Welcome to the Dove Direct Print and Marketing Blog. Today's post, "Marketing Evades 1st Spending Cuts," dispels the notion that initial budget cuts in times of financial trouble should come from marketing dollars. We have all seen how brands typically cut marketing budgets at the first sign of any negative news or impact regarding sales, mergers, catastrophes, or a downward economy. Nearly every world event, and indeed, stateside event, such as the attacks on September 11, 2001, left advertising and marketing, and other industries in a state of complete disbelief and disarray.
Most brands, including the iconic brands, dive and huddle in economic fear, clutching their advertising dollars, while literally shutting and locking the spend vault. In essence, nearly every advertising medium hears the bullhorn's disturbing message, and with little forethought will make moves to "Cancel All Advertising Immediately!"
GM, Ford, Chrysler, Toyota, Honda, Nissan, and others, all cut their ad budgets significantly during this period. Tons of mid-size businesses also cut most, if not all, ad spending. However, what invariably happened as a result of the marketing cuts is a lesson for the ages. One huge takeaway from this marketing cut debacle is that those brands whose marketing went dark lost market share during and after the economic market stabilization.
While many marketers eliminated most advertising after the 9/11 incident, Hyundai and Kia chose to buck the trend and not only continue to advertise but increased their ad budgets. While the Big Three US automakers cut ad spending, two foreign automakers stayed their course, and the results were undeniable. Hyundai and Kia gained market share, and the rest lost market share after the economy became stable.
Diageo Makes The Case To Stay The Course
In 2001, data collection and analysis was in its infancy stages but has since developed into an explosive technological juggernaut. To that end, Diageo has transformed the notion that ad dollars should be the first to be cut in the face of brand challenges. Although there are situations that supersede maintaining the course, however, those situations more than likely are brand ending anomalies.
Who is Diageo? Diageo's brands include Smirnoff (the world's best selling vodka), Johnnie Walker, Baileys (the world's best selling liqueur), and Guinness. It also owns 37% of Moët Hennessy, which owns Moët & Chandon, Veuve Clicquot, and Hennessy. Diageo is a major player in the alcohol and liquor industry sector.
Marketing 101 teaches us to observe and learn from iconic brands, particularly when it comes to marketing overall. Small to mid-size businesses typically cannot compete with iconic brand marketing due to budget levels. However, the strategies and tactics can be applied and scaled to fit existing budgets. That said, let's move on to examine what Diageo refers to as a "profound shift" in the belief in marketing.
Diageo's new marketing belief arose out of an effective platform called Catalyst. Diageo launched Catalyst in 2017 to provide marketers instant data that could assist them with planning and strategic decisions with a focus on how and where to invest marketing dollars. Diageo's global marketing effectiveness director Adam Ben-Yousef initially referred to the plan as a mechanism to create an "army" of effectiveness ambassadors across the business.
Plans can and do change. And, to that effect, on October 15, 2019, at the IPA's Effectiveness Conference, Ben-Yousef stated: "Diageo has not hired an army of marketing effectiveness analysts; instead, we have up-skilled our teams and created a powerful army of marketing effectiveness ambassadors.
Productivity and Cost Cutting
Diageo leaped to establishing marketing effectiveness as it relates to productivity. In this context, Diageo initiated a £500m productivity drive. This particular productivity drive was predicated on delivering £100m in productivity improvements and, most importantly, the elimination of inefficient spending while improving profits by shifting dollars.
Diageo's global planning director Andrew Geoghegan, stated, "By making the case that marketing productivity could mean a combination of eliminating ineffective spend and generating more profit by shifting money to more attractive brands and activities, we were able to make a case for the kind of productivity that in theory could also deliver long-term growth."
Diageo's Ben-Yousef put it this way, "We set out to drive more profit from our existing marketing investment. But we've achieved something greater and unexpected – a more profound shift at the highest level in the belief in marketing investment. Marketing is no longer the first spend to cut when a market wants to deliver its annual plan."
Overall, the success of the Catalyst program has given Diageo the momentum to continue to bring its strategic marketing capabilities under a single hub, where marketers can access, adapt, and use it for their daily job requirements. Going forward, "Digital Catalyst" will enable marketers to ascertain digital media spending, monitor, and track live campaigns, against a standardized set of rules, with the ability to change the course of the campaign as necessary in real-time.
As Diageo plans evolve, one thing is clear; marketing dollars should no longer be the first budgetary cut. That said, it would appear that any brand looking to achieve marketing success will need a system where marketing data and the ability to track campaigns and measure them against performance in real-time is the norm. We believe the Diageo model is worthy of consideration. Thanks for reading, "Marketing Evades 1st Spending Cuts."
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