What you need to know:

• Cummins & Partners is bidding to prove the link between marketing investment, advertising and growth.
• CEO Michael McConville last year returned to Australia to take the helm after five years as Managing Partner with adam&eveDDB in London.
• He saw first hand the power of econometric modelling with clients including John Lewis and Volkswagen.
• But he thinks the Australia is about to go way beyond that, applying econometrics not just to optimise channels but to creative. Which is why he’s inked a deal with Mutinex to use its real time market mix modelling platform.
• McConville thinks the platform enables “a form of applied marketing science”, and reckons the upshot is that marketers and agencies can prove that the rules set out by the likes of Binet & Field, Mark Ritson and Byron Sharp actually work.
• If he’s right, marketers will no longer need to talk marketing metrics to CFOs, but hard growth numbers – and forecast what their investments will deliver in sales terms.
• Plus, brand teams and agencies can feed in learning in near real time to improve creative effectiveness.
• McConville is starting to restructure its fees to be lighter upfront and heavier on share of growth as a result: “I can look a client in the eye and say we only grow when you do, simple as that.”
• There's a lot more to unpack in the podcast. Get the full download here.

Econometric modelling is largely the preserve of big brands, and far from perfect, says Cummins & Partners CEO, Michael McConville, of his UK experience.

“It was used on John Lewis, it was used on Volkswagen but they would typically do one or two dips a year – and it might take five months for the data to come through to tell you exactly how well your work performed.”

That meant it took multiple years for the learning to start informing brand work. But it was often worth it: McConville cites Audi as a UK standout.

“Benjamin Braun [now CMO at Samsung Europe] was a great marketer, he built learning over three to four years, and Audi were able to get to a point where they could forecast within 32 units [i.e. 32 cars], what their campaign spend was going to get them in terms of sales,” says McConville. “That was really amazing.” The approach also helped Audi land a Cannes gold and IPA Grand Prix.

Working with John Lewis, McConville says econometrics ended conversations around whether the work actually worked. “It was just a question of how well it worked, and then you realise that creativity is the determining factor between really strong success, or not achieving as well as you could.”

The same applied to Volkswagen: “We were able to see across a range of different pieces of communication – global, local, regional – what was working best in the short and the long term; you could do it by asset by channel … and it just pulled the market forward,” per McConville. “This worked across all channels, and there’s nothing better to input to your creative for future campaigns than taking learning from what has worked previously.

Better, faster, scienceier

McConville thinks Australia should lift the same playbook and write the sequel by going beyond the “infancy” of optimising channel mix and into actual creative optimisation that drives growth both long and short-term – but without taking years to do it.

Which is what McConville is attempting to do via a deal with Mutinex to use its real-time econometric modelling platform – and he’s staking Cummins future revenue on it working.

McConville thinks the platform enables “a form of applied marketing science”, and reckons the upshot is that marketers and agencies can prove that the rules set out by the likes of Binet & Field, Mark Ritson and Byron Sharp actually work.

“80 per cent of what those guys talk to is largely the same… and if you follow those core principles, econometrics will typically prove them to be true and correct,” says McConville.

The difference is that brands can now start to inform future work within days of a campaign going live. “It took Audi and John Lewis years to build the number of campaign case studies required to get reliable data …. You had two dips a year and the results would pop out five months after the fact,” says McConville.

Which is why he thinks real time market mix modelling is about to put marketers and their creative partners back in the driving seat.

“This is a step ahead of what I’ve used in the past by a long way. To me it’s a vanguard moment in our business and in our industry. Being able to ascertain the actual value – the actual marketing return on investment that every asset and component part can deliver, within five days of a campaign going live – is a transformational moment.”

Connecting brand to revenue

The ‘transformational moment’ is connecting advertising and brand investment directly to revenue while enabling full transparency on the data between brand, media and creative agencies. Which mean marketers can prove the value of investing in brand while also being able to more accurately forecast marketing investment's impact on sales in the shorter term.

“It allows us to connect advertising and brand to business – and that’s the missing link,” says McConville.

“I feel for CMOs, because we talk to them about brand terms like ‘awareness’ and ‘consideration’. But we've never been able to tell them what that means for the bottom line. So we serve up our CMOs to go and talk to the C-suite. And the CFO says ‘that all sounds wonderful, but what does 5 per cent increase in consideration mean for business? What return am I getting?’ and the conversation dies.”

He reckons the platform, used properly, can help flip that narrative – and give CMOs back their C-suite mojo.

“I'm interested in returning marketing to being perceived as a growth centre, not a cost centre. When we were growing up, there were two core growth centres within our business. One was new product development, and one was marketing. Somewhere along the way, we lost the battle to talk about marketing as a growth factor in a business, it's become a cost centre. And it's been really hard for CMOs and marketers to justify why they spend what they spend,” says McConville.

“If I can put a marketer in a position to say ‘give me $1 million and I can prove to you that I'll return $4 million back to the business’, marketing is straightaway at the top seat. That is what we owe clients, that's what we owe marketing – and that's why I say this isn't just an agency repositioning in [Cummins & Partners] going after this,” he adds.

“This is the beginning of an industry repositioning. This is a switch point, which means in five years, everyone will look back say ‘I can't believe we didn't know that stuff’. That's what I've always wanted to do – and now we've got the tools to do it.”

McConville won't disclose which of Cummins & Partners clients, which include the likes of Jeep and McCain, will be first off the rank. But in terms of using the platform to predict sales outcomes off the back of marketing investment, “I think we’ll be looking to beat Audi,” he says. “I think the level of predictability through this will be much tighter because of the close to real time nature of what we can do.”

Media agency gains

While Cummins is full service, McConville sees big gains for other media agencies too.

“For clients, it will plug in sales data, it will plug in pricing, it will place in seasonality, originality, all of those elements from a media perspective. It will take all third party data and platform data over the course of two and a half to three years minimum, depending on what the client has access to and the agencies have access to … That’s a ten week set up, so there is patience required. But that is not very long, compared to normal econometric models,” says McConville.

“Once you're up and running, you can take insights from all those [historic] campaigns and you can use those insights to plug into work from then onwards. So everything just helps you optimise. And it allows you to predict what you're going to do next … to predict what your campaign is going to return," says McConville. "It took Audi four years to get to that level of consistency ... This is unlike anything we’ve been working with before. It [enables] a proper coalition and partnership between media, creative and clients – and where [data] transparency is key.”

For one client now going through set-up with the Mutinex platform, “we'll get 20 licenses,” says McConville, but then distribute them to partners.

“The client will have some of those licences, we'll have some licenses, but I'll also pass over licenses to the media agency – so we will all have total transparency. That's the play. This is not about getting a partnership in place and raking in more cash, this is about doing the right thing by clients. And that transparency, that openness, that forms really tight teams,” he adds. “The teams that I worked with on John Lewis and Volkswagen, they were phenomenal – across the board, the media agencies, creative, digital, client, everyone played brilliantly together. We all had the same visibility and trust, and if you can build those kind of environments, you’re unstoppable.”

Making growth pay

It might not be about “raking in more cash”, but McConville is backing the agency’s bet on faster econometric modelling to change its business model and fee structure.

“One of our clients at the moment is under this new model. They are going to pay me less month on month – I’m putting that margin at risk. Then we’re developing a bonus structure which enables us to grow [revenue] as we growth their business. So as they achieve higher degrees of marketing return on investment, we will bonus against that – and that won't just be some annual piece, which is fairly commonplace for large brand relationships – we'll look at that on a monthly on a quarterly basis because we can,” says McConville.

“That client totally understands that they'll pay me less upfront, but that the chances are they'll pay me more in the long run. But they will be happy to do so because we'll be able to prove the incremental gains we've made for their business,” he adds.

“I think a lot of agencies have toyed with this notion and probably thought about something like a royalty-type approaches as nirvana. But they've been unable to do it …. Now I can look a client in the eye and say we only grow when you do, simple as that.”

There's a lot more to unpack in the podcast. Get the full download here.