Horton hears a brand – why marketing lost its voice and how to get it back
Where have all the CMOs gone? According to Troy McKinna, Australian businesses are losing sight of the value of brand, caught up in an endless and unsustainable cycle of short-term outcomes.
A review of the ASX top 20 reveals that only two companies have a marketer at the executive leadership table. Some would argue there are evolutions of the CMO role present. Three have a chief customer officer and another two have a chief commercial officer. However, doing right by the customer can be different from doing right by the brand, and everyone knows that short term sales targets will always win out over long term brand investments.
Who then drives the brand agenda for these companies? I doubt it’s the chief risk officer who is more likely to be found at the executive leadership table. Marketing’s challenge is it’s investing in an asset that no one cares about on a payback period that is far too long for shareholders’ patience.
Brands are classified as intangible assets. International accounting laws prohibit companies from identifying brand value on the balance sheet if they have created it themselves. So, if there is no marketer at the leadership table, who is staying awake at night thinking about brand value? It’s unlikely to be the CFO, who normally places more importance on tangible assets.
Many leadership teams operate under the false pretence that brand value is static, that is the brand has had a strong past and will continue to have a healthy future, regardless of investment levels.
Next time you are on the roads keep an eye out for a Holden Commodore; they have all but disappeared from Australian roads. The once dominant, number one selling car in Australia now sells 10% of what it did at its peak 20 years ago. By failing to evolve its offer and brand to meet changing customer needs, its value has been decimated.
In The Long and the Short of it: Balancing Short and Long-Term Marketing Strategies, authors Peter Field and Les Binet studied the effectiveness of 996 campaigns and found that short-term promotional mechanics deliver bigger immediate returns; but once finished, sales return to the previous baseline rate. Long-term brand building campaigns deliver steady growth that compounds year on year, but with a lower immediate return. Shareholders and leadership teams lack the patience to wait for returns beyond this quarter’s financial results. If maximising quick returns is the goal, short-term mechanics will always win out. By prioritising this quarter’s returns companies are doing a disservice to their long-term growth.
A case in point, a large Australian service provider, has over 100 products on offer, many designed to entice customers to switch, but a more in-depth analysis reveals that more than 50% of those customer acquisitions churn within 12 months. Despite offering lots of attractive short-term offers, the business is still experiencing a decline.
When a CMO has a seat at the leadership table, and the brand’s health is an important topic of conversation, great things can happen. During Rebecca James’s tenure as the ME Bank CMO, the bank more than doubled its customer base and grew at an annual compound growth rate of 35%. By focusing on customer-friendly banking products, building a direct digital conversation and finding a distinct voice, the brand grew its value and delivered above market financial performance.
Equally, the founders of Four Pillars gin have delivered rapid growth by doing what’s right for their brand for the long-term. By elevating the craft of distilling, creating exceptional and talk-worthy gins, the team have found their way into the best bars and restaurants around Australia. The rumoured acquisition price by Lion clearly values the business beyond its tangible assets.
Growth is a universal goal for companies, but the most significant lever for defendable and sustainable growth is often undervalued, underinvested in and just not talked about it enough. The CMO is in the driver’s seat to unlock long-term growth because they have the power to connect the business with customers in a meaningful way. This journey starts by credibly valuing the brand and continues by creating products and campaigns that deliver in the short-term but also build value over the long-term. It’s not easy to lift the view of executive teams incentivised by the short-term bonuses, but it’s the right thing for the company and its longevity.
Troy McKinna is cofounder of Agents of Spring and Calm & Stormy and author of Brand Hustle
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Image credit: Sophie Dale