How to Get Great Work from Your Ad Agency

We all know its more important than ever to get the most out of your marketing dollars, and to do so you must get great creative from your agency. But in today’s frenetic world, many have lost the art of making it happen. Here are some important tips:

1. Get the “A Team” on your business. In my experience, every agency has their “A” talent, and their B/C talent. Its important to get their strongest performers on your account- even if you have to go to a smaller agency to do so. The A team at a regional agency typically is more creative, experienced, and talented than the C team at a national player.
2. Take the time upfront to brief the Agency on your business situation, objectives, and most importantly, your target consumer. A holistic understanding of the situation will lead to better creative and more insight.
3. While its worthwhile to work collaboratively on the creative process, it is critical to have a single clear decisionmaker. This is important for a couple reasons. First, having multiple decisionmakers tends to lead to the work getting “dumbed down” to the least common denominator. Second, agency creatives don’t make advertising for companies, they make it for people- that’s why its important for the client to get to know both the account team and the creatives.
4. Do consumer research up front with the brand team, the account team, and the creatives. This allows you to understand consumers together, gain consumer insights together, bounce ideas off each other, and build a relationship with the key players. 
5. You’ll get better work if you treat the agency like a partner on your business, rather than as a supplier.
6. Be media agnostic. Work with the agency to determine what specific media vehicles will best accomplish the objectives of the project.
7. Write a clear, concise creative brief. The most important elements of this document are the target consumer, the brand benefit, key consumer insight(s), and the brand personality.
8. Ask to see a range of work. This allows you to get some “safe” work that is comfortable and on point, but likely not “breakthrough”, as well as some options which scare you because they are higher risk, but potentially higher reward.  If it’s a major project, you may want to have multiple creative teams providing work.
9. Give the agency enough time to do great work. Most of us are linear thinkers, and are by nature, impatient.  But the creative process works best when the creative have enough time to consider a broad range of directions.
10. Listen. When the agency presents their work, listen and ask questions to be sure you clearly understand the inspiration behind the work.
11. When commenting on work, speak in terms of objectives, not tactics. Nothing drives a creative crazy more than a client saying, “can we use this font, or this specific color”. A more appropriate comment would be, “I’m finding the current font difficult to read, can you consider other options which pop better?”
12. Throw them a bone. If the agency feels very strongly about work that you are lukewarm on, go ahead and include it in testing. You may be surprised how consumers react to it, and at the least, it shows you respect the agency’s expertise and are willing to work together. (Important note: this does not mean you should produce subpar work, it does mean that if the agency feels particularly strongly about a particular direction, you should get some consumer feedback on it.)
13. Celebrate success! Once you have worked together to develop powerful work that builds your brand, show genuine appreciation to your agency partners by celebrating success together.

Thanks for stopping by, and as always, I welcome your thoughts and insights.
Mike

Private Label Advice for Retailers from a CPG Leader

Private Label products are one of the few beneficiaries of today’s tough economic conditions.  Recent Nielsen data indicates private label is up on average +7.4% versus year ago, with an average share of 16.9%.  Retailers- from Wal Mart, to Safeway, to Kroger, to Super Valu- are wisely turning to private label to drive growth and profitability at this time.

However, many retailers are not yet taking a long term, holistic approach to the role that private label products should play in their business.  Here are eight suggestions for retailers to consider as they seek to profitably grow their private label businesses:

1. Remember to keep things simple for the shopper. Don’t proliferate sku’s just to fill shelf space.  Safeway is guilty of this in the pasta sauce category.  Besides carrying all of the national brands, Safeway has no less than three complete private label lines of spaghetti sauce- Safeway Select line, the Eating Right line, and O Organics line. (insert safeway spaghetti sauce pictures here).  Why would consumers need so many lines of pasta sauce, with little or no differentiation?
2. Don’t  launch private label into categories which aren’t big enough to merit it.  Wal Mart, for example, has tested a private label diabetic shake product to compete with Glucerna.  This is a relatively small category in absolute, and launching private label into it pulls down the velocity of all the sku’s in it- both branded and private label.
3. Play fair with the national brands.  Let’s face it, in times like these it is tempting to focus all growth on private label by unfairly disadvantaging the national brands in shelving, merchandising, etc.  But its important to take the long view here, and recognize that national brands have driven traffic to the category for years behind investing in building a relationship with consumers, product innovation, etc.  Its important to balance growth opportunities between both private label and national brands for the long haul.
4. Don’t leave money on the table.  It can be tempting to get VERY aggressive with private label pricing.  After all private label products frequently have less expensive ingredients, cheaper packaging materials, no marketing costs, and limited R&D expenses.  But its important to consider whether you are leaving money on the table by pricing the product lower than the consumer expects.  In this situation, you are hurting category $$ sales, and category profitability.  To effectively price private label products, its important to consider national brand prices, consumer expectations, and what other retailers you are truly competing with.
5. Take the time to develop attractive packaging.  Most retailers don’t spend enough time ensuring their private label products are attractively packaged, which often sells what’s inside the package short.  If it’s a food product, the graphics better produce appetite appeal.  Using bland packaging with lots of white space and a purely descriptive name like “Frozen Toaster Waffles” or “Dry Dog Food” conjures up images of the horrible generic products of the 80’s.  You may laugh, but many retailers still have packaging that’s not far away from that.
6. Choose a reputable supplier.  Its more important to select a supplier who will provide high quality product, on time, in the quantity and variety ordered, than it is to choose the cheapest supplier.  Remember you get what you pay for.  Squeezing too hard on price will result in substandard product or inconsistent supply.
7. Understand your target and what he/she is looking for.  Wal Mart’s Great Value line, works for the Wal Mart shopper, who will typically sacrifice bells and whistles to spend less.  But that wouldn’t fly at Safeway or Harris Teater.  On the other hand, a few years ago, Wal Mart tried to lead the market by launching private label organic baby formula before any branded organic formulas were out.  Predictably, it flopped.  Talk about not being in touch with your shopper.
8. Understand that over 60% of households have only one or two people in them.  It can be tempting to offer private label in large sizes to drive transaction size. That’s an acceptable strategy, but it is also important to keep in mind the growing number of smaller households, and be sure you are offering products which meet their needs.

Private label is an important part of most retailer’s product portfolios and following these tips can help to optimize its performance.  As always, I welcome your thoughts and comments.

What are the barriers to CMO’s leading the Corporate Growth Agenda?

Today’s guest post is by Randall Beard, a leading and award winning Chief Marketing Officer and General Management executive with 25+ years global experience across consumer packaged goods, financial services and high-touch service brands, including Nielsen, Procter & Gamble, American Express, and UBS. He is currently Global EVP & General Manager at Nielsen IAG, responsible for Consumer Packaged Goods. To read more about his thinking, visit Randall Beard’s Blog.

The CMO’s job is simple—to drive growth, right? As Lou Gerstner ex-IBM and American Express CEO once put it: the role of Marketing is to build the brand and deliver a great customer experience. But is it really that simple?

At the recent CMO Club Summit in San Francisco, I was part of a panel discussion with Joe Ennen, SVP Consumer Brands at Safeway and Scott Thurm, Management Bureau Chief of The Wall Street Journal, titled "CMO's as Leaders of the Corporate Growth Agenda."

Scott led off the discussion by reframing the topic, asking, “What are the barriers to CMO’s leading the corporate growth agenda?” Joe, Scott and I spent the session discussing and debating this important question. 

Barriers to CMO’s Leading the Corporate Growth Agenda

CEO/CMO Alignment - I told the group that "the best CMO is a CEO who believes in Marketing." The CMO's ability to lead the corporate growth agenda starts with alignment with and support from the CEO. Not all business models and CMO’s are created equal. The role of Marketing in an organization can vary widely. And the CMO role can range from a narrow Marcom role all the way to something like a Chief Growth Officer. The CEO and CMO must be aligned on the role of Marketing in the organization for the CMO to effectively lead the growth agenda.

Growth Means More Than Marketing - The CMO has to think more broadly than Marketing. What are all of the potential growth drivers - Marketing or otherwise ? Companies such as Zappos.com have actually gone so far as to define a non-Marketing function like customer service as Marketing. A critical part of the CMO's job is to understand the business model and all potential drivers-whether inside Marketing or not. This is becoming even more important as digital and social media blur the lines between Marketing, Public Affairs and Customer Service.

• At UBS, we learned from Corporate Reputation research that being “open and transparent” was a key driver of reputation, and that reputation scores correlated  with “willingness to refer others” and other business growth metrics. This led the Marketing function to explore programs to communicate to stakeholders in more open and transparent ways.
• At American Express, we learned that offering free “Special Merchant Offers” to consumers using their Gift Card drove significantly higher purchase intent. This led Marketing to spearhead the development of partnerships with key consumer preferred merchants—and to market these offers as a key benefit.

Voice of the Customer – In Joe’s view, another key barrier to the CMO driving the corporate growth agenda is customer neglect. The CMO needs to continually advocate for keeping the customer front and center. All CMO’s could learn from A.G. Lafley, ex CEO of Procter & Gamble, who continually reminded employees that “the consumer is boss.” 

Customer satisfaction surveys not only measure satisfaction. They also measure the important factors contributing to satisfaction and quantify the relationship between those factors and satisfaction. Understanding these drivers enables Marketing to define areas outside Marketing that are central to driving growth. 

• For example, at UBS we learned that client contact frequency was an important satisfaction driver—more was better up to a threshold where satisfaction leveled off. Yet, the majority of client advisers were contacting clients well below the threshold. This led to a concentrated effort to improve contact frequency—and drive growth.

Connecting Customer Needs with Enterprise Assets – I stressed the important role the CMO plays in getting the organization to think about the entirety of the enterprise’s assets and capabilities. Connecting customer needs with assets from outside a business unit is a great way to drive growth—and one that organizational structure often stymies.

• Crest: Consumers had an unmet need for whiter teeth, and paste formulations simply didn’t do the job. A smart R&D person connected this need with synthetic bleach technology from laundry and substrate technology from paper making to create—voila--Crest WhiteStrips.
• Gift Card consumers wanted to buy the cards in retail. The American Express Gift Card group had no relationships with grocery and drug store chains. So, the organization leveraged the Amex Establish Services organizations retailer relationships to facilitate introductions and help gain distribution in over 70k locations in less than two years.

Keys to CMO Success

CMO’s clearly have a tough job, with an average lifespan of just 28 months. Lou Gerstner’s formula for CMO success is a good starting point, but CMO’s need to go further. Building the  brand and delivering a great customer experience plus driving the corporate growth agenda can help CMO’s and their firms be more successful in the future.

Are Brand Marketers Facing a Perfect Storm When It Comes to Private Label?

There’s no denying that private label continues to grow. In fact, Nielsen 52 week data thru July 11, 2009 shows that private label is up +7.4% across the Food, Drug, and Mass Merchandiser channels, with an average share of 16.9%. But why is that?

We all know it’s a tough economy, with consumers eating at home more often in an effort to save money. So when the economy improves, we should expect to see private label shares return to historical levels, right? Well, not exactly. Consider the following: 

• Private label shares in the U.S. have historically been well below those of Europe and Canada, and even with the recent share increase in the U.S., that gap remains.
• The “social embarrassment” associated with buying private label appears to have disappeared recently. Consumers used to “hide” private label products in recipes, while trying to avoid letting others know they use them. That is no longer the case. This is part of a larger overall trend going on in our country today where being thrifty and seeking simplicity is now seen as a good thing, and is being embraced by the masses.
• The quality gap between private label and national brands is narrowing. This is dangerous for brands, as once consumers try a private label product, and determine there is minimal difference from the national brand, they become less willing to pay the premium that brands are used to commanding.
• In today’s hypercompetitive, slow growth marketplace, many retailers share a common strategy of actively seeking to grow their private label businesses, as they are typically able to earn higher margins from private label versus national brands.
• The line between private label and national brands is blurring. Well managed private label products are becoming “brands” to consumers. Well designed offerings like Safeway’s O Organic and Eating Right lines, as well as Wal Mart’s Parents Choice products, are often viewed by consumers as brands.
• Departing from historical practices, retailers are beginning to broadly advertise their private label products beyond their weekly circular, with Wal Mart’s Great Value brand television campaign being a prime example.

Frightening, isn’t it? So what can brand companies do to stay competitive in this new reality?

1. First, continue to invest in brand equity, being sure to build an authentic relationship with your target consumers while stressing your brand’s point of difference.
2. Second, innovate, innovate, innovate. Staying ahead of private label products (and other branded competitors for that matter) gives your consumer a reason to pay a premium and maintain a relationship with your brand.
3. Understand how much your brand interacts with private label. Studies have shown that premium brands, with strong brand equity, often have less switching with private label products than second tier brands. This is important as you can then sell the retailer on how your brand attracts a different shopper and helps maximize the category closure rate for the retailer.
4. Understand and manage the price gap. In most categories, consumers are still willing to pay more for national brands versus private label. Where brands get into trouble is when they try to command a larger premium than the consumer thinks the national brand is worth.

Next time we’ll look at whether it makes sense for branded manufacturers to be in the private label business. Thanks for stopping by, and as always, I’d welcome your comments.

Refocusing On Marketing & Leadership Principles

Marketing and Leadership are topics that I have tremendous passion for.  I have been extremely fortunate in my career to work for some fabulous leaders and teachers, for some great companies, and on some iconic brands. Here are a few examples of businesses I’ve had the good fortune to help shape:

The inspiration behind this blog is to give back—to share what I have learned over the years, to throw out observations and ideas, and to challenge convention. It is my hope that this will lead to debate, and to growth. Philosophically, I believe each day we are either getting better—growing and learning—or we are getting worse, falling behind—its simply not possible to stay the same.

The business world is at an incredibly interesting time. First the economic reality we have all had to face:

• Entire industries like banking and auto manufacturing have been turned upside down
• Unemployment is at a peak
• The stock market has become extremely volatile with several hundred point swings becoming commonplace and retirement nest eggs have been diminished
• Discretionary income has declined as taxes and health care costs continue to rise and wage freezes/pay cuts become common- meaning consumers have less dollars to spend at retail

In addition, the consumers who drive companies’ economic engines have also evolved:

• Consumer segments are becoming much more diverse in terms of ethnicity, age, interests, attitudes, and behavior.
• How we interact has changed dramatically—social media and texting have replaced many face to face conversations
• Technology has enabled extraordinary availability of information (both accurate and not so accurate), which has changed the way consumers make decisions.

While these unprecedented times call for some changes in how companies behave, the core leadership and marketing principles of successful companies should not change. Here are some of the most important marketing principles (we’ll save leadership principles for a later post):

• Understanding your consumer and what motivates them
• Building brand equity by creating an authentic relationship with your consumers
• Always act ethically, and transparently with your consumers (and all your stakeholders)
• Providing true value
• Continue to innovate to meet consumers wants and needs
• Resist the urge to cut marketing spending dramatically; instead focus on maximizing return on your marketing investment

In the coming weeks, I’ll delve deeper into these principles, as well as sharing thoughts on effective leadership. Thanks very much for stopping by, and please let me know what you think.