By Carl Moggridge, head of strategy, Edelman Australia.
Undoubtedly, in all its forms, advertising still works. It’s still a fundamental driver of growth and an integral part of the economy. However, across the pond in the US, The Association of National Advertisers suggests that our efforts may not be quite as effective as they used to be.
Despite total marketing investment climbing to $1 trillion, sales have declined for the second straight year. Last year saw a 7.5% decline in sales, a concerning trend nobody obviously wants to continue.
There are of course many factors causing this, but one of the biggest, is a worrying race away from objectively trying to grow a brand, towards filling the world with content just to optimise your brand tracker, or push an agenda based on the type of content you make money from.
By ignoring the basic principles of business strategy and only spending our energies on short term tactics, we know from IPA’s research that our efforts are less effective. So, what is it that makes us continue along this path?
We’re comfortable with the easy path
I’m sorry to say it, but we generally default to the easiest way. It’s the status quo and nobody gets fired for questioning that. It’s also probably a bit sexier and certainly a lot less accountable.
But let’s be frank – brand love or a novel virtual reality, programmatic, influencer-fueled thing from outer space are all well and good, but it isn’t a business strategy – it’s something else. Is it any wonder that management consultancies continue their assault on the industry, while charging a premium for the privilege?
Back in the 50s, the iconic Howard Luck Gossage made this timeless observation:
“Instead of starting out the way you would with any other project, by defining the problem and then deciding what to do and then allocating the money, the procedure is reversed. The advertising recommendation is based on money to be spent rather than problems to be solved.”
It’s a shame things haven’t changed much since Gossage, but what else could you do?
Follow the well-trodden path
In between the easy path and the hard path, is the well-trodden path. Stealing and applying the frameworks developed by management consultancies, pioneers such as Michael Porter and Peter Drucker, or more recently institutions such as the Ehrenberg Bass Institute, is still a very, very good idea.
Just because they’re well-trodden and from the slightly stuffier, or academic side of our industry, these approaches to business strategy are still relevant and to a degree, have stood the test of time.
Having worked in a few agencies that claim to solve business problems, it’s amazing how little rigour they have when it comes to solving their own.
And as much as I love Simon Sinek’s point of view on the power of why, again it isn’t a strategy and it lacks a hell of a lot of how.
Let’s drop the anti-intellectualism because the well-trodden path is 100% better than the easy path (and the big wigs are familiar with it).
Be bold and take the hard path
Business strategy isn’t necessarily seen as an exciting endeavour, at least in our industry, but it is. How you define your business and the problems you’re solving, are the source of disruption for many industries.
If there was anyone that takes the hardest path of all and reaps the rewards it’s Elon Musk. In a recent interview, Musk states that defining the question is often the hardest. Once that’s been cracked, the answer is easy. He continues, that as his questions have gotten better, so have the value and impact of his companies.
The flipside of this of course, is that if you’re defining the business you’re in incorrectly, it could be your demise. If the post office was in the personal communications business instead of the letters and stamps business, where might it be now?
Devising a strategy by taking a first principles approach to business is no easy feat, but that’s half the fun isn’t it?
So, which path do you want to take?
Carl Moggridge is co-presenting AdSchool Strategic Planning Extended Skills, taking place in Sydney from May 17. The course is also taking place in Brisbane from May 31, Melbourne from August 9 and Perth from August 15.