Magic and Logic: Bridging the Marketing Gap

In large brand-led organisations there is typically significant tension between the finance and marketing departments. The finance team frequently ask 'Why doesn't marketing spend their money wisely?' while the marketers will be asking'Why doesn't finance trust us?' Finance is now turning the screw by introducing procurement professionals to apply the rigour of professional purchasing to marketing activities. Marketers are fearful that their opportunity to set the agenda will be further eroded.

At the heart of the issue lies a widespread suspicion that marketers' commercial skills are significantly less well developed than other heavily spending parts of an organisation. For example, in a recent study, marketers rated themselves as 75% excellent at both 'results orientation' and 'commercial ability and financial understanding' in stark contrast to 40% and 35% respective scores when rated by other departments (Shaw & Radford 1997). In the case of 'effectiveness of controls' 60% of marketers rated their own performance as good/very good, while their finance director colleagues rated marketers' performance at a lowly 30%. In contrast 90% of FDs rated their performance at good/very good level whereas marketers felt that 60% of their FDs achieved this level (Shaw & Fisk 2002). Clearly, the marketers' belief that their mastery of commercial controls was about the same as thatof their finance colleagues is poles apart from the massive 60% differentiation that finance perceives.

What often eludes both finance and marketing is the true cause of the friction between them, namely the failure to recognise that there are two different disciplines at work within marketing, one creative and the other operational.

Creative marketing provides the 'magic'. It drives the creation of the ideas and concepts for new products and their communication. This discipline is characterised by the participation of a small number of high-calibre people. The approach is generally ad hoc and not very data driven. Success is measured by the quality of the output rather than the efficiency of the process.

Operational marketing relies on 'logic', it is the delivery of activity to consumers, be it advertising, promotional material or even packaging. This discipline is characterised by completely different skill-sets. Here success is achieved through factory-style replicable processes, single-minded focus on efficiency and the elimination of waste. Automation and information management are often vital enablers to smooth running, and generate opportunities to measure and evaluate output data to enable optimisation over time.

Most marketing teams are hired and rated on their ability to deliver creative marketing. The things that make them good at 'magic' (for example, out-of-the-box thinking) are not well suited to successfully delivering operational marketing. This leads to all sorts of problems: excessive costs, missed deadlines, and lack of accountability and transparency in terms of cause and effect (the marketing inputs and outputs).

It can be argued that this operational inefficiency is an acceptable cost of having great marketers.

The difference between brand success and failure will have more to do with the quality of the creative marketing than the efficiency of operational marketing, i.e. great creative marketing that is poorly executed is still great marketing. In cost-conscious times this is clearly a difficult argument to defend, and, even then, there is another significant issue to consider.

The inability of marketers to recognise and optimise their operational marketing capabilities presents a formidable barrier to successful engagement with the rest of the organisation. If their efforts are tainted by a suspicion that things could have been done less wastefully and marketing initiatives are reviewed in this context, why would a finance department or general management support a bold creative idea when they feel a significant percentage of the operational budget will be poorly spent?

WHAT CAN MARKETERS DO ABOUT THIS?

First, they should recognise the clear differences between 'magic' and 'logic' in marketing and treat them accordingly. A good starting point will be to separate key marketing activity into each category. Creative marketing combines creative development, brand positioning, media strategy, innovation and consumer insight while operational marketing covers the relatively 'unsexy' areas of production, printing, asset management, media buying and agency remuneration. An obvious paradox is that while 'magic' captures more than 80% of conventional marketers' time and attention, it is 'logic' that accounts for more than 80% of marketing spend.

The second imperative is to develop a better understanding of the key drivers that make the difference to the operational excellence. These will include achieving scale economies through 'bundling' volume of marketing activity across brands and geography, reviewing suppliers to ensure that lowest cost specialist suppliers are used where appropriate, and that the marketing supply chain is clearly defined, underpinned by efficient process and supported by enabling technology. Controls and measurement should be transparently expressed in terms understandable to non-marketers.

Armed with new clarity on exactly how the marketing supply chain works and where the costs are, it is a surprisingly straightforward task to start to demonstrably improve operational efficiency. Results are dramatic: typically, international marketing companies are able to reduce non-productive costs by the equivalent of 5% of overall marketing spend within the first year. Individual areas of spend such as production and print may be expected to fall by 30-50%, with the knock-on effect of reducing agency fees by around 10% in recognition of reduced workload as specialist tasks are redirected to lower-cost suppliers. These significant cost improvements are invariably accompanied by measurable improvement in speed and predictability of delivering marketing communications within an information framework that is transparent and accessible to marketers and non-marketers alike.

Armed with the understanding of the importance of 'logic' excellence senior marketers are better equipped to engage with the mainstream organisation. As an added incentive the considerable financial savings achieved can be redeployed as additional 'magic' activity to support brand growth.

This article featured in Market Leader, Autumn 2005.