Last week I went along to speak to a financial services advertiser at their six monthly marketing planning day. They asked me to talk about the various types of marketing departments. When they called me and asked if I could come and speak the topic was “What is a high performance marketing team?”

That initial conversation went for about half an hour and I finally got to the bottom of what really was the issue. The marketing team and structure had to be changed about six times in the past 4 years (not uncommon in financial services) and marketing were trying to identify what was their role and opportunity in the new structure?

On the day I talked to this presentation, which I have shared on Slideshare previously.

One of the issues that arises when we have undertaken a Strategic Supplier Alignment (where we align suppliers to the strategic needs of the marketing function) is that the marketing leadership often rightly question if they have the best structure in place.

On the basis that structure follows strategy it is possible to see how the organisation strategically positions marketing by the structure applied.

It is interesting that often this conversation is not overtly explored when organisations are restructuring marketing. Instead the new marketing structure is deployed, resources are rearranged and changed and business as usual resumes, albeit with usually less resources and new reporting lines.

But beyond the usual vacillation between centralised and decentralised models, there are a number of structural features that can quickly identify if marketing is seen as:

1. A supplier
2. An advisor
3. A partner
4. A leader

Some of the most obvious signs are:

1. Does the Marketing leadership report to the CEO or someone else such as Sales or a Business Unit?
2. Does Marketing hold P&L responsibilities or just a budget?
3. Is Marketing responsible for NPD? Pricing? Distribution? Or simply Promotion?

Check out the presentation for yourself.

Let me know in comments which marketing structures you have seen and how well (or not) they work.

These days, many consumers form their impressions of organisations, brands and products through what they read, hear and see in the editorial and news sections of the media as much as they do through paid advertising in the same media.

Research studies conducted in the late 1990′s in the US by AT&T’s Public Relations research department measured the interaction between news coverage and advertising. It was concluded that news coverage can have a substantial impact on consumers, on a par with advertising. They suggest that news coverage can substantially impact the investment a company makes in various forms of paid marketing communications and that expert management of media relations is critical to protect and leverage this investment.

Yet very few organisations really know how each influences consumers, what interaction there is between the two and what the consequences are if advertising is presenting one perspective, while the editorial media is presenting another.

Once upon a time advertising was king

There was a time most consumers were conditioned to receive messages through advertising. Editorial never stooped to cover commercial matters, which was regarded as giving advertisers a ‘free plug’.

Today editorial is much more an equal partner. Media see it as their responsibility to inform and educate – giving huge amounts of space to everything from reviews of products to coverage of the evolution of industries such as consumer electronics.

As well, a large number of Australians are now shareholders, so finance and company news has spilled over into general news.

The result is that consumers are now confronted with a smorgasbord of news, information and content. Some is advertising, others are editorial – but distinguishing between the two is increasingly becoming a challenge. Perceptions are created and opinions are formed from all of this – but never has it been so unclear as to what has the most potency.

What impact is this having on consumers?

Take telecommunications in Australia today. The participants are spending millions on paid advertising. But the sector, and the companies within it, are subject to constant editorial coverage. Advertising traditionalists will argue that to counter heavy media editorial coverage, marketers need to spend heavily on ‘controlled messages’ through advertising.

PR people will argue that research clearly shows that consumers are heavily influenced by what they read as editorial (and perceive as independent opinions), and that they are distrustful of companies simply telling their own story through advertising.

The bottom-line is that news/editorial coverage is, for many companies, assuming an increasing proportion of what the consumers see, hear or read about them. Yet many organisations are still running their PR and advertising agencies as separate silos based on the traditional model.

What is the opportunity for alignment?

Questions major consumer marketers, who find themselves in sectors widely covered by the news media, should be asking are:

1. Should we be finding out what in today’s total environment is influencing our consumers (ie not just researching the impact of our advertising)?
2. Are we coordinating well enough the messaging between advertising and PR?
3. Are there ways we can make our PR more effective in delivering product messages (and measuring the degree of success)?
4. Are our existing advertising and PR agencies working toward the one common goal with complementary messaging?

Often the problem is that public relations, increasingly like social media, is the domain of corporate affairs and reputation management. Therefore marketing is not aligned with corporate affairs. And corporate affairs is not aligned with marketing. Yet both have an important role in managing the reputation of the brand and the organisation.

We have found that the first step is to recognise the interaction between the two and then to align structure and strategy across marketing and corporate affairs.

Where have you seen these two closely and successfully aligned?

When I was doing my Bachelor of Applied Science at RMIT, our first year included a study unit on the Theory of Science and the Scientific Method. In this unit we read Darwin’s The Origin of Species and discussed the scientific method which became the foundation of science to separate “scientific fact” from “science fiction”.

Interestingly few people have heard of the Scientific Method, even though it is at the basis of all science breakthroughs and is the best way yet discovered for sorting the truth from lies and delusion. The simple version looks something like this:

1. Observe some aspect of the universe.
2. Invent a tentative description, called a hypothesis, that is consistent with what you have observed.
3. Use the hypothesis to make predictions.
4. Test those predictions with experiments or further observations and modify the hypothesis in the light of your results.
5. Repeat steps 3 and 4 until there are no discrepancies between theory and experiment and/or observation.

At a time where there is so much change and many hypotheses on what will work and what will not, it seems to me that proven methodology like this could be easily adapted for marketing.

In the case of marketing ‘test & learn’ the steps could be:

1. Observe some aspect of the market place or use market research to define an insight.
2. Invent a tentative strategy, that is consistent with what you have observed.
3. Use the strategy to make predictions of the effect the strategy will have on the market.
4. Test those predictions by experiments and observations and modify the strategy in case where it under-performs the predicted results.
5. Repeat steps 3 and 4 until there is consistent over performance against the prediction when you would integrate the strategy into the core ‘go-to-market’ strategy.

I have heard from a number of advertisers, who have used this approach, that they start by separating their budget into a 10 / 20 / 70 split.

70% is for business as usual (BAU) – that is, they budget to undertake their usual marketing plan with a 30% reduction. This reduction is achieved not by paying the agencies 30% less for the same work, but by eliminating waste and investing less in non-essential or non-performing activities.

Of this 30% reduction, 10% is for observing, strategy hypothesising and testing and the remaining 20% for proving those test strategies that deliver worthwhile results.

It provides a disciplined approach to embracing those opportunities that seem to continually present themselves and testing and learning what is working and what is not before you jump in with a significant investment or worse, underprepared and under-resourced.

But it is not just new opportunities, the process can be used to test and learn how effective many of your existing strategies actually are delivering against your objectives and predictions.

We have been very effective in finding where you can fund this from within your existing marketing plan and budget.

Are you testing and learning? And if so, what is working for you?

My friend and colleague Clement Toulemonde recently shared a list of phrases commonly used in English language that are often misinterpreted by the listener.

I suddenly realised that this happens often in meetings between marketers and their agencies. The cause is often the two parties are often working at cross purposes: the marketer is trying to provide feedback, direction or criticism without causing offence to the agency and the agency is trying to achieve agreement to their recommendation or point of view coming from an often unrealistic but optimistic perspective.

In the process, two groups of communication professionals completely miscommunicate their intentions and fail to align to the business strategy. So here it is, “what marketers say, what they mean and what the agency hears”.

I was reading through these in a meeting and discovered three more happening before my very eyes:

There must be many more where these come from, so please feel free to provide any suggestions below.

How did you select your digital agency? Did you need a Facebook page or a microsite or perhaps some banners ads and the creative agency said they can do that so it was easier to just get them to do it rather than finding another agency? Or perhaps your creative agency put forward an online idea and so it was natural that they would implement it? Or was it your media agency who convinced you that they were best to plan and buy your online media and so it was natural that they would also provide that online content?

Now it is a year or so later and you are finding that more and more of your budget is being spent online. You have social media and microsites and  Facebook pages and the relationship works well, after all it is easy and convenient to manage and that is one less agency to manage.

Meanwhile your corporate affairs people have engaged a public relations firm that specialises in reputation management and is managing the social networking with a Twitter account, a blogger influencing strategy and a Facebook page.

Meanwhile the sales promotion agency has been building microsites for competition redemptions for your various brands and has been collecting customer data in the various databases behind each microsite.

When you look across the various activities and add up the cost it is now in the millions of dollars when it started out at less than the cost of a television commercial. So the question is “Are you getting good value for money?” It is certainly a question I get asked by many marketers and more often by their procurement people.

The answer depends.

While it is true that great ideas can come from anywhere, there are fundamental differences between traditional advertising production approaches and digital:

1. Digital and especially interactive is better suited to an on-going engagement implementation rather than the traditional campaign approach.
2. Whereas traditional media production is usually consumable (create, use and discard) online production should be building assets for on-going use.
3. Even the content that is created for online use such as text, images, video, animation, music and audio can be managed and repurposed.
4. Applications such as e-commerce and database creation and management require a whole of business approach including finance, operations etc, beyond the scope of advertising.
5. The digital category is becoming more and more diversified with increasing numbers of suppliers working with increasing numbers of stakeholders – social, search, content management, analytics and reporting, customer data etc.

The fact is that an agency simply recruiting IT project management skills and programming skills is not enough. The digital marketing strategy needs to be aligned to the organisational IT strategy. Fragmenting this across multiple suppliers makes that alignment even more difficult to achieve.

Accenture found in their research paper “CMO – CIO Alignment Imperative” that companies who created an impenetrable alliance between marketing and IT are able to achieve unparalleled customer loyalty and advocacy.

So who is best to manage your online and digital strategy and production?

What are your thoughts?