Constructive disruption: Change, adapt and invest

Lara Sinclair — 5th August 2020

Innovative productivity strategies at fast-moving consumer goods company Procter & Gamble have been paying dividends even in the midst of a global pandemic as the packaged goods brand powerhouse focuses on what it calls “constructive disruption”.

P&G last month reported its biggest annual sales gain since 2006 as global consumers rushed to buy more cleaning and laundry products, with net sales up 4% to US$17.7 billion.

The company has been one of those to do well in the COVID-19 pandemic; other influential marketers have not fared so well.

Nike, for example, has seen digital sales explode, up 75%, to about 30% of total revenue -- a milestone it had previously targeted for three years’ time. Now it’s aiming for 50%; but expenses for shipping and returns and a large stockpile of unsold product no longer being ordered wholesale by bricks-and-mortar retailers have cut the company’s profit margins by 18%. “We are continuing to invest in our biggest opportunities, including a more connected digital marketplace,” Nike’s CEO John Donahoe said in a statement. 

Amazon -- adept at online fulfilment as well as retailing -- has also seen expenses grow, but that hasn’t stopped its share price from rising $1200 since the beginning of the year, underlining its dominant position in ecommerce.

Apple is also cleaning up thanks to online sales, in June becoming the first company to reach a market capitalisation of US$1.5 trillion. But Google’s parent company Alphabet, saw revenues fall for the first time, from US$38.944 billion to $38.297 billion, as struggling businesses cut search advertising. This caused Google to join the ranks of companies cutting their own marketing spending, which it said it would reduce by 50% for the rest of this year.

P&G, Nike, Apple and other champions of marketing shape new generations of marketers through their internal disciplines, training programs and their approach to external brand-building -- setting the bar high and influencing other brands across the industry.

So what is happening in a broader sense within marketing in 2020? We know marketing is at the heart of corporate responses to the challenges of a pandemic-impacted world as companies re-shape their go-to-market activities.

And according to the latest results of the semi-annual CMO Survey, produced by Deloitte, the shape of marketing activity is changing.

Overall spending is down, and likely to drop further, but the study shows marketing budgets have risen to their highest ever percentage of corporate budgets and revenues, at 12.6% and 11.4%, respectively. 

Online sales grew 43% on average between February and May, accounting for 19.3% of all sales for those firms that took part in the study -- which means digital marketing efforts are likely to attract a greater share of marketing spending.

Interestingly, social media has become a critical brand-building tool, with budgets up 74% since February, from 12.3% to 23.2% of total marketing spend.

Companies are increasingly using social platforms to engage consumers, with 84% of respondents to the survey using them for brand building, and more than 54% using them for customer retention during the pandemic.

And if it feels like we’re all doing more with less, staffing numbers bear that out: there’s been a 9% reduction in marketing jobs, the study showed.

The global shift to remote work is one that affects marketing as much as any other department: according to the Financial Times, almost a quarter of CFOs expect to move at least 20% of their workforce to permanent remote positions, making collaborative technology and security a priority.

How should brands respond?

According to Moeller, P&G is making “make productivity as integral as innovation” as it looks to drive brand choice. The company is prioritising disruption across the entire business, including marketing and supply chains, as it looks for ways to be more productive.

“The short-term need to balance this crisis and the long-term need to invest in top- and bottom-line growth underscore the importance of productivity,” Moeller said. 

“Success in our industry comes with a mindset of constructive disruption, a willingness to change, adapt and invest in long term technologies.” 

Marketers have traditionally not been great at improving productivity. This is partly because stakeholders external to marketing are often involved in marketing decision-making -- which can sometimes cause timelines to expand without notice.

But there are clear options for marketing leaders looking to improve productivity and engage in “constructive disruption”.

  1. Streamline your administrative processes

Vague or misdirected briefing can cause campaign creation investment to blow out by an average of 30%. 

It doesn’t take expensive software to fix the problem: simply establish a process by which the marketing leadership team signs off on all major briefs to internal or external creative teams -- ensuring they’re only ever working on properly briefed, approved projects. 

Have them approved the same way or utilise compliance technology to keep your brand on message. 

In most enterprise marketing teams, significant resources lost to poor administrative processes can be redirected to more productive activity.

 

  1. Invest in technology that underpins productivity

Whether you’re implementing a messaging tool, a brand automation platform or other technology, prioritise innovation that underpins or boosts productivity. 

Identify what the long-term gain is likely to be: it should be worth the short-term pain. 

When you’re producing more for less, you’ll be talking the language of the CFO -- not a bad habit to get into in a tight market.

 

  1. Anticipate and avoid bottlenecks

Spending patterns in the medium term are pretty clear: high-volume, labour-intensive digital marketing and social media channels are already attracting increased investment and look set to attract more. 

Look for ways to manage those channels as efficiently as possible for maximum impact and minimal investment of time from your team.

Try templating technology that allows external stakeholders to create their own assets -- within approved brand guidelines -- reducing the load on stretched production teams, and improving the speed and responsiveness of marketing throughout your organisation.

It can transform marketing into an organisation-wide enabler, instead of the brand police and production bottleneck. 

Innovations developed during a crisis often yield a positive impact in the long run, as opposed to simply cutting back across the board; marketing is no exception. 

We can’t all be P&G; but its philosophy of constructive disruption and a willingness to change, adapt and invest in technologies that drive productivity is not a bad mandate to follow as we navigate our way through these challenging times.

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