To Loerie, or not to?

The current Loeries brouhaha really stems from a rather silly and petulant banning of a journalist from attending the event. Why the organisers ever thought this was a good idea is beyond me. It isn't, wasn't, and they've suffered the consequences.

But then of course, because it put its pretty green head above the parapet, The Loeries itself got smacked.
For relevance.
For the very point of its existence.
For its methodology.
For being a business.

And seeing as my very business idea is premised on the fact that creative advertising is better than the other sort, I thought I'd stick my oar in.

Esteemed industry commentator, Chris Moerdyk, wrote a blistering article: "It's time to take a long hard look at the Loeries", that raised a number of points. One of them was, and I paraphrase here: "other than going away for a Loeries weekend and partying up a storm, The Loerie Awards have no benefits whatsoever." 

He questioned the award criteria ("Award-winning advertising is not chosen on the basis of efficiency or effectiveness but purely and simply on the gut-feel of peers. It is like choosing a car of the year because it just looks as though it can go fast and be a useful tool in helping pimply young Lotharios to pick up women. Without any consideration given to the fact that it was grossly underpowered and completely failed all known safety rating tests.") And he said that  "Statistically, 20% of all advertising not only fails but also actually damages the brand it is supposed to be promoting."

I'm making an assumption that his point is that it is the creative award winning ads which are those 20% of ads that fail in the marketplace. And the frivolity and pointlessness of the pursuit of creativity is somehow misaligned with the purposes of business.

Luckily for all of us that value innovation and progress, this is simply not true. The IPA in the UK commissioned research by Peter Field, and this is what he found: "Creativity is no longer a luxury if campaigns want to achieve business success says Peter Field in the latest IPA/Gunn report: The Link Between Creativity and Effectiveness. Over the period 1994 to 2002 creatively-awarded campaigns were around 3 times as efficient as non-awarded ones, and this number rises to 12 times more for the period 2003-2010".


The "Case for Creativity", a great book by James Hurman, combines the results of fifteen studies, over two decades, by Academics, researchers at Mckinsey and industry, which all reach the same conclusion: that creative advertising is more effective. The slideshare summary is available for download here and it makes compelling reading. But if I pull just three points out of it:

1. The more awarded the campaign, the more dramatic its business results tend to be;

2. The companies that won the Cannes Advertiser of the Year awards throughout the 2000's experienced a more than 40% growth in their share price in the period in which they won the award - the article refers to the culture of creativity and innovation being pervasive in the entire company. See slide:





3. Creative advertising is more talked about, more noticed, more recalled, more persuasive. 

And so, it has to have a higher ROI on money spent.

Is it then that the Loerie judges (who by the way, are only invited to judge based on years of experience and success), while partying their brains out and using their gut feel, somehow use a different criteria to judge these awards? Of course not. The criteria is not gut feel. The criteria specified by the Loeries are is that the ad is innovative, with new and fresh thinking; that is it excellently executed; and that it has relevance to the brand, the target audience and the chosen medium. Not too fruit-cakey that.

So back to Chris' 20% of failed advertising - I would love to venture that it is the staggering lack of bravery in this space that accounts for most of the failed advertising. Those boring, mundane and tediously un-innovative concepts that masquerade as advertising. And yet - I have seen some of those ads work. I have seen results off ads that make me want to cry. But the point that is made so well in "The Case for Creativity" is that the results would most likely have been better, had the advertising been more creative. See the slide below: creatively awarded campaigns are 10% more effective than non-creatively awarded campaigns on a high spend, and 27% more effective on low spend campaigns.



 
So, truthfully, what the Loeries seeks to award should be celebrated by the broader business community. What the winners do should be learned from and the practice of seeking better, innovative and fresh thinking should pervade our businesses, not be something we fear or make fun of.

Is The Loeries a business? Sure it is. I googled "Industry awards 2012" and I got 419,000,000 results.

Is it a great party? Sure it is. But I've been at Client conferences that make the Loeries look like a party with training wheels.

But more than all of this stuff about whether The Loeries should even exist when it doesn't measure effectiveness, and whether creative advertising ever works in the real world  - is the basic factor of motivation. How do we motivate creative thinkers, who as Chris Moerdyk rightly point out, are engaged in the incredibly frustrating world of having their ideas pecked to death by committees of geese everyday? 

Daniel Pink, in his essential-reading book : Drive (the surprising truth about what motivates us), draws on four decades of scientific research on human motivation, and exposes the mismatch between what science knows and what business does. "He demonstrates that while carrots and sticks worked successfully in the twentieth century, that’s precisely the wrong way to motivate people for today’s challenges. In Drive, he examines the three elements of true motivation—autonomy, mastery, and purpose". It turns out that Creative people (and these are not just in ad agencies) are motivated by these factors, more than by money and money-based incentive.  They are intrinsically motivated by the almost impossible task to do something that has never been done, the challenge, the craft. A quote from his book by Tom Kelly, GM, IDEO, is "the ultimate freedom for creative groups is the freedom to experiment with new ideas. Some skeptics insist that innovation is expensive. In the long run, innovation is cheap. Mediocrity is expensive...".

The last point I would make is this: a recent study seems to to confirm a 1993 study on what the most important criteria were to SA Marketers in the selection of an ad agency. In the 1993 study, the top two criteria were equally important: they were "creative reputation" and "understand my business". In a new study conducted by two Professors at UNISA in 2010, they found that the : "Critical selection criteria mostly include issues related to functionality, reputation and price... When advertisers appoint advertising agencies, the level of creativity is considered by 99% of respondents to be either critical (81%) or important (19%)."  How, then, in heavens name does an agency get a 'creative reputation' without entering and winning awards? It's the ad agencies' own marketing tool, using a factor that is relevant to their clients. And if it wasn't relevant, why do marketers rate it so highly?

To go back to that figure of 20% of advertising being wasted: Chris Moerdyk estimates the value of that to be R4billion a year. Imagine if, of the remaining 80%, only 10% (if that)  is as good creatively as it should or could be. That means that around R14billion's worth of SA's advertising  is mediocre. Now that is a real waste.

It's not all fluffy: why CEO's should take note of Reputation Governance.

26^th May 2012

I was kindly invited by Sifiso Falala, CEO of Plus 94 Research, to address the Mail & Guardian’s Top Companies Reputation Index Awards. Here is a copy of my talk:

Last year, you may have been lucky enough to listen to the charming and insightful Michael Judin. I have it on good authority he talked a lot about Arsenal. I’m not going to talk about Arsenal, mainly because I’m a Man U girl.

But I do want to talk a little about an area that Michael and I have been exploring, based on his work in the writing of King III, and the increasing importance of Reputation in Governance.

Our question is:  “Who’s seated at the top table?”

If I ask you to close your eyes and imagine the following:

• Julius Malema.
• Barack Obama.
• Angelina Jolie.
• Meryl Streep.
• Woolworths. 
• Auction Alliance.
• Apple.
• BP

In a heartbeat, your brain has created a reputation index of your own, hasn’t it? It's what Malcolm Gladwell refers to in his book “Blink”, the ability to sum up something in ‘the blink of an eye’.

Obviously the measure of reputation is far deeper than the immediate outward representation, these “snap judgments”. But it’s like Jeremy Bullmore, former Chairman of ad agency JWT, says about how consumers build brands: “like birds build nests – from the scraps and straws they chance upon” little pieces of foam, sticks and twigs from anywhere form our opinions about things, people, products, brands, companies.

Some of these reputations you formed in your mind are because of things you’ve been told, you’ve personally experienced, someone else told you, or maybe something you read on Twitter.

And we all know what happens when what we've been told or promised is out of synch with what is delivered? A change in trust occurs. Of course it can be a positive change (Angelina Jolie went form the weird girl who kissed her brother and wore a vial of blood around her neck, to a paragon of good work with the UN). But if there’s a disconnect, mistrust sets in. A lack of credibility arises. Future dealings are affected.

And boy oh boy is there a lot of chat.

On every social network, word of mouth is amplified. Take the Zuma spear story. How many of you have ever been to an exhibition at the Goodman Gallery? How many of you would have seen the picture in its exhibition? How many of you saw the picture in the press? How much more damage was done by the reaction to the painting? The impact of the social media in this case is staggering. As of yesterday (24^th May), the online reputation management company, Brandseye, reported that 108 million people had engaged with the issue online!

We know that there are two fundamental areas in which things can go wrong:

·      Where there is a gap between what you say, what you do

·      Where there is a gap between what you do and what people expect you to be doing.

(Source: Yardstick)

And many companies only realize the potential impact of it, when it all goes horribly wrong. This breakdown in reputational trust can shut a business down.

Ask Rael Levitt.

I read a great report called “The Trust Deficit – views from the Boardroom”, and their point was that every business nowadays starts with negative trust: a Trust Deficit. As one FTSE 100 CEO commented, “in the world of business, it’s not you’re innocent till proven guilty: it’s - prove that you’re not guilty first”.

There is growing scepticism and cynicism about claims and actions of businesses – primarily driven by the behaviour of the financial institutions abroad, but in daily actions that undermine the trust we had in a company or brand, or the expectation we had from them. We’re seeing this in the role of the National Consumer Commission and the CPA (Consumer Protection Act). Take the Woolworths Frankie's example, where there was outrage the Woolworths had copied (‘stolen’) a small producers retro drink’s concept.

And, as with the Woolworths example, the greater the trust in a company or brand, the greater the outrage and sense of being let down, when they do something we don’t expect from them. The flip side is the greater the trust, the more rope we will sometimes give them.

A wonderful example of this is, years ago, I used to work on a Trade Opinion panel, with Perry & Associates. Interviewing the Checkers guys, they said: “when a customer finds us out of stock, they’re furious with the store manager. When a Woolworths customer finds that something they wanted is out of stock, they say “I should have got here earlier”.

CEO’s see the increasing need to verify claims and demonstrate trustworthiness - more independent or external certification to prove they are trustworthy (eg Fairtrade, Beauty without Cruelty). In SA, testing beauty products on animals is illegal – you can’t have beauty with cruelty or you’ll be in jail. So there is no real need for this badge – yet we want it anyway. In the absence of this proof, businesses feel they are deemed untrustworthy. Any malpractice is deemed indicative of a greater malaise anyway: “I knew it – they all do the same”.

There is also the dynamic of the 24 hour news cycle: as one CEO said, “the media has got the news almost as soon as the Company has it”.

So the quick turn around of news is forcing companies to react much faster - how fast is fast enough? Take the recent Blackberry example, when it took several days for the company to respond to a Twitterstorm about a network problem.

Overwhelmingly, TRUST IS INCREASINGLY UNSTABLE.

Also, this thing called trust is also deeply personal. It’s about relationships. Trust cannot be outsourced. And I’ll talk more about outsourcing later.

Now, I know that we all know all of this.

We understand the business imperative of reputation management, of building and maintaining trust amongst our stakeholders, by saying, then doing, then delivering. And the risks if we don’t. Warren Buffet said it succinctly, “It takes 20 years to build a reputation, and 5 minutes to ruin it. If you think about that, you will do things differently.” Apple lost $100m due to one blog post! (See this excellent article by Tim Shier, Quirk).

However, if we take a look at how this year’s Reputation Index pans out – the 8 factors show us that there are areas we are doing far better than others. The ranking is as follows:

1.  Financial performance 
2.  Products and Services
3.  Vision and Leadership
4.  Workplace environment
5.  Governance
6.  Communication 
7.  BEE
8.  CSR

And this emphasises our key question:

How come the areas that define how we engage or communicate with our diverse stakeholders (Communication and CSR) are so low on the list? Remember – these are the scraps and straws we can actually control, in a world of communication that is largely out of our hands.

And, when I say ‘communication’ its not just external. Employer branding plays a vital role. Sustainability and community engagement are also critical areas both of communication and CSR.

So why so low on the scale?

In our opinion it’s because they’re too far removed from the Board, from the CEO. Are Boards too focused on the operational and inward aspects of Reputation? Have the communication aspects of Reputation been too far outsourced inside and outside the organisation?  We think so.

Corporate reputation seems to have separated out from Brand reputation. Corporate reputation has the CEO’s ear. But the discussions of how the overall corporate reputation is maintained and built through its brands’ messaging and actions, are missing in action on these boards.

Question:

How many Marketing Directors do you think sit on Boards?

I asked Donovan Neale May, the head of the Global CMO Council and he said “worldwide, we estimate less that 5 percent of corporate boards have experienced marketers as either internal or external directors.”

We estimate that under 20% of companies in SA have a strong marketing presence on the Board. And, we have it on good authority that those Marketing Directors that do sit on their Board often feel undermined, too often treated like a cost centre, rather than a strategic business builder.

Perhaps this is because of what they call the CEO-CMO disconnect.

In a study done by Fournaise in the UK, US and Europe it was found that 73% of CEOs think marketers lack business credibility.

Some of the top issues CEOs have with their Marketers are: 

·      They keep on talking about brand, brand values, brand equity and other similar parameters that their top management has great difficulties linking back to results that really matter: revenue, sales, EBIT or even market valuation (77%)

·      They bombard their stakeholders with marketing data that hardly relate to or mean anything for the company’s P&L (70%)

·      Unlike CFOs and Sales Forces, they don’t think enough like businesspeople: they focus too much on the creative, “arty” and “fluffy” side of marketing and not enough on its business science, and rely too much on their ad agencies to come up with the next big idea (67%)

The worrying part: while 73% of CEOs think Marketers lack business credibility and are not effectiveness-focused enough to generate incremental customer demand, 69% of the Marketers Fournaise talked to feel their strategies and campaigns do make an impact on the company’s business, even though they can’t precisely quantify or prove it – confirming the great CEO-Marketers disconnect.

The report is summed up like this:

“Until Marketers start speaking the P&L language of their CEOs and stakeholders, and until they start tracking the business effectiveness of all their strategies and campaigns to prove they generate incremental customer demand, they will continue to lack credibility in the eyes of their CEOs and will continue to be seen more as a cost centre than an asset” said Jerome Fontaine, CEO & Chief Tracker of Fournaise.”

So, the CEO thinks the Marketer is talking about arty and fluffy things?

Yet, these are two of the areas in which they rank lowest in terms of Reputation Index?

Is it because their role is seen only as “generating incremental consumer demand”? That may have been their role in the past, but in today’s world, their role has become much, much broader than that.

What piqued our attention, was King III’s attitude towards management of reputation.

There is a new age afoot. And it may as well be called “Brand Governance”.

King III has 9 chapters and a full chapter is dedicated to the issue of reputation as part of governance. King III’s Chapter 8: Governing Stakeholder Relationships defines the principle that “the Board should appreciate that stakeholders perceptions affect a company’s reputation”.

The Board, it is suggested, is the ultimate custodian of this reputation and the relationships with these stakeholders.

These stakeholders are the very people who may now, in terms of King III,  demand to know what you as a board are doing to protect the value of the brands, the intangible assets are increasingly almost more valuable than the tangible assets. Why have you chosen this positioning? Why have you embarked on this new creative route? Why did you respond in that way to a Twitter conversation? Who is the face of Twitter? Is it outsourced or is it the CEO?

They are the communities who can question your authenticity and ethics in your CSR programmes. They are your staff who ask how you can make promises to customers which they can't keep.

Consumers and communities are now empowered! And we’ve seen huge business losses as a result.

These things traditionally have kept Marketing Directors awake at night.  They’re now going to keep the CEO awake too, unless changes are made.

EisnerAmper, a US based firm, conducted a Board of Directors survey about concerns facing Boards, and found that reputational risk has for the first time overtaken regulatory compliance risk as the primary concern.  66% stated that reputational risk is most important to them (other than financial risk).

It’s time, in our opinion, to marry Governance and Due diligence with Brand management and Reputation.

It’s time for Boards to ask the questions about key reputation issues the brands and the company are facing. It’s time the most senior executives are put in charge of these conversations and these programmes.

An excellent example of this is Michael Jordaan from FNB, who presents an accessible and responsible face of FNB as the CEO, through his personal management of his active Twitter stream (@MichaelJordaan).

Or perhaps  it’s time that the person currently tasked with this increasingly important and critical job, The Marketing Director or CMO, is elevated to a higher place in the organisation.

In our opinion, it's time that Brand and Corporate Reputation be invited to lunch together at the Top Table.