The average chief executive is in the job for eight years. For chief financial officers, it is five years. For chief marketing officers, the average is just four years. Why does this matter? Well, thanks to a new report commissioned by Magnetic and compiled by Enders Analysis, we can identify this as just one piece of evidence of short-termism that is having a potentially crippling impact on marketing effectiveness.
Enders cites the changing ownership of UK-quoted shares, which are now held by diverse interests across global markets, as a key contributor to this phenomenon. This new breed of shareholder is demanding faster returns than was previously expected by UK insurance companies and pension funds, which owned 43% of UK shares in 1998 but now own just 9%.
This short-term outlook has also contributed to volatility within senior positions at public companies. In marketing, a discipline in which top-level talent is already thin on the ground, it is even worse, with just 2.6% of directors at the major companies monitored by Standard & Poor’s coming from a marketing background.
This would not be such a problem had companies got their trusted advisors by their sides. But again, when it comes to relationships with ad agencies, we see a move towards shorter-term arrangements. The average partnership between brand and agency fell from 86 months in 1984 to 30 months in 2013, according to the IPA. Which, alongside the need to deliver efficiencies, explains why procurement departments are now so heavily involved in marketing investment decisions.
There is no doubting that technological disruption has also contributed to the uncertainty and prompted a shift towards shorter-term decisions about marketing investment. It is anticipated that digital advertising will grow because of the forecast that by 2020 we will be spending an extra 21 billion hours online, 75% of which will be on mobile devices.
In a session at ISBA’s conference in March, Saatchi & Saatchi chairman and chief strategy officer Richard Huntington said of the industry’s response to consumers moving online: "We believe that quality of media is simply the quality of the pipe, and whether it accurately reaches someone we have predicted might be interested in us, rather than the whole context around the message and the brand."
Coming back to the work by Enders, its report for Magnetic noted: "Context and environment in digital media have not been systematically quantified as an influence on brand, on premium price positions and on a range of other marketing objectives… A related failure to measure a range of marketing risks, such as the negative reputational effects of poorly executed retargeting or the long-term implications of the radical shift in spend from brand to activation", could damage a brand forever.
The attribution models of return on adspend have also become compromised. Building the tools and analysing the results of today’s complex marketing investment is costly and takes time, which means it is too often neglected. Consequently, there is not enough weight placed on pinpointing the true context and value of marketing communications.
"When it comes to relationships with advertising agencies, we see a move towards shorter-term arrangements"
It is not too late, though. We can defuse the effectiveness time bomb by recognising short-termism results in attribution and structural biases in the marketing and media industry towards "the last click" at the expense of brand-building. It also leads to the neglect of creativity and planning and a lack of focus on the quality of the context and environment in which marketing messages are located. Anybody looking for evidence that advertising can really hit the fan in this climate just needs to consider the sorry state of affairs that led to a boycott of YouTube by advertisers over ads that appeared next to offensive content.
These incidents highlight that it is time we got to grips with the benefits and risks associated with the context in which marketing appears and its impact on building brands and delivering long-term return on investment. It is worth companies focusing their resources on how each media environment provides different levels of trust, quality and relevance for both brands and audiences. That is the most obvious and pain-free way to start reversing the decline in marketing effectiveness while averting some of the brand crises that pose a real threat to shareholder value.
As Magnetic chairman and chief executive of Time Inc UK, I am committed to increasing our investment and efforts in accurate measurement tools. AMP, our new audience currency, is a great start and lays strong foundations for better understanding of audience behaviour. But we also want to play our part in developing more partnerships between channels, media brands and advertisers to help quantify these complex but critical issues around context and environment.
There is plenty of evidence from the UK, the US and Australia about the long- and short-term role strong and trusted content channels such as magazine brands play, but it seems as though we will need to raise our game if we are to allay the "crack hit" that is our obsession with the last click and showing immediate returns.
Marcus Rich is the chief executive of Time Inc UK and chairman of Magnetic