Decoding visions of 2020

Shapeshifting defines the decade
The quiet but persistent chant of “the model is broken” leads me to expect ongoing turmoil as ad agencies and PR companies continue morphing. PR firms are turning into ad agencies by expanding their creative services, while agencies are recasting themselves as consultancies. Accenture buying Droga 5 – one of the hottest agencies on the planet – provided an unlikely spot of hope: it’s an acknowledgement that data alone is not the answer, as creative is the lifeblood required to give it shape, relevance and meaning. And as AI creep continues, we maintain uneasy co-existence. We love it but we hate it. The flurry of AI “creative directors” has been laughable up to this point; in fact, Burger King mocked it openly. But still the quest continues to make creative more science than art.

Fewer cage matches
I’d like to see more clients migrate back to a one-agency commitment model as they remember the remarkable power of a business partner who speaks their brand shorthand. I think smart clients will figure out that placing multiple agencies in cage match on a project-by-project basis is the direct path to inferior creative, crushed morale and diminished motivation.

The fallacy of privacy
Pressure is mounting for greater transparency and personal control over how advertisers use data – witness the spate of how-to articles helping people limit outside access to intel provided by their smartphone. The ascendency of sound-activated search comes with its own Achilles heel. The New York Times offered its own take on Amazon Echo: “The 2010s proved it’s easy to convince people to bug their own homes if you also give them the ability to listen to Maroon 5 on demand.”

This may be the decade we stop clinging to any nostalgic notion of privacy, as security cameras and our own phones surveil every moment of our lives. The horse has left the barn.

We are in era of mistrust
Here is an unnerving stat: 89% don’t trust advertisers. We score lower than politicians. Ouch. As well, the trust Canadians have in major institutions, organizations and leaders has been badly eroded.

Truth is under siege. We have work to do as an industry and as a community. This is the time to clean up our act, and leverage the power of creativity to help right the ship.

A category grows into its own
It has been fascinating to see the cannabis category invent itself. It is the quintessential case of building the airplane while in mid-air. As the world looks on, Canada is scrambling to figure out the bust-and-boom world of weed. It is as highly regulated as it is volatile: look no further than share prices of key cannabis brands or producers beginning to sell off some of their assets. Beyond the focus shift to edibles, safe storage and concerns about vaping, we will see the expansive allusions to CBD being a cure-all for everything from dandruff to kidney disease coming under far greater scrutiny.

“Purpose-washing”
Millennials seek brands that align with their personal values, and they are not alone. As more companies grasp the importance of purpose versus just profit, we’ll have a burgeoning of clients with conscience. The caveat is the trap of the empty gesture. People are deeply wary of purpose-washing, so a brand’s commitment to purpose must be long-term, legit, internal and external or it will feel the backlash, fast and furious. Brands that get it right include Tom’s Shoes, Patagonia, Warby Parker and Italy’s Leroy Merlin.

Sustainability is hip
The 60s are back, and it’s a good thing. Millennials are today’s hippies. Namaste to that. They are our climate champions, preachers of sustainability and acolytes of reuse and recycle, and causes and brands that flank those beliefs will flourish. Our millennials are the antidote to all things Gordon Gecko. They give me hope. Greta Thunberg is the gamechanger, watch us vector towards meaningful action with regards to climate change.

Digital detox
Will this be the year we end the bashing of social and trashing of Twitter? The bigger issue is the people, not the platform. We need an etiquette update and it goes like this; when you are with people, be present. Listen, and engage. According to studies by psychologist Dr. Mary Donahue, we swipe our phones an average of 2,562 times a day. Will we see a shift to mindful untethering (thank you Gwyneth Paltow) and take part in a little digital detox now and then?

Oh Canada
A tip of the hat to our own wonderful and humble country. Beyond our national treasure (of course I speak of Ryan Reynolds), we have become a mighty force creatively. Almost 100 countries submitted work into Cannes Lions in 2019, and Canada quietly claimed 8th place for most awards won. We have global traction. You will continue to see Canadian creative flourish, and be recognized on podiums worldwide.

To CMO or not to CMO?

What do the global CMOs at Johnson & Johnson, McDonald’s and Uber all have in common? In recent months, their positions have all been eliminated.

In some cases, as with Johnson & Johnson, the lead marketer’s responsibilities have been redistributed among other members of the c-suite. At McDonald’s, the departure of CMO Silvia Lagnado in July sparked the creation of two new roles – SVP of global marketing and SVP of marketing technology – at the fast food chain. In other instances, new roles like chief growth officer (CGO) or chief customer officer (CCO) have sprung up in their place.

Forrester, which predicted the rise of more chief growth officers last year, expects that 2020 will see more of the same in its latest annual CMO predictions.

“The real-time, data-intense reality of the digital age has turned the CMO from a brand-building or even direct marketing boss into a generator of customer outcomes,” notes the firm’s report. “But the reality is that most CMOs haven’t effectively navigated this transition. 2020 marks the beginning of a final desperate fight for survival.”

In spite of the rhetoric, Forrester notes that this doesn’t signal bad news for CMOs. In fact, the firm predicts it could signal that marketing as a discipline has found renewed importance throughout the entire organization. “Counterintuitively,” the authors write, “eliminating the CMO position sets the brand free from the confines of marketing, reuniting it with the business.”

The CMO title – as understood as being limited to marketing – is flawed, says Keith Johnston, VP and research director at Forrester. “More proxy titles are a real possibility until there’s continuity in the decisions and budgets that deliver on the customer’s total experience, and the value delivered.”

All major brands are taking a hard look at the role, he says, whether it means moving the CMO up, out the door or into “more rational” roles like CGO or CCO, positions that are “bigger than marketing and innately clear.”

“And some may eliminate it for a time to recalibrate the job, rid themselves of some history, then higher with a modern set of standards and expectations that will guide the hire and shift a new mindset in the C-suite,” Johnston says.

Karen Howe, founder of creative consultancy The Township, wonders whether the trend isn’t merely about semantics. “We love to rebrand roles and titles often without a significant change in responsibility,” she said in an email to strategy. “I have long felt that the title of CMO has not commanded the respect it deserves within many organizations.”

Similarly, David Pullara, a marketing expert and business consultant whose own role as CMO of the Hill Street Beverage Company was eliminated in July (with those duties being handed to the chief commercial officer as a result of changing business imperatives), believes the impact CMOs can have is diminished when their scope is limited to marketing communications.

“Do you know what a great marketer calls a ‘growth marketer’? A marketer,” Pullara says. “I don’t know any great marketers who aren’t constantly focused on driving growth.”

Pullara believes the CMOs who will be “fighting for survival” are those who think of marketing as “creating Cannes-worthy advertising and maximizing the number of Instagram followers” and those “working for companies who aren’t able or willing to give the CMO the level of scope and responsibility necessary to effectively drive growth.”

Over the next year and beyond, Forrester believes the marketers that will succeed are those who are accountable for a wide array of activities, including brand, communications, sales, customer experience and tech, enabling them to influence the entire customer experience.

“For those companies who never fully understood or accepted the role of marketing within their organizations, eliminating the CMO and replacing it with a chief growth officer is actually a positive development,” Pullara says, “because it effectively elevates the function of the CMO to where it should have been all along, even while eliminating the CMO title itself.”

In its predictions, Forrester points to KFC CMO Andrea Zahumensky, whose remit includes innovation, marketing, operations, media and sales, as an example of the “future-proofed” CMO. Though the research firm expects only 10% of execs with CMO titles to raise to this level, it anticipates 2020 will “clarify the CMO role – and one designted leader will be responsible for all that surrounds the customer.”

How to do cost-cutting right: lessons from P&G

For several years Procter & Gamble has been ridding itself of advertising waste by cutting costs and becoming more efficient. That endeavour, as the industry found out this month when P&G released its 2019 annual report, appears to be working, with its sales performance continuing to hold strong.

The Coles Notes on P&G’s cost cutting since 2015

In 2017, the CPG giant and world’s second-largest advertiser shed $200 million from its digital ad spend over concerns that its ads weren’t effectively reaching their intended audience. The announcement followed a previous $100 million reduction that proved to have little impact on the company’s bottom line.

Continuing down that path, last year P&G announced plans to slash an additional $400 million from its advertising budget by revisiting its agency models and reducing the number of its agency partners by 50%. Cost-cutting measures undertaken in 2015 had already reduced the number of partners it works with from 6,000 to 2,500, which reportedly helped it save $750 million in agency and production costs.

The company has looked for efficiencies in other areas of the business as well. In November 2018, it announced a global restructuring that reduced its ten product categories into six business units, with the goal of streamlining operations, driving growth and giving individual brands more “executional freedom.” At the time, P&G chairman, president and CEO David Taylor described the move as “the most significant organization change [P&G has] made in the last 20 years.”

A review of the company’s performance in 2019

Released this month, P&G’s 2019 annual report showed that, during fiscal 2019, organic sales grew 5% – the best organic sales performance P&G has reported in eight years. Moreover, the uptick was above its “going-in estimate and represents a significant improvement, with sales by quarter improving sequentially from 4% to 4% to 5% to 7%,” according to the company’s annual report. (In comparison, competitor Unilever saw 3.1% growth last year, when excluding its spreads business, while Kimberley-Clark and Colgate-Palmolive posted organic gains of more than 1% and 0.5%, respectively.)

The report suggests further reductions are on the horizon, as the company looks at “eliminating substantial waste in the media supply chain.” Over the last five years, it notes having “delivered $1 billion in savings in agency fees and ad production costs – and we see more savings potential in these areas.”

In fiscal year 2019, total global advertising costs (across television, print, radio, internet and in-store advertising) amounted to $6.8 billion, down from $7.1 billion in 2018 and 2017.

Think smart, not lean

While P&G can report that it’s business as usual following a series of sustained cuts, not all companies have been as successful: Kraft Heinz is a recent (and famous) example of the adverse effects that cost-cutting can have on a company’s bottom line.

But that could be the result of motive: while P&G looked to create efficiencies and streamline operations through cost-cutting measures, Kraft Heinz looked to lower costs (at all cost, even to its brands) through a zero-based budget approach in which every expense is justified at the start of each year.

Instead of reducing expenses to make way for profits over growth, P&G has worked to remove advertising waste by focusing on reach, rather than frequency online, according to chief brand officer Marc Pritchard when speaking with Marketing Week at the 2019 Cannes Lions Festival of Creativity.

“The reason I don’t want to talk about spending anymore is because that’s not what’s important. What’s important is how many people we’re reaching,” he said. “We’re finding that we’re reaching more people and we’re trying to reduce the amount of times we reach the same person over and over again. Excess frequency is the biggest waste and in every aspect of our media we’re finding waste to allow us to be able to invest back in creating reach.”

It was previously reported that Kraft-Heinz’ radical reductions came at the cost of building its brands through marketing campaigns, and is likely one of the reasons it issued a US$15 billion asset write-down for its Kraft and Oscar Mayer brands.

“In my experience, when you stop investing in a brand it erodes,” says Karen Howe, founder of creative consultancy The Township.

Howe notes how companies are grappling with the rise of brand disloyalty, also known as “newism,” as a result of consumers growing “culturally restless” in light of unprecedented choice in all aspects of their lives. It’s a conundrum facing CPG companies, in particular, which must compete in categories where price can often be the biggest purchase driver.

Tony Chapman, consultant and CEO of Tony Chapman Reactions, says the new reality means mass brands must appeal to consumers who are buying “more and less,” meaning “more personalized, more tailored, more for me and [with] less effort and inconvenience.”

Recent Nielsen research suggests “consumer disloyalty is sweeping the globe,” especially in markets outside of North America, where advertising spend is lowest. In North America, 36% of respondents said they “love to try new things,” compared to the global average of 42%. At 47% and 45%, respectively, disloyalty was highest in the regions of Asia-Pacific and Africa and the Middle East.

Elucidating those findings in an online post, Matthew O’Grady, global managing director at Nielsen Media, notes that this is “no coincidence” as consumers “lack that constant reminder in markets where advertising spend is low.” This leads them to consider more options and, ultimately, try other brands.

As for P&G’s investment in its brands, Howe says she has seen the company make a “fervid commitment to becoming a portfolio of purpose-led brands over the last three years… Perhaps what has helped them to stave off the softening is the social commitment in concert with a hard lean into purpose.”

Similarly, Chapman acknowledges the challenge facing any conglomerate that is hoping to reduce costs for the long term. “Your brands must stand for more than profit, they must have a greater purpose that resonates with your consumer, but at the same time doesn’t make you more expensive.”

This article originally appeared on Strategy.
Author: Justin Dallaire

Retaining culture

It’s no easy feat maintaining an agency’s culture after being acquired by a foreign multinational, but it can be a much less difficult task when that culture is a selling point.

Such was the case when Japan’s Dentsu purchased Toronto’s Grip Limited and its collaborative structure – which had resulted in long-standing relationships with several blue-chip clients, like Yum Brands, RBC and Honda – back in 2016. Since its launch, the agency has been structured to have multiple creative directors, each with their own dedicated teams and clients. Senior creative leadership is still the main point of contact for the client, but it helps staff at all levels get more face time with their boss and have their ideas heard.

Randy Stein, who has been one of the creative partners at Grip since it opened in 2002, says there are always ways to improve culture – pointing specifically to diversity as something the entire industry could improve, and which Grip has internal groups working on – but having that structural guide post helped it maintain its identity as it grew and was later acquired.

“We have our own defined groups, but there’s no pyramid with one person at the top,” Stein says. “I’m in their office every day, they’re in mine, and we’re working on things together. We’ve been collaborative from the start.”

As much as “collaboration” has been a buzzword thrown around by holding companies looking to cross-pollinate ideas between different shops and markets, being more collaborative within an agency’s walls is becoming an increased priority within Canadian companies, for talent satisfaction reasons as much as creative ones. For example, as much as Forsman & Bodenfors’ democratized and “flat” creative structure is promoted as a way to get to the best creative and strategic thinking, Matt Hassell, the agency’s CCO in Canada, says regularly having younger staff contribute to the work of 30-year creative veterans – and vice versa – goes a long way to helping people feel like their input is valued.

“It’s human nature to want to be heard and recognized,” says Karen Howe, the founder of creative consultancy The Township in Toronto, who has also done agency search consulting in recent years. “The happiest places I see are where a voice is being heard beyond the executive team, and that team isn’t in an ivory tower that disconnects them from the rest of the agency.”

Taking creatives to school

One of the things Stein says Grip’s management is most proud of is the fact that many staff have left and come back to the agency, something that is only going to happen if they feel it is a place where they can develop from a professional perspective.

And one of the most effective ways agencies can create a workplace where staff will enjoy working, Howe says, is to acknowledge that it is, in fact, a workplace and not a clubhouse full of ping pong tables and other superficial “perks.” Staff in any department needs to feel fulfilled and supported on a professional level, but Howe points out that many creative departments don’t prioritize training and professional development opportunities, at least not to the degree that they are for staff in client service, strategy and digital departments.

For creatives, development could include learning new design skills, improving their presentation abilities or going to places like Cannes Lions to be exposed to world-class work. But it should also include leadership and management skills, something that typically isn’t part of the education creatives receive, unlike colleagues in other departments who went to business school before moving up the ladder and into C-suite positions. Besides making creatives better at the job when they eventually reach a leadership position, it shows them that their company is willing to invest in their long-term success.

“We aren’t clear enough about how to get creatives to the next step in their career and the skills they need to get there,” Howe says. “We throw a lot of titles around to keep people happy, but showing them how to really earn that title and giving them the opportunity to develop those skills can feel really meaningful.”

Aside from training, Howe suggests a Montessori-like method, where junior, intermediate and senior staff all have a chance to mentor the people at the level below them and learn to become leaders, while still being mentored by those above them. That teaches them a valuable lesson for when they become a CD, when their role is not about individual success, but doing what they can to help their team achieve excellence.

This article originally appeared on Strategy.

Tips on building a successful in-house agency

Dreams of in-housing continue to dance through the heads of C-suite execs despite trouble attracting and retaining top creatives.

A recent study by the Association of National Advertisers (ANA) in the U.S. noted a whopping 78% of its members had an in-house agency as of 2018, up from 42% a decade earlier. And the amount of work being done internally has also risen, with 90% of respondents saying the workload of their in-house agency has increased in the past year (65% say it has grown “a lot”).

Canadian companies have not been immune to this trend. In-housing has long been a priority for L’Oreal Canada, while Labatt recently brought its in-house social agency north of the border.

According to the ANA report, which was based on interviews and surveys of 111 of its members, digital media was the most likely task to be in-housed: 91% said creative for digital media was handled in-house, followed by 85% for strategy, creative for traditional media at 81%, data/marketing analytics at 47% and media planning and/or buying at 33%. While there are not readily available comparable Canadian statistics, experts on this side of the border say the trend towards in-housing (and its challenges) mirror those in the U.S.

While the drive to in-house marketing services continues apace across North America, there are many challenges that companies continue to struggle with, according to the survey and Canadian experts consulted for this article. The study found that in-house agencies face four key issues: attracting top-tier talent; keeping that talent “energized;” applying key marketing processes; and having healthy creative tension.

Pennywise, pound foolish?

Attracting (44%) and keeping top talent energized (66%) were the top two issues for survey respondents. Karen Howe, founder of creative consultancy The Township in Toronto, is not surprised to hear this and says Canadian companies face the same challenges as their American counterparts. According to the industry vet, attracting and retaining in-house creatives has always been an uphill battle.

“I don’t love the idea… it’s largely to trim costs… not about great creative,” notes Howe, who says companies continue to bring marketing in-house, even though she “can’t think of any great work that’s been done by an internal agency.”

Other Canadian experts see the situation with more rose-coloured glasses, though all admit that budget is a main motivator for companies who opt for in-house agencies.

Keeping things fresh

David Carey, managing partner for North America at Oliver in Toronto, often works with companies on their in-housing needs by building dedicated agency teams within the client’s office.

While he admits going in-house is still looked down upon by some in the industry, he believes the attitude is shifting. Millennials and Gen Zers who came of age in the gig economy tend to be more flexible and open-minded when it comes to in-house gigs, he notes.

“Younger people are more open to it, those that have been around don’t really believe in the model and believe there should be a church and state separation,” says Carey.

He recommends that companies that spend time attracting leading creatives also put energy into ensuring the team stays motivated. Often creatives at companies will end up working on lower-tier work, such as point-of-sale and direct mail campaigns, while the higher-end work gets served to outside agencies.

Many creatives want to feel challenged and build their portfolios, the experts say, so companies need to give some plum assignments to them, otherwise they will leave. Carey suggests larger companies with a portfolio of products and brands could keep marketers “fresh” by allowing them to rotate assignments, for instance by working on peanut butter one year and mac-and-cheese the next.

‘A revolving door’ for CMOs

Stephan Argent, founder and CEO of marketing consultancy Listenmore in Toronto, says good work can’t be done when many in-house agencies are not built on a solid leadership foundation.

“It’s a revolving door culture with the CMO,” says Argent, noting a recent study that found CMO tenure dropped to 43 monthsfrom 44 last year in the U.S. “If the CMO is on shaky ground, how can the in-house agency survive?”

While he acknowledges turnover is high in the Canadian ad world, whether at a company or an agency, he questions if some companies “truly have an appetite” for in-house marketing agencies. While CEOs and COOs are naturally attracted to the idea of saving money by bringing some marketing services in-house, Argent says not enough is being done to retain high-level staff, such as CMOs. He suggests companies invest in integrating CMOs into the C-Suite by putting them on boards so they can better participate and understand all aspects of the company they are working for.

And for more junior staff, Argent advises they ensure it’s a good culture fit from the get-go.

“Hire people with potential who are client and customer focused,” he advises. “If you are a very traditional organization and you’re expecting people to turn up in suits, for example, and you’re trying to hire a bunch of creative people who are coming out of an agency, it’s just not going to work.”

Focus on the work

Roy Levine, founding partner of Toronto-based Agency Inside, admits there remains a stench around going from agency to in-house work, so he echoes Argent’s advice that hiring the right people with the right attitude is key to success.

“It’s not just for old farts, it’s not necessarily for people who are in the twilight of their career to make a move. It’s really more about a mindset,” insists Levine of opting to work for an in-house agency. “There are a lot of great creative people out there who care more about the work than the place where they work.”

Going in-house often means creatives get an opportunity to understand from the inside in a way they never could at an outside agency, notes Levine. And “there may even be a pension, fewer all-nighters,” he adds to a list of pros that comes with working directly for a company.

Despite the challenges, in-housing will likely continue to be popular on both sides of the border, because as Levine points out, it’s a trend “driven by cost efficiencies, having creative resources at your fingertips, making sure people are very close to your brand and that allows you to ensure that you come up with solutions that are more timely and more relevant than having to rely on external people.”

But while Howe admits in-housing was the topic du jour on the beaches of the South of France during the Cannes Lions International Festival of Creativity last month, this cost-cutting dream has been around for decades. “It’s really short-sighted,” she says. “The eye is on the bottom line, rather than the quality of the work.”

This article originally appeared on Strategy.