Marketing activity efficiency and effectiveness

Understanding procurement maturity and organisational structure

The 2012 WFA SPIRE Diagnostic Webinar

World Federation of AdvertisersSteve Lightfoot

Tel. +32 (2) 506 4390s.lightfoot@wfanet.org

www.wfanet.org

SPIREPaul Duxbury

Tel. +44 (0)207 297 2221paul.duxbury@spire-ww.com

www.spire-ww.com

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Introductions

• The World Federation of Advertisers– The only global organization representing the common interests

of marketers– Members represent ~90% of global marketing communications

spend, almost US$ 700 billion annually– Champions responsible and effective marketing communications

• SPIRE– Marketing capability building consultancy– Works with multinational organisations: Arla, Novartis, Shell,

SABMiller, Universal Studios – Partners of the WFA since 2009

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Today’s Agenda

1. How the top performers set themselves up for success

2. What entry level/advanced characteristics are displayed by best-in-class organisations

3. Drivers to help procurement further integrate with marketing

4. How to diagnose the capabilities and set up action plans to improve your performance

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1. How the top performers set themselves up for success….

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Combination of ROI, outcome and input focused evaluation

Marketers have ROI focused post evaluation…

“Now that there is an accepted mandate to understand and measure the financial impact of marketing, it’s time to take a more disciplined approach”

Source: Millward Brown 2008

…and outcome focused post evaluation…

Source: www.effieindex.com

…and now an input focused evaluation tool.

Self assessment of approach to effectiveness and efficiency of marketing activities, to drive discussion and alignment across the marketing team and support the building of world class capabilities

Source: WFA SPIRE Diagnostic Tool

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Building understanding and alignment, before starting to build capabilities

• Understanding the effectiveness and efficiency landscape– Putting common terms and parameters around a previously

uncharted territory

• Understanding how well the organisation performs for key effectiveness and efficiency themes– Areas of good performance, the size and location of gaps and areas

of misalignment

 • Understanding how well prepared the business is for

capability building– And where improvements may be required as, or before capabilities

are built

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2. The entry level and advanced characteristics displayed by best-in-class organisations…

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45+ Phase One benchmark companiesAnnual marketing budgets worth an estimated $60+ billion

10

2010 2012

46

48

Overall performance for all themes of effectiveness & ef-ficiency

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Overall performance for all themes of effectiveness & efficiency

Source: WFA SPIRE 2010 survey and 2012 Diagnostic ToolBase: all respondents

11

Lower quartile Lower-mid quartile Upper-mid quartile Upper quartile

12

37

56

82 2012 performance by quartile

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ny2012 performance by quartile

Source: WFA SPIRE 2012 Diagnostic ToolBase: all respondents

Organisations are grouped into quartiles, based on their overall performance across the 4 themes of effectiveness and efficiency, with each quartile representing ~25% of the total respondents

12

57 57

39 38

89 89

72 78

All Re-spondents

Upper Quartile

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2012 performance by effectiveness and efficiency theme

Source: WFA SPIRE 2012 Diagnostic ToolBase: all respondents

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At a company level, the gap between the performance of the most and least advanced organisations is getting wider

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Performance by quartile• Organisations were grouped into quartiles,

based on their overall ratings across all drivers of marketing activity effectiveness and efficiency

• On average the ratings for the top 25% of organisations are more than 6 times greater than the bottom 25%

Widening gap between top and bottom• The theme ratings of the top three quartiles

increased by between 3 and 6 points from 2010 to 2012

• Over the same period the theme ratings for the lowest quartile fell by 8 points, increasing the gap between organisations with the most and least well developed capabilities

Should the most advanced organisations help the weakest develop their capabilities and how could that be done?

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The most advanced organisations have made the greatest progress with their approach to the management of agency partnersChange in upper quartile capabilities by theme• From 2010 to 2012 there were increases in

capability for two of the themes of marketing activity effectiveness and efficiency

• The most significant change was an increase in capabilities to identify and work with the best agencies and suppliers

2012 upper quartile capabilities by driver• All capability drivers were rated at 80 or more

in 2012• With near maximum performance across 3 of

the 5 drivers that were identified as of primary importance to increasing marketing activity effectiveness and efficiency

Are the agency management capabilities of upper quartile organisations approaching a point of marginal return and is there more upside to be gained in other capability building areas?

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The least advanced organisations have lost ground both in managing money tightly and working with agenciesChange in lower quartile capabilities by theme• From 2010 to 2012 there were significant

declines in capability for two of the themes of marketing activity effectiveness and efficiency

• For the other two themes there was no significant change

Lower quartile performance by driver relative to the upper quartile (for the managing money tightly theme)• For most of the drivers of managing money

tightly, the capabilities of the lower quartile fell whilst those of the upper quartile increased, creating a widening gap

• The same trend, albeit less pronounced was seen within the agency management theme

For additional driver analysis refer to appendix 14

Have there been changes to the external operating environment that made it even harder for the least capable organisations to perform well e.g. complexity from increased digital marketing spend?

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Some of the capabilities considered to be most important* have increased whilst others have declinedDrivers of primary importance for which capabilities have increased• The biggest increases have been for capability

drivers within the agency management theme • Within the integrated and streamlined process

theme there have been no capability increases for the drivers of primary importance

Drivers of primary importance for which capabilities have fallen• There have been falls in capability drivers

within both the agency management and managing money tightly themes

• As well as a significant decline in the linkage of activity to overall strategy

Is there an issue with the prioritisation of capability building efforts, or with premature assumptions that drivers are ‘fixed’?

* The ‘most important’ drivers were identified by respondents to the 2010 survey

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The capabilities that are hardest to build and sustain remain the least well developed across the boardOverall capabilities for each theme• The two ‘traditional’ or ‘foundational’ themes

of marketing activity effectiveness and efficiency have equally high levels across all companies

• The ‘process’ and ‘learning’ capability themes lag behind with levels nearly 20 points lower

Performance trends• Compared to 2010, the capability levels for the

‘process’ and ‘learning’ themes fell in 2012• This further increased the gap between these

drivers and the ’traditional’ themes

Are organisations falling into the trap of prioritising the less challenging areas for improvement, rather focusing on the areas of greatest upside, despite the difficulty levels?

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3. Drivers to help procurement further integrate with marketing…

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Cross functional working and centralised sourcing strongly correlate with advanced effectiveness and efficiency capabilitiesStrong linkage between cross functional working and capabilities• Organisations in the upper quartile of

effectiveness and efficiency capabilities have a much stronger culture of cross functional in and around the marketing team

• This is seen at all stages of the planning cycle, from goal setting to post-evaluation

The best performers source more centrally• In nearly all spend categories the organisations

with the strongest effectiveness and efficiency capabilities source more centrally

• The smallest gap between upper quartile and all respondent performance is for media and the greatest is for digital

Should these organisational areas be developed in parallel with capability building, or are they a pre-requisite?

For all spend categories refer to appendix 15

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The tenure of the sourcing team and integration with the marketing planning process strongly correlates with advanced effectiveness and efficiency capabilities

Tenure of the marketing sourcing team• The marketing sourcing teams of upper

quartile companies have spent significantly longer influencing spend than the average for all companies

• 40% of upper quartile companies have had marketing sourcing teams in place for more than 10 years

Integration of sourcing in planning• In upper quartile companies marketing

sourcing is consistently more involved in the planning process

• Although levels of involvement reduce when it comes to the development of individual activities and activity evaluation

Do the marketing team recognise the role that sourcing can play, and are sourcing teams fully describing the commercial benefits they bring?

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4. How to diagnose the capabilities and set up action plans to improve your performance…

Two levels of diagnosis

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1 marketing respondent

1 sourcing respondent

15 minute on-line survey

1 hour presentation

Initial overview of effectiveness & efficiency ratings

~10 marketing respondents

~10 sourcing respondents

15 minute on-line survey

Presentation

In depth review of effectiveness & efficiency ratings & planning sessions

Facilitated workshop

Outline capability building plan

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0%

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Ratings from respondents in a range of locations, marketing and related functions

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Source: WFA SPIRE 2012 Diagnostic ToolBase: all respondents

How increasing responses can drive complexityExample data for Org Z

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To participate please access the WFA SPIRE Diagnostic survey link:

http://www.surveygizmo.com/s3/942382/WFA-SPIRE-DIAGNOSTIC-TOOL

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Looking forward : continuous development of the Diagnostic Tool

• Extending the respondent base– Target of 100 companies by end 2012

• Completing in-depth company specific reviews– Usually for 10-20 same company respondents– With follow up capability planning sessions

• Increasing depth of organisational factor analysis and actionability of findings– Ready for 2013 diagnostic cycle

For more information, please contact:

World Federation of AdvertisersSteve Lightfoot

Tel. +32 (2) 506 4390s.lightfoot@wfanet.org

www.wfanet.org

SPIREPaul Duxbury

Tel. +44 (0)207 297 2213paul.duxbury@spire-ww.com

www.spire-ww.com