Why efficiency and effectiveness are opposing forces in a marketing tug of war

Nickie Scriven

Nickie Scriven is the CEO of Zenith. Scriven joined Zenith in 2014 as Melbourne Managing Director, and was previously head of marketing and brand at Australian Super. A marketer with more than 18 years’ experience, Scriven has worked with Budding Enterprises Australia, National Australia Bank and News in senior marketing, sales and strategy roles. She has also established her own marketing consultancy business working with many small and medium sized businesses.

I’ve been a long-time fan of renowned effectiveness experts, Peter Field and Les Binet, and their work, The Long and the Short of it, in which they outline the key ingredients to effectiveness in the short and long term. In a recent documentary, Making a Marketer, they share further practical applications for marketers to improve their craft and effectiveness.

While this is clearly important, the marketing leader’s challenge to deliver effectiveness more often lies in organisational structure. I see the bigger question being whether a marketing chief has a seat at the executive table, and the ear and respect of the CEO and company board.

This comes back to the CMO/CFO dynamic. We know CEOs typically come up through the ranks via a financial background. This trend also reflected at board level. The problem is CFOs and CMOs fundamentally see the world in different ways, and often speak an entirely different language.

CFOs see marketing as the biggest discretionary spend on the P&L, seeking proof of ROI along with ways to drive efficiency, which ultimately leads to cost cutting and the flow-on effect of short-term marketing strategies and tactics such as discounting and promotion. While this can create a short-term spike in sales, it can have a detrimental impact on brand equity and margins in the longer term.

CMOs, on the other hand, see marketing as an investment – that when executed well and over the long term, can build brand equity, create meaningful connections with consumers and create margin and profit for the brand and business. This approach and language is about effectiveness.

The words efficiency and effectiveness are often used together or interchangeably. However, in reality they are opposing forces in a constant tug of war.

In Making a Marketer, Field and Binet explain effectiveness and efficiency are not one thing, but in fact behave very differently in the whole of business. They talk about how organisations get obsessed with efficiency as the low-hanging fruit, which leads to cuts.

Effectiveness is about maxing out the outcomes, driving growth, generating revenue and maximising profits. The answer is not one or the other, but about maximising the ratio. In their view, a focus on efficiency means you focus on doing the wrong things more efficiently, which can lead to bankruptcy.

In my experience, the way to avoid tinkering by non-marketers is to ensure there are brand metrics on the scorecard at board level, and that these are measured and reported on quarterly. This helps to keep campaigns on track and build to the longer-term brand goals.

Consensus among the experts interviewed throughout Making a Marketer seems to be 60 per cent of your marketing investment should weighted towards building the brand over the long term. The other 40 per cent can then be used for tactical activity to maintain immediate sales volume. So how is it that we so often find ourselves so far out of whack?

If we look to the digitisation of media and the rise of Google, Facebook and Amazon, we can see how marketers have been seduced by the short term. Finally, after years of not having the data to prove ROI, we can demonstrate and measure in real time what our marketing activity is doing.

Binet believes it is idiotic be so data-driven and to think brand is irrelevant. He suggests in the digital era we have forgotten that we need a strong brand behind us. And he reminds us that brand building activity builds memory structures and creates mental availability for brands, which ultimately builds brand equity. In reality, if we want consumers to buy us, they need to know us.

Binet provides us with a frank and refreshing reminder it is in fact brand building that fuels the whole engine, and turbo charges short-term activity.

As is often the case in the marketing and media landscape we get obsessed with the ‘or’ and in proving the virtues of one approach over another. ‘Or’ has no place in this vernacular but ‘and’ certainly does. It’s time for marketers to step back up and prove their craft, build their brands and drive sales, maximise growth and demonstrate ROI.      

 

Tags: efficiency

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