John McGee: Time for marketing to be part of the boardroom
Money invested in advertising is money well spent as it can deliver substantial returns to a brand's bottom line, according to a new report
You could probably count on two hands the number of marketing directors who sit on the boards of large Irish companies, including those that are quoted on the Irish Stock Exchange. Even fewer have gone on to become CEOs of the businesses they work for, and it's probably fair to say that even fewer again, if any at all, have ever gone on to chair the board.
Ireland is by no means unique in this respect. In the USA, a 2016 study of the companies on the S&P 1500 index carried out by Forbes magazine found that just 2.6pc of the 65,000 directors had a managerial-level marketing background. A similar study by the Financial Times in 2015 found that just 21pc of CEOs had a marketing background in 2015.
At a time of profound change in the business world where long-established hegemonies are under threat from newer and nimbler rivals and where increasingly fickle and polygamous customers ought to be front and centre of all businesses, this is extremely worrying.
"The absence of marketers from boards cannot be good for companies; it means that a critical part of the business is not being given sufficient voice or respect and it goes a long way to explain why marketing budgets are thought of as an expense rather than an investment," said Patrick Coveney, one of Ireland's top CEOs.
Coveney, the CEO of Greencore, one of Ireland's most successful companies, was speaking this week at the launch of a landmark report on the macroeconomic and microeconomic impact of marketing communications which was published by the marketing communications group Core Media, which he also chairs.
Called Marketing Multiplied, and written by Core CEO Alan Cox together with economists Jim Power and Chris Johns, the report was published in association with the Association of Advertisers in Ireland (AAI) and makes a thoroughly compelling and important case for marketing.
But corporate Ireland still has a lot to learn about marketing and its capabilities.
According to Coveney, "boards tend to be dominated by people with financial or engineering backgrounds, who are not necessarily trained to understand the consumer, the competitor landscape and external environment in a way that a skilled marketer can."
He added: "Boards often explain this shortcoming by saying that marketing is a tactical rather than a strategic pursuit and therefore has less of a place in the boardroom. This is plainly ridiculous. Of course, this challenge cuts both ways - marketers need to 'up their game', to make their input, agenda and style more relevant to their board peers. What's needed here is to configure senior management teams and corporate boards with complementary skills; to embrace diversity of thought; to balance creativity, analytics and performance discipline."
Perhaps marketers haven't done themselves any favours in the past. Apart from being viewed as an expense, rather than an important investment, marketing has often been dismissed as somewhat woolly, vague and often relies on a complex supply chain of marketing communications providers many of which don't have the same perceived gravitas as other providers of corporate services like management consultants, tax advisers and solicitors.
Perhaps it also has to do with the perceived absence of adequate metrics that clearly demonstrate a quantifiable return on marketing investment, or indeed the marketing industry's inability to demonstrate its importance to the board. Or indeed the fact that many marketing directors, unlike CEOs and CFOs, rarely stay beyond three or four years in the same job. Most likely, it is a combination of some or, indeed, all of the above.
But it doesn't have to be this way.
The world has changed since the department store magnate John Wanamaker is reputed to have said, sometime in the 1920s, that "half the money I spend on advertising is wasted; the trouble is, I don't know which half". In a hyper-digitised age, where there's no shortage of econometric models and data analytics available to companies to track the performance of their marketing campaigns, companies and their boards have absolutely no excuse for not taking marketing seriously.
Indeed, one figure that jumps out in the Marketing Multiplied report that should make boardrooms around the country stir from their slumber is the typical return on marketing investment that a brand can expect from a campaign. Meta-analysis conducted by Core Media's data science department over a two-year period - and covering eight different industries - found that every €1 invested in advertising typically delivers a revenue return on marketing investment of around €8.26 and, more importantly, a net return on investment of €5.44.
To any cynical company who is still unsure about marketing, surely this is a no-brainer.
Contact John McGee at email@example.com
Sunday Indo Business