Spring 2005: IRM Media just published their annual report stating how much Scandinavian advertisers spend annually on media exposure. It was a mind-blowing 10 billion Euros. The dotcom party was over. A lot of marketing departments were paralysed by cost reduction projects. Everyone, except CMOs, was talking about ROI and ROMI. They were running at max speed against a huge wall that was soon about to materialise.
I decided to have a cup of coffee with every CMO I had worked with over the past 15 years. Why hadn’t they been focusing on the return on their budget? Why do we perform so many reviews without including finance in the equation? I decided to approach them with one simple question: Let’s pretend that I am your boss (CEO), and we are now discussing next year’s marketing budget. I am prepared to give you the same amount that you’ve had this year. How can you give me a little higher return on that money next year? After 20 cups of coffee, I received only one valid answer. Only one out of twenty CMOs could explain how they measured and improved their performance and consequently their financial return from one year to another. I was stunned by the reasons why they couldn’t provide a good answer. I finally understood why many marketing departments are viewed as internal cost centres rather than revenue centres.
I was not happy with my career. As a strategy consultant and partner in my own company serving 40% of the top advertisers in Scandinavia, I ought to be pretty happy. But someone asked me: What do you want to achieve in your working lifetime? The answer was simple. I want to solve a substantial problem or challenge in marketing management. Building a consulting company wasn’t doing so.
Now I had the chance to solve a real, substantial problem in marketing. They were all missing a systematic approach to learning. I continued my “coffee talks” with another 20 CMOs in Stockholm and Copenhagen, trying to throw forth ideas on what kind of solution that could solve this issue. There were basically three “obstacles” preventing them to learn systematically:
Yin Yang – learning by comparison
Over the past 2,000 years, Asian philosophers have stated how seemingly opposite forces may be complementary or interconnected in the natural world. Yin (black) and Yang (white) are related to each other and symbolise that it is valuable to benchmark Yin with Yang. It is easier to understand how important it is to stay healthy if you have seen or personally experienced the opposite -- sickness. When we see examples of success and failure on a specific topic, we create a measurement unit that we use for improvement. It is simply one of the main pillars of how we learn.
I noticed that many marketing departments couldn’t benchmark results on campaigns with best or worst practices. Can you know whether a campaign is successful if you haven’t experienced a failure? I tested this notion with a dozen CMOs, and they all agreed. But why aren’t you doing this today? – We don’t have a database that can give us benchmarks, they said. Some agencies say that they do, but we have no way of knowing whether the benchmarks are relevant to our campaigns. Some argued that this is not possible, because industries and categories vary.
Is that true? Do we really measure campaign performance differently from industry to industry? Are there many different ways to perform brand or campaign post-test surveys? My hypothesis was that the questions and methodology are pretty much similar across industries and categories, with minor differences in KPIs. Two years later, we proved that we were right. This enabled us to create a database with relevant benchmarks in every industry.
360 – learning by seeing the whole picture
The great thing about marketing is that it includes both the understanding of consumer minds (perception) and consumer behaviour. You have to know how to penetrate the mind with a convincing argument that generates a specific behaviour. This also defines the complexity of marketing. It is really difficult to get a view of both perception and behaviour – and even more difficult to understand the correlation between them.
We know from Millward Brown’s Brand Z study that there is a clear correlation between brand preference and behaviour (e.g. purchase). A marketing professional needs to view and understand how perception impacts behaviour.
If you want to understand the dynamics of consumer behaviour, you need to understand the context before, during and after the campaign. This calls for gathering a lot of data that is located within different sources, and it all requires a manual collection method, eg. Excel or a data file. In other words, most marketing professionals back in 2005 didn’t have the time to get the whole picture.
What if we created a database with live data collection to all major media platforms? Could we then get rid of the time-consuming issue of collecting data manually?
Presentations – the worst learning tool ever created
When CMOs walked me through a few campaign reports, brand reports and campaign surveys, I was shown an endless array of PowerPoint slides. A typical brand report that should explain the perception of the brand, included somewhere between 40 and 200 slides. A campaign report from 20 to 50 slides with charts. Their learning tool – PowerPoint presentations – lacked reference to the history and rarely discussed future scenarios. I gradually began to understand why marketing effects are questioned by CFOs. The task was complex. Their learning system was not generating accumulated learning. Even worse, they could not improve from an ad hoc learning system.
Simplicity can, however, easily kill complexity. Dashboards have that great ability to give you an overview and the option to deep dive where we need to learn from a focused area. It is simply a great way to learn and find significant learning points faster.
6 advertisers joined forces
I invited six of the CMOs to a meeting in June 2005. I presented these 3 obstacles that prevent them all from improving their marketing budget performance. Along with it was a suggested solution:
- Let’s build a database that digitally collects the data you need to review performance. It has to include all research, all traffic, context, and sales.
- We will build it in the cloud, because this will enable you to invite all team members including agencies to review performance.
- On top, we create a flexible and self-served dashboard where you can view and analyse performance in a simple 360 view with the possibility of benchmarking results.
Finally I presented a budget of EUR 100K per participant and a time frame of two years to build the tool. They all accepted the deal, and we started developing Penetrace in August 2005. Two years later, on the 27th of September 2007, The Norwegian Association for Advertisers (ANFO) launched Penetrace at their first performance seminar for advertisers.
Ten years later, more than 10,000 campaigns have been reviewed in Penetrace by more than 5,000 users in Asia, Europe, and the Americas. It is a widely used learning tool for big and small advertisers across all industries. We are now adding machine learning tools for predictive modelling and a better understanding of cause and effect.
I think it’s fair to say that the most exciting time in marketing is right now! As complexity is growing, we kill it systematically with yin yang, simplicity, and a 360 view. Ultimately showing the CEO that marketing provides important business results.