There’s only one thing that can match the span and range of topics discussed at the recent ANA Advertising Financial Management Conference. And that’s the passion of the brand and agency leaders having the discussion.
Among my big takeaways were valuable insights into current thinking on agency compensation; a fascinating case study on how Mastercard is reinventing brand marketing; and the challenges of navigating a constantly shifting business environment. Here’s a summary.
1. Agency compensation: Movement towards value-based pricing and away from timesheets
This topic never gets old—you can always learn a lot by following the money. And the panelists who presented this topic in two different sessions did cover new ground. David Beals and Brittany Elliot presented findings from the ANA media services and compensation survey conducted in April. Later, Christin Earley of Fiat Chrysler and Antonio Humphreys from Adobe shared how they think about agency compensation. (Hint: their bias is for value-based pricing.)
When I look at these sessions together, here’s what I learned:
- Compensation drives behaviors – and timesheets often drive the wrong behaviors. For example, a time-based fee structure can dissuade an agency from asking that talented senior media strategist to attend meetings because there aren’t many hours left in the budget. The result could be the loss of an opportunity to develop a breakout idea. Despite issues like this one, the marketers surveyed by ANA report that time and labor compensation models still dominate how they buy media planning and buying services. The only exception is programmatic.
- It seems to be simple common sense: You can elicit desired behaviors by using performance-based compensation. But that approach is actually losing ground. Only 46% of brands surveyed by ANA report paying any form of performance incentive as an element of their base compensation structure. That’s dropped from a high of 61% in 2013.
- There are some good trends in the data. For example, most often, performance compensation its structured as a bonus (reported by 57% of survey respondents.) That means if an agency exceeds defined benchmarks, it earns extra money. A mirror tactic—a penalty model—is used by 38% of those surveyed. Here, an agency would owe money to the brand if their work fails to achieve agreed-upon goals. (In those cases, brands seem to buy into what life coach Tony Robbins says: “People will do more to avoid pain than they will do to gain pleasure.”)
In any case, an ideal solution is still a work in progress. One panelist characterized the desired end state as “being highly overcommitted” to the client and “capable of delivering transformative business results”.
2. Brand reinvention: lessons from Mastercard
A keynote by Raja Rajamannar, Chief Marketing and Communications Officer and President, Healthcare Business at Mastercard, was a real eyeopener—and ear-opener.
One of the most innovative marketers I know, Raja spoke about Mastercard’s brave decision to eliminate the wordmark, “Mastercard” and base its brand identity solely on its symbol and new sonic branding (which has yielded a visually interesting brandmark paired with a very catchy tune.)
Far from being an “out there” creative choice, Mastercard’s tremendously innovative new identity system is the result of foresight and analytic rigor. This decision was underpinned by Mastercard’s drive to build a sustainable competitive advantage in a world where the printed page is giving way to a voice world. Voice is the future of shopping —and voice commerce is exactly where Mastercard plans to lead. No wonder Raja’s presentation was the talk of the conference.
I couldn’t tape his ANA conference presentation for you so here’s the next best thing: watch what Raja shared about the strategy in this short YouTube video.
3. The business environment has never been more dynamic
Agencies and brands are riding wave after wave of change, and that truth surfaced at multiple sessions. Here are five of those trends:
Digital transformation: It’s a thrill ride. According to Accenture, 84% of digital transformation efforts are stalled by integration challenges. And 91% of brands have moved at least half of their digital marketing operations in-house to achieve greater client control. The research indicates 87% of decision-makers are still concerned with trust and transparency. Finally, marketers need a large dose of corporate courage in order to actually do things differently.
Purpose: Purpose was selected by ANA members as the marketing word of the year in December 2018. It also tops the list of the leadership agenda items for the CMO Masters Circle. Leading with purpose means transforming brands from the inside out to inspire key audiences such as employees. Purpose is also an effective sales growth strategy. (86% of shoppers nationwide believe that companies should take a stand for social issues, and 64% said they are very likely to buy from a brand that supports a good cause. This data is from a 2018 Shelton Group report, “Brands & Standards: Social Purpose is the New Black.”)
The pace of societal change: Businesses today are working to adapt to the changing values of their customers. They’re working to achieve gender parity, for example, and are making mental health awareness a priority. As the pace of change at the intersection of technology and human behavior continues unabated, it presents strategic challenges. (Think AI, robotics and ongoing cyber security threats.) At the same time, extreme weather events and rising sea levels are emerging as threats that businesses can’t ignore.
Business partnerships: A couple of decades after partnering became an essential strategy, this practice has really hit its stride. Today, partnerships happen fast, have a tightly defined focus, and need to produce timely results to be considered effective.
Big company growth has become binary: During his presentation on the mandate for change, Tom Morton of R/GA mentioned that half of the Fortune 500 is growing–and half is not. It seems that 52% of Fortune 500 companies shrank and while 48% grew. This statistic underscores the struggle to stay ahead in a shifting business landscape.
To sum this up, there’s no doubt that the ANA Advertising Financial Management Conference was a worthwhile event for learning what’s on the mind of industry leaders. If you are interested in hearing more, please feel free to reach out.