Antony Mayfield's List: Earned Media investment

• Jonathan Mildenhall, VP Global Advertising Strategy and Creative Excellence, who recently stated that:

   

  “All advertisers need a lot more content so that they can keep the engagement with consumers fresh and relevant, because of the 24/7 connectivity. If you’re going to be successful around the world, you have to have fat and fertile ideas at the core.”

• That’s the challenge: To what extent do you control the message? Coke has had to deal with things like those viral videos that show people putting Mentos in Diet Cokes and creating giant fountains. Do these things cause concern? Or do you try to embrace them?

  It’s not just that you can’t control it—when you try, it backfires. You have to understand consumers: They would like to be heard. It’s a question of cocreating content. Five years ago social media was 3% of our total media spend. Today it’s more than 20% and growing fast.

• Last year, when Coca Cola announced their new strategy to shift focus from 'creative excellence' to 'content excellence' (something of a marker in the inexorable trend toward brands-as-content-producers, and explained in two rather jargon-filled short films), they talked about applying a 70/20/10 investment principle to content creation:

   
   
  • 70% of the content should be low risk, bread and butter marketing
   
  • 20% should innovate off what works
   
  • 10% should be high risk ideas that will be tomorrow's 70% or 20%
• In the same year as Schmidt was espousing the Google approach to innovation, McKinsey published a report (`Boosting Returns on Marketing Investment’) in which they recommended that in the face of declining effectiveness and trust in mass advertising and the increasing fragmentation of media, brands spend 80% of their budget on banker strategies and tactics, and 20% on learning through well structured tests. It's a useful approach, and one that I've advocated before now as a pragmatic way to enable a greater experimentation with under-pressure budgets. But reading around those different approaches makes me realise that 70/20/10 is a much more useful contemporary model, not only for learning, and innovation, and content, but for something of fundamental importance in marketing: the allocation of budgets.

• Once upon a time, the hush-hush plans and special-access security clearance would have been about some cutting-edge sneaker technology: the discovery of a new kind of foam-blown polyurethane, say, or some other breakthrough in cushioning science. But the employees in this lab aren't making shoes or clothes. They're quietly engineering a revolution in marketing.
• On one level, it aims to develop devices and technologies that allow users to track their personal statistics in any sport in which they participate. Its best-known product is the Nike+ running sensor, the blockbuster performance-tracking tool developed with Apple (AAPL). Some 5 million runners now log on to Nike (NKE) to check their performance. Last month Digital Sport released its first major follow-up product, a wristband that tracks energy output called the FuelBand.
• Nike Digital Sport, a new division the company launched in 2010.
• But Digital Sport is not just about creating must-have sports gadgets. Getting so close to its consumers' data holds exceptional promise for one of the world's greatest marketers: It means it can follow them, build an online community for them, and forge a tighter relationship with them than ever before.
• Nike's spending on TV and print advertising in the U.S. has dropped by 40% in just three years, even as its total marketing budget has steadily climbed upward to hit a record $2.4 billion last year. "There's barely any media advertising these days for Nike," says Brian Collins, a brand consultant and longtime Madison Avenue creative executive.
• Gone is the reliance on top-down campaigns celebrating a single hit -- whether a star like Tiger Woods, a signature shoe like the Air Force 1, or send-ups like Bo Jackson's 'Bo Knows' commercials from the late '80s that sold the entire brand in one fell Swoosh. In their place is a whole new repertoire of interactive elements that let Nike communicate directly with its consumers, whether it's a performance-tracking wristband, a 30-story billboard in Johannesburg that posts fan headlines from Twitter, or a major commercial shot by an Oscar-nominated director that makes its debut not on primetime television but on Facebook.
• The reason for the shift is simple: Nike is going where its customer is.
• It spent nearly $800 million on 'nontraditional' advertising in 2010, according to Advertising Age estimates, a greater percentage of its U.S. advertising budget than any other top 100 U.S. advertiser. (And Nike's latest filings indicate that that figure will grow in 2011.)
• Two years ago a group including Stefan Olander, 44, a longtime marketing executive (and Matthew McConaughey look-alike) formally pitched Parker on the idea for Digital Sport, a cross-category division that would take the Nike+ idea -- chip-enabled customer loyalty -- into other sports. Up and running a month later, the Digital Sport division now works across all of Nike's major sports.
• n 2000, Wieden handled all of Nike's estimated $350 million in U.S. billings. Now those campaigns are increasingly split between Wieden and a host of other agencies that specialize in social media and new technologies.
• But as the marketing mix becomes less about hero worship and more about consumer-driven conversation, they say, Nike is insulating itself from an era of athlete endorsements gone wrong. "Everybody's realized there's not the same one-to-one relationship as in the past: When Jordan's hot, his shoes are hot," says a former Nike executive. "I don't know if hero worship is the same as it used to be."
• That's not to say everything has been a slam dunk. Nike shut down its Joga network after the last World Cup game in 2006, confusing the million-plus members who'd signed up for it. Its Ballers Network, meanwhile -- launched in 2008 as an app that let basketball players organize street games -- recently had less than 300 users in the U.S.; a recent wall post was a teenager complaining he couldn't get it to work. And critics say products like the FuelBand and Nike+, while dazzling, are more about keeping Nike's retail prices high than innovating.

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• I spoke to Samantha Silberberg, integrated marketing manager, and Patrick McIntee, senior marketing manager, in The Economist Group’s integrated marketing department about the top
• Advertisers are creating their own content in-house, and requesting it from media companies. So much of advertising today is about relinquishing control of brand image, but white-label content [content produced by media companies that advertisers rebrand to appear as their own] allows them to provide information that is valuable to readers while creating a positive brand image.
• The truth is that many advertisers lack the time, skills, expertise and resources to produce effective white-label content. There is also still distrust from audiences towards companies that are not already content providers offering content.

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• Cadillac has moved 25% of its marketing spending into digital platforms from 17% three years ago as it uses online advertising to build its global brand around its BMW-fighting ATS sedan, said Don Butler, VP-U.S. marketing for Cadillac, between sessions at the JD Power Automotive Marketing Summit in Las Vegas on Wednesday.
• The cornerstone of that effort is the Cadillac ATS and a series of videos, "Cadillac vs. The World", that debuted during the Olympics. The short films, Cadillac's attempt to explain the brand to a global audience, were shot in Patagonia, Morocco, Monaco and China and both cut into TV spots and distributed digitally.

• Nearly 40% of CMOs do not think they have the right people and resources to meet their goals, says an Accenture report entitled “Turbulence for the CMO”. Martin Sorrell, the boss of WPP, the world’s biggest marketing and advertising group, says that since the 2008 financial crisis marketers have been elbowed aside by finance and procurement chiefs. Dominique Turpin, the head of IMD, a Swiss business school, writes that “the CMO is dead”.
• When the weather cooled Kleenex, a brand of tissues, used Google search terms and health-service data to target ad spending to areas likely to suffer the most sneezes. Andy Fennell, the marketing boss of Diageo, a drinks firm, thinks this is “a golden era for brand builders”.
• Nestlé’s “digital acceleration team” (DAT)
• If sentiment droops, “community managers”, many of them DAT alumni, can swoop in to soothe a malcontent or suggest a fix. Such give and take has “radically changed the relationship between our brands and the consumer”, says Patrice Bula, Nestlé’s marketing chief. “Today we have really entered the age of conversation.”
• This helps explain why marketers are feeling both potent and panicky. Instead of just lobbing messages out into the void, they must now act as customers’ “ambassadors”, says David Edelman of McKinsey, a consultancy. And that is tricky.
• The biggest shock, say marketers, is the schooling in humility that comes with round-the-clock conversation. Consumers are in charge.
• The lines between marketing and other disciplines within a firm are fading. Brands want to be antidotes to cynicism. But this will not divert marketers from their main task, pungently summed up by an ad exec: “to figure out and fuel consumer desires like they’ve never been fuelled before.”
• Did you think Special K was a breakfast cereal? It is so much more. MySpecialK, a website, will advise you on diet, exercise and overall well-being. Do you pay attention to Nike only when your running shoes wear out? Then you don’t wear a Fuelband, which will record your workouts and upload the data to the internet every time you charge it. The point of Pampers is not to sell the most nappies but to help mothers raise happy, healthy children, writes Jim Stengel, a former CMO of Pampers’ owner, Procter & Gamble, in a recent book.
• To chase consumers around, CMOs are pinching marketing techniques from other industries. Customer-relationship management (CRM) is used mainly by companies with enduring ties to consumers, such as banks and telephone companies. “Now you see CRM methodology in places where it had not been applied before,” says Marco Rimini of Mindshare, a part of the WPP group.
• “Adaptive marketing”, which varies messages as audiences and circumstances shift, should be as fast as journalism, says Nick Emery of Mindshare, which devised the Kleenex campaign. Or faster. Nike found 21,000 ways to tell people to “find [their] greatness”.
• MarketShare touts the case of Electronic Arts, which was spending too much on television and cinema advertising and not enough on search advertising and YouTube videos to promote its “Battlefield” video game. After cutting television’s share from 80% to half and boosting spending on video and paid search, sales of the new version jumped by 23%.
• But to stride in jauntily they will have to change the way they work. Gartner, a consultancy, has predicted that by 2017 they will spend more on technology than their companies’ chief information officers. Already 70% of big American firms employ a “chief marketing technologist”, says Gartner. With the shift in emphasis from set-piece campaigns to rapid responses, CMOs need more people working directly for them. This is putting into reverse a 20-year trend of favouring “working spend” (what consumers see) over “non-working spend” (overheads), says Dominic Field of the Boston Consulting Group.
• Still, a gap yawns between what CMOs could do and what they actually do. The left-brained bent that the job now demands “is not part of where their experience has been”, says McKinsey’s Mr Edelman. But CMOs are learning. Mindshare installed an “adaptive lab” in its London headquarters to educate them. DigitasLBi teaches its clients that not every utterance about a brand needs to be vetted by lawyers.

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• But spare a thought for the poor admen. Their industry is going through a particularly difficult time. Not only are they confronting a proliferation of new “channels” through which to pump their messages; they are also having to puzzle out how to craft them in an age of mass scepticism. Consumers are bombarded with brands wherever they look—the average Westerner sees a logo (sometimes the same one repeatedly) perhaps 3,000 times each day—and thus are becoming jaded. They are also increasingly familiar with the tricks of the marketing trade and determined to cut through the clutter to get a bargain. Scepticism and sophistication are especially pronounced among those born since the early 1980s.
• A study by the Boston Consulting Group found that 46% of American “millennials” use their smartphones to check prices and online comments when they visit a shop.
• Many companies want to go further and bypass conventional ad campaigns altogether. It has long been known that “earned media”—word-of-mouth recommendations from friends, family and news articles—are highly trusted. Nielsen’s studies show that strangers’ comments on social media and online forums are also now seen as credible sources, rivalling traditional “paid media”.

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