Deep Dive

Some of Australia’s biggest brands across airlines, banking, retail and telco are set to take a financial hit due to underinvestment in marketing, innovation and customer service, leading to significant declines in brand strength and value, according to the world’s leading brand valuation firm. That will play out over the next year or so as they lose some of the network effects and efficiencies delivered by strong brands – including pricing power and ability to command higher premiums, customer acquisition and loyalty, recognition, consideration and recommendation, directly impacting revenue. The good news for strong brands is that previous investments insulate them from economic downturns and systemic shocks, according to Brand Finance MD Mark Crowe. Optus’ data hack could have been “catastrophic” for a weaker brand. But the telco is already recovering. He’s compiled the 20 Australian brands with the biggest declines in brand value and brand strength for Mi3.

Chris Janz did the “deal of a career” when brokering the 2017 arrangement with Google to sell Fairfax’s premium inventory programmatically, reportedly for guaranteed annual revenues north of $40m. Now he's heading in an entirely different direction with VC-backed media challenger Scire, claiming the firm will collect no personal data and won’t do standard ads. Publishers trying to compete on data and tracking – areas in which News, Nine and others have invested heavily – “are playing someone else’s game” and have already lost, per Janz. He says the future of news is all about trust and tracking-focused approaches are about to get regulated. Guardian Australia MD Dan Stinton agrees on trust, contextual targeting and the push away from open exchange “direct response” advertising and into brand. But the two fear the next wave of financial and regulatory challenges is almost upon major mastheads.

Brand investment beats ESG and performance marketing – not a big insight for brand groupies but quite the conversion for a career performance marketer turned Chief Purpose Officer at Intrepid Travel, a B Corp company with ambitions to top $1bn in revenues by 2025. Last year the Melbourne-based global travel firm notched revenues of $370m, this year it will crack $600m and Leigh Barnes, now Chief Customer Officer, attributes much of that stellar performance, outside the world returning to post-Covid travel, on Intrepid’s first brand campaign in the company’s history. Free-spending baby boomers and 30-something professionals have also come to the party for Intrepid and all its key metrics, including sales, have taken off. Barnes credits his Covid downtime to a lot of reading and listening that helped him “get over myself and my preconceived ideas” on the role of marketing and brand investment. 

Just as Netflix encountered turbulence this year as it launched an ad-tier to buttress growth for its once untouchable subscription-only streaming service, Hollywood studios too have just reverted to an old world revenue stream. After discovering dissident economics from their new and numerous streaming services, Hollywood is returning to a cinema-first strategy. Sony Pictures was the only streaming holdout among the big studios. ‘We’re either going to look like the smartest person in the room, or the dumbest,” Sony Pictures local boss Stephen Basil-Jones told Hoyts CEO Damian Keogh a few years ago. But facing spiralling losses on their streaming businesses and stars and directors in revolt over a studio retreat from cinema-first release windows, Basil-Jones says Hollywood has universally changed its tune. “They’re saying ‘We’re back, baby! We need you!’. Here’s what’s next.        

Debate on when – or even whether – short-term sales activation campaigns, or performance marketing, can build brands longer term and vice versa – aka ‘double duty’ – is running as hot as the budget knives pressed to the CFO’s whetstone. For all the industry talk at present of holding to longer term investment in brand building as the economy tightens – or priming future demand as some dub it – News Corp's Pippa Leary says "we're in a down cycle and what we're seeing everywhere is marketers just cutting their brand budgets". Leary says the money is piling into performance marketing and sales activation ad formats to drive sales at a rapid clip. But in this abridged version of Mi3's weekly podcast, a partially reformed Silicon Valley growth hacker, John James, argues the brand-performance divide is a "false construct" anyway. Marketing and ad effectiveness advocates, Rob Brittain and James Hurman, counter and weigh in on the swirling debate managing brand and performance strategies – and new challenges to marketing mantras like ESOV [extra share of voice] and the Ehrenberg-Bass "thought experiment" called the 95:5 rule. 

Three years ago Jenni Dill put a multiyear strategy plan to Arnott’s management and board. The former McDonald’s CMO had been in the CMO gig at Arnott’s for 13 days. But Dill had just completed The Marketing Academy’s Fellowship course, which she says provided the clarity to speak business, not marketing – and to deliver a growth agenda at pace. It’s paying off. Despite the biggest spending squeeze in a generation, Arnott’s brands are powering. Tim Tams, Shapes and Vita-Weats sales are up double digits as Australians cut out restaurants but keep buying branded snacks and staples, resisting the siren call of supermarket’s own brands. Dill puts it down to brand re-investment after a decade of underspend, enabling her to link marketing spend directly to the P&L. She was also one of the first Australians to complete The Marketing Academy Fellowship program run by McKinsey that is launching in APAC this year for 20 elite CMOs - 10 Australian marketers could land in that group who want to be the next CFO, CEO or board member. Dill, along with Lisa Gilbert, CMO of the $20bn IBM managed services spinout Kyndryl, unpack what’s required and what the best of the best – today’s ‘super CMOs’ – will get in return. 

Mel Hopkins says she hasn’t gone to Seven “to put lipstick on a pig”. The former Optus CMO says CEO James Warburton wants “total transformation” and she’s hatched a four-point plan, which includes linking Seven’s marketing activity and investment directly to earnings and the P&L “in real time”. Anything less, she says, “and I am failing to do my job”. That means growing both the brand and its equity as well the number of eyeballs tuning into Seven's assets as a destination – fast. Hopkins thinks Seven Plus can outpoint the streamers and reckons their ad-funded tiers may fizzle as Covid-driven growth wanes. But she needs to build sharper digital marketing smarts. Plus, Hopkins opens up on the Optus data hack, a cautionary tale for brands.

Tracksuit, a two year-old New Zealand-based brand tracking platform has slashed the cost and turnaround time of quantifying brand equity – historically considered fluffy by the business community. The rapidly growing start-up has caught the eye of VC Blackbird, with Mark Ritson and Ascential, the firm behind Warc and Cannes Lions, also investors. Now it’s bidding to carve out a slice of a market dominated by global research firms like Ipsos, Kantar and Nielsen – and has just inked an alliance with fellow SaaS disruptor Mutinex. The two aim to align the in-market perceptions of a brand directly to the P&L while doubling the $4bn addressable brand tracking market. Venture capital firms are piling in not just as investors, but to actually harness the tech to grow start-up portfolios faster and more sustainably.

Douwe Bergsma was a veteran consumer goods marketer long frustrated with the light fodder served up at marketing industry conferences, and by big tech and the trade press. But he found enlightenment in the dense and dreary of marketing and behavioural science and advertising effectiveness studies. It’s not often Australia or New Zealand can teach the big US dogs new tricks but Bergsma’s agenda to reinvent healthcare and his $7bn organisation was a risky, and at the time, radical roll of the dice that spurned embracing everything new for the sake of it. The strategy and results so far are textbook stuff. Everything worked. KPIs are powering. Nobody is asking him any more hard questions, they just want more. Here's how it was done.