I have constant reminder of how marketing looked like 10 years ago. During that time, companies and marketing teams knew how to bring down the brands from the shelves or screens, down to the public market, creating stories, emotions and experiences.
The brands live in the hearts and minds of the people. Should be involved in people life, should allow clients to sense and literally touch it. If you did well your job, you could see soon in client research that the brand just won a target group, a city or a region. It was sustainable, but it seems it was not enough.
Unfortunately, the “Right School” of marketing is a “lost art”. There are still companies that lead the way in this area. But in the majority of cases, the marketing department lost its “craftsmanship” and ability to create solid brands.
Causes
- The erosion of the FMCG companies. They were in the avant-garde of marketing. From Stars, they went into Cash Cows (in the best cases) or in Dogs (in darker scenarios). Usually, when companies face head-winds, the marketing budgets are among the first to be cut, being considered as “costs”.
- Cost-cutting. Usually, when companies face head-winds, the marketing budgets are among the first to be cut, being considered as “costs”. Thus, the activity plans became poorer, protecting some few key investments, like Media or Trade.
- Short-terminism. After 2008 crisis, a new paradigm was sold to the CMOs and further on to the Boards or investors. The narrative of marketing efficiency, powered by performance and measurement. This is a short-term view, while marketing and brand building is medium to long term. One of the first companies that embarked this journey was Procter & Gamble. One of the first companies to recognise that they did a mistake and they cannot see the returns from this approach, was Procter & Gamble.
- Retail concentration. The evolution of key accounts and e-commerce reduced the negotiation power of the regular companies, in front of both retail and end clients. As a result, the competition based on price and promo sky-rocketed.
- IQ concentration in Hubs. The high-IQ jobs (strategy, innovation, creative development) were clustered in commercial Hubs, while the asperities, execution and follow-up were left to the countries. The best people and the cool stuff banded together in few locations, while markets remained with left-overs.
Effects regarding marketing people
- From Creators to Implementors. Two decades ago, marketeers were specialists on “Consumer Insights”, “Brand Development”, “Creative Execution”. They were expensive, had their own views and asked for freedom. Now they became specialists in Project Management, Power Point Presentations, Business Cases, Cost Management.
- A new culture of managing risks, not taking opportunities. In time, the best implementors became team-leaders, creating a new culture which emphasised their own focus and strengths.
Negative effects regarding activities
- Short-term allocations. The investment further increased in the short term activities: price, promos, performance media.
- Investments in other people properties . Lacking budgets, craftsmanship, and risk taking, brands invested in platforms that belong to other entities. Can be the investment in the Facebook or Instagram account, in the e-commerce marketplace, in the delivery platform, or sponsoring a festival organised by somebody else. Even it is short term efficient and apparently risk free, the future is questionable, because those properties belong to someone else. You can bet that once the negotiation power goes down, the fee will only go up.
- Increasing cost per lead. In some instances, the cost per lead enters the range of the customer lifetime value. Again, not much of sustainability.
Negative effects regarding brands
- Accelerating commoditization. The undifferentiated, budget stripped brands hold few chances. The companies in distress step-up the death spiral: higher price reduction, more permanent promos, less budget for brand building or significant innovation.
- Low-level equilibrium. With diminishing profitabilities, always lower budget, depressed team morale, culminating with a culture of implementation and risk-avoidance, there are not many handy solutions. The companies will pass “the point of no return”. Will remain in the single possible circle: concentrate on short term activities that can deliver the next target, doubled by deeper cost cutting and a culture of cynism.
What’s next
The good news is that the Natural Selection always works in the marketplace. From the existing brands, just few of them will survive on shelves.
The polarity between brands will further increase. We will have few brands that are profitable, have a solid competitive position and can create relationship with clients through their own communication platforms. They will retain the best marketing people and will have cumulative advantages. On the other extreme will have the many brands, based on low cost and promos.
“The New Art” of Marketing. The next companies that will bear the Marketing flag will be the technology ones. They are in full investment cycle. Once they will not be able to differentiate anymore thorough features, and the commercial leadership will increase their power in those companies, they will accelerate the marketing spent. They are the ones who are going to uncover the “lost art” of marketing. Probably they will also refresh some concepts. As a first step, one can see who are the new sponsors of the Euro 2020 (TikTok, Booking, Ali Pay, Take Away).