The current drive to performance marketing and sales promotions is because Australian marketers find it easier to justify the advertising spend.
A study by Kantar, Destination: Marketing Effectiveness, found almost half (47%) found it easier to communicate the returns because it drives more short-term returns than brand marketing.
Four in ten (42%) “feel pressure from the C-Suite to achieve targets”.
The report, based on an online survey of 210 brand marketers, reveals that leading businesses in Australia are deeply consumer centric across functions, clear on their positioning and portfolio and defend their differentiation and salience.
They have measurement systems in place to provide proof points to build trust with senior leadership and incorporate brand in measurement to represent what marketing contributes to sales. And they optimise execution, they don’t test it.
“But the biggest difference is that they prioritise marketing in any economic environment as an investment not a cost,” said Mark Kennedy, managing partner for consulting at Kantar in Australia.
“This prompts the need for marketing functions to ensure that they are speaking the same language as their financial decision-makers.
“Marketing needs more credibility to be seen as a growth engine. This requires honest conversations about what is and isn’t working (tactics, measurement) and transparency to allow other departments (finance) to verify effectiveness.”
“There is indisputable evidence that unbalanced brands struggle in the long term. Global Kantar studies show that if brands consistently favour performance marketing, baseline sales will erode – and this is leading to a decline in brand equity in Australia.”
Kantar global data shows that brands grow by being “meaningfully different” to more people with strong brand equity driving four times more value share.
However, the number of Australian brands considered to be highly “meaningfully different” has dropped -51% in the last decade.
“Marketing is at an inflection point in an era of unprecedented change and must evolve to meet the needs of today and tomorrow by reframing its critical role in an organisation,” said Kennedy.
“Marketing must become much more deliberate about its commercial value and how this is interlinked and communicated throughout the business.
“Marketing must have proper conversations with the CFO, and to do this, the language of marketing needs to change. Reframing its commercial focus will go a long way to ensure that Marketing can reclaim its rightful place at the board table and partner with the C-Suite to drive overall performance – in both the short- and long-term.”
The latest Kantar report also finds organisations with strong trust in marketing perform better.
However, a clear capability gap in measuring and proving effectiveness, especially as the effects of the economic squeeze continues to impact all organisations, is having significant impact on confidence in the marketing function.
This is despite just one-third of Australian organisations cutting marketing budgets even in a time where 57% say that their business has been affected by the current economic conditions.
The reality is that capability is more under the spotlight than budgets, which is affecting resourcing and, in turn, effectiveness measurement.
Jonathan Sinton, chief commercial officer for Kantar in Australia, that while some marketing effectiveness opportunities are enduring, such as establishing the commercial credibility of marketing within an organisation, others are newly emerging, such as the impact of artificial intelligence on content creation, media buying and measurement.
“All of this combines into a paradox where there is a heightened focus on effectiveness, alongside diminishing confidence in how to achieve it,” Sinton said.
“Times remain tough – from cash flow to confidence – and what hasn’t subsided since the start of the pandemic is the economic conditions in which we continue to operate.
“Some of the key challenges that continue to impact marketers are the need for instant results resulting in a continual move to short-termism, tightening marketing budgets that mean being brave and experimental is becoming riskier, and a subsequent lack of investment in brand building resulting in a sea of sameness.
“We may be at significant crossroads, but the opportunity is ripe to build a strong foundation – key to both short- and long-term sustainable growth.”
Kennedy said Australian organisations are less impacted by the economy and are seeing marketing budgets increase despite resourcing being compromised.
“They are also more holistic in their approach and the C-Suite do see marketing as a strategic business partner,” said Kennedy said
“Overwhelmingly, they are in it for the long-term. There is a lot to learn from those who have their Marketing Effectiveness roadmap aligned with their entire organisation – those with a holistic focus on organisational performance are set up for success.”
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