Why Marketers Should Rethink Advertising as Operational Expense
In a bold move, marketing executives are challenging the traditional view of advertising as an investment. Discover why top industry leaders are advocating for a shift away from framing advertising as a strategic investment and towards viewing it as a necessary operational cost for businesses.
Money
Brands should stop framing advertising as an investment, according to Nationwide’s director of brand, marketing and corporate affairs.
Speaking at Thinkbox’s ‘New business case for advertising’ launch today (24 April), Richard Warren from Nationwide pointed out that using the word "investment" when discussing advertising in the boardroom can be problematic. He mentioned that many executive committees and boards in businesses do not view advertising as an investment, but rather as a regular expense. Warren emphasized that while marketers may believe it is smart to refer to advertising as an investment, others simply see it as nonsense.
He remembered hearing CFOs say that the first things they usually cut are "training and advertising" in the past. They believed that investing in brand equity for the long term was crucial.
Warren advised not to deceive others. He suggested avoiding calling it an investment because others may not see it that way.
Whilst we [marketers] might think this is really clever and shrewd to cloak advertising in the word investment, they [the exco/board] just think it’s bollocks.
Richard Warren, Nationwide
Marketers need to convince boards to invest in advertising by emphasizing the long-term benefits and the importance of consistently nurturing the brand, according to industry experts.
Matt Chappell, global client success officer at Gain Theory, echoed this sentiment by advising marketers to avoid using misleading tactics when speaking to CFOs. Instead, he suggested that marketers should focus on discussing the potential risks and benefits in a clear and transparent manner.
Chappell emphasized the importance of showing the risks of inaction to the exco. He believes that this will help them understand what could be lost if funds are not allocated to marketing.
Warren highlighted the clear benefits of investing in marketing. He pointed out the internal advantage of developing a "strong brand campaign." Warren also mentioned the significant positive impact of Nationwide's brand overhaul on the company internally.
“When you’ve got 18,000 colleagues on the internet commenting on how much they love the ads, that’s as persuasive as any ROI argument,” Warren added.
Hurdles to face
IPA director of effectiveness, Laurence Green, highlights the clear risks of not pursuing a creative idea. He mentioned the financial consequences of producing uninspiring work, noting that brands could potentially lose millions of pounds.
Green identified three significant challenges that the industry is currently facing. The first obstacle is the struggle to allocate enough time to establish effectiveness in the correct manner.
Our main driving force in business is not just an afterthought, as he mentioned.
Furthermore, Green pointed out that more efforts are needed to promote sustainability. He highlighted the GiffGaff and Ebay pre-loved campaigns as good examples and urged brands to take further action.
Green emphasized the importance of having more stories that are both commercially successful and promote sustainability.
He stressed the need to continue pushing for change in our practices and the products we create.
Marketers often face a third challenge - their own professional mistakes and wrong assumptions about their target audiences, their behaviors, and what actually works in their advertising efforts.
To improve effectiveness in marketing, it is important to adopt a mantra: "Share what you know, admit what you don't know, and then share your thoughts," as suggested by the expert.
Throughout the day, another important topic of discussion was the debate between performance and brand becoming outdated. Dom Charles, the managing director of audience intelligence and marketing science at Wavemaker UK, expressed his belief that the phrase 'performance vs brand' is not helpful in media optimization.
He suggested that the industry should shift its focus towards the "three dimensions of effectiveness," which are scale, efficiency, and time.
Breaking it down further, Charles clarified that scale refers to the impact of advertising on the business, efficiency relates to the cost-to-payback ratio, and time indicates the duration of advertising payback.
He also mentioned that comparing performance to brands is not useful as it weakens the argument for advertising and makes it seem irrelevant and vague.
Editor's P/S:
The article highlights the need for marketers to rethink the way they frame advertising to gain buy-in from executive committees and boards. By avoiding the term "investment" and instead emphasizing the long-term benefits and importance of brand nurturing, marketers can better align advertising initiatives with business objectives. Additionally, the article underscores the crucial role of marketers in demonstrating the risks of inaction and the positive impact of effective marketing on internal morale and brand perception.
This shift in perspective is essential to overcome the challenges facing the industry, including the struggle for time, the need for greater sustainability efforts, and the prevalence of professional mistakes. By adopting a mantra of transparency, sharing knowledge, and admitting gaps, marketers can enhance their effectiveness and drive meaningful change in advertising practices and products. Embracing the "three dimensions of effectiveness" - scale, efficiency, and time - will further enable marketers to optimize media strategies and demonstrate the tangible value of advertising to business outcomes.
