have lengthened since Brexit. The seismic shift in UK politics has some analysts already declaring Bunnings’ strategy a failure, with Bank of America Merrill Lynch’s David Errington stating: “Our economics team anticipates the UK could enter recession following Brexit. We believe the initial investment Wesfarmers made ($700 million) has a zero value.”
However, Bunnings’ CEO John Gillam remains confident of the company’s strategy: “We knew of the Brexit risk when we planned the investment and moved money into pounds to fund the acquisition and investment. So we have a natural hedge against currency movements.” His attitude captures the essence of the company itself: bullish, and not afraid to take risks.
The move to the UK is certainly risky, with the retailer planning to invest £500m over the next five years. But it also offers Bunnings not only a key foothold in the UK, but also – assuming the UK government is successful in securing vital, post-Brexit trade deals – a starting point for mainland European expansion. Bunnings has shown historically that it is not afraid to spend money, either on growing its store network or on advertising.
The brand will be faced with more competition in the UK than it is used to back home, notably from B&Q, Wickes, and Wilko, meaning that its price guarantee and low-cost offerings are likely to continue to underpin every aspect of the brand’s offering.
Do you think it's possible to enter and dominate a new market without a fully integrated digital legacy and strategy in place?
Lauren Fitzgerald is an experienced Strategist working in the Communications Insight team at Ebiquity. She works with a number of clients across sectors including FMCG, Beauty, and Automotive, providing insight into competitor marketing activity and strategic direction.
Australia quantifies media ROI
A pioneering study of media
Nick Pugh, Ebiquity’s Head of Marketing Effectiveness, looks forward to a pioneering study of media ROI in Australia.
When the world’s largest advertiser, P&G, announced this summer that it was looking to reduce investment in targeted Facebook advertising while at the same time increasing the proportion of its budget spent on TV, the global advertising community took notice. Unable to generate a reliable or predictable sales boost by targeting specific consumer groups on Facebook, P&G’s Chief Brand Officer Marc Pritchard acknowledged that the company had “gone too narrow” It needed to balance its media plans for its brands with more reliable, proven channels including linear TV.
To quantify media ROI for Australian advertisers, ThinkTV, the research and marketing organization backed by Australia’s free-to-air and subscription television broadcasters, has commissioned Ebiquity to run a pioneering econometric study. With more pressure than ever before on marketing budgets and the C-suite looking to marketers to justify spend, the research aims to understand the contribution that five different media channels make to sales and how they compare in terms of ROI. Media under the spotlight in the Payback Australia study include TV, radio, press, online, and outdoor. Industry body ThinkTV is investing A$1m in this first-of-its-kind study.
The analysis will integrate complete campaign activity and sales data from 20 leading Australian advertisers for each of the last three years. Companies contributing data to the study will include Unilever, Kimberly-Clark, Goodman Fielder, Sanitarium, and Lindt.
ThinkTV is modeled on Thinkbox, the marketing body for commercial TV in the UK which aims to help advertisers get the most out of the medium. Ebiquity has a long relationship with Thinkbox and we have conducted several waves of research for the organization on the value and effectiveness of TV over the past five years – follow these links for the 2011 and 2014 results. Our studies for Thinkbox have routinely shown that TV delivers the best ROI of all media. The most recent Thinkbox study found that TV advertising was twice as effective at creating sales uplift than the next best performing medium, and we are just starting the latest round of research for Thinkbox.
The Payback Australia study is expected to publish its results in early 2017, and we’ll cover the findings – giving Australia’s first set of robust industry benchmarks across different categories – in a future issue of Response. The intention is to provide forward-facing analysis to enable Australian advertisers to use the research findings in marketing and media planning.
Register for the November ReTHINK TV Marketing forum with Payback Australia research findings here.
Nick Pugh is Head of Marketing Effectiveness for Ebiquity UK. Nick leads Ebiquity’s UK Effectiveness division, which is responsible for delivering marketing and promotional analytic solutions to clients – leading to significantly enhanced return on their investments. He has been part of the group since 2003. Prior to this, he successfully completed a PhD in Optimization Methods.