Diageo's Dogs and Stars
Rob Malcolm, Diageo's president of marketing, sales and innovation, shared observations from 25 years experience in measuring marketing effectiveness in a recent speech to the British Brands Group.
The following is extracted from his talk entitled, "100 Percent Marketing."
|
The corporate environment in which we compete today is more focused on performance than ever, with an emphasis on profitable, sustainable growth. Translate that to mean maximizing total shareholder return, ruthless cost control, more accountability, return on investment, fact-based analysis and transparency about everything we do. CEOs want the delivery of promises. They don't like surprises. They want a higher degree of discipline, analytical rigor and a consistent and reasonable expectation of return for the investment that they are making in this important part of their balance sheet and P&L statement.
The fact is far too little has changed in the world of marketing and its perception, since Lord Leverhulme's famous quote: 'Half of what I spend is wasted. The trouble is I just don't know which half.' Some 70 years later, this is all too often how the marketing function is seen. Less than 50% effective, with serious, often high-profile doubts about which half is the effective half. We really do still have a long way to go.
So if marketing and brand building is to become a core part of the corporate DNA and to live up to the challenge, we need to effect a dramatic shift. Essentially, we need to move the dial from 50 to 100% marketing effectiveness. How? We should take our cues from situation analysis and return to our internal competitor, in this case the finance function. Finance has three things going for it:
- People know what finance does for the company.
- People believe they do it professionally and with rigor.
- Most can prove their contribution absolutely, or at least they can prove it empirically.
While there may be some doubt about the proof (we all know that even numbers can be deceptive and at odds with reality), numbers tend to be trusted implicitly. Disraeli first said, 'Lies, damn lies and statistics,' but that hasn't stopped the statisticians from influencing the CEOs and CFOs.
|
In contrast, what does marketing offer today? Too often, I believe, there is a lack of clear understanding of our role, a feeling that is often magnified in either financially oriented or sales oriented companies. A slightly dilettante image: Is it really a profession like law or accounting or something else that we don't really comprehend? And truth be told, we have an unimpressive record of proving a solid return on investment.
What is our functional game plan to address this issue once and for all? Here are three core suggestions for your consideration:
- First and foremost, it is critical to get corporate understanding and more importantly buy-in of what marketing contributes to the good of the enterprise. No more hiding behind the veil of our own language and award shows.
- Second, we need to build true professionalism throughout the function everywhere it operates.
- And third, we need to establish clear accountability and measurement of the contribution that we are making.
My experience with metrics and measurement is to make it simple if you want any chance of getting it done. Make it complex and it won't happen. At Diageo we have invested in a few very simple tools for our marketing investments with a bit of rigor behind them.
The first we call the Dogs and Stars Chart (see above). It is a simple two-by-two matrix with the ROI on the vertical axis and the effect on the consumer (or brand building power) on the horizontal. We plot all our activities. Things in the lower right-hand corner that are working with the consumer but not providing a return get our attention for how we might do them more efficiently. For those delivering great return on investment but not brand building, we look at how we might create a more sustainable effect on the consumer. Those in the bottom left-hand corner we don't do again. It is a very simple visual tool that marketers understand and buy into and finance directors love.
The second is a tracking chart that I review with our executive committee once a quarter. It is an analysis of the effectiveness of our advertising by brand, by medium and by market for our top brands worldwide.
|
When I first shared this chart I was a bit nervous as it put on the line for all to see one of the most closely guarded marketing secrets. Does our advertising really work? Does it really grow the business? The blue lines are where the advertising has been running for more than a year and proving itself in business results and equity measures. The green lines are less than a year but all the testing and equity measures are positive. The yellow are 'We don't know,' and the red is 'We have a problem, we know it doesn't work, and we are working hard to solve it.' The arrows up or down indicate the change from the last quarter.
I knew we were on our way to building trust by the reaction of the CEO when I first put two imperfect score cards that looked like this on the table and he said, 'This is the most honest and transparent presentation I have ever seen for marketing and I really do trust that you are on track to making the progress we need.' That is the start of the journey for the kind of professionalism and trust that we need to build for this function.
Click here for the complete text of the speech in PDF format.
|
Born and raised in California, Rob Malcolm spent over 20 years with P&G — rising to vice president category manager for personal care before leaving to take on senior management roles internationally. He joined Guinness in 1999 and assumed his present role, which he retained after the merger with Diageo.
