Greg Paull
May 7, 2014

Where there's mystery, there's margin

The above quote from a presenter set the theme for the annual ANA Advertising Financial Management Conference in Naples, Florida, where 400 of the world’s biggest procurement and marketing leaders gathered with agencies and consultants for a three-day talkfest.

Greg Paull is principal of R3
Greg Paull is principal of R3

As digital continues to grow in the US, and the path between marketer and publisher becomes murky, there’s ongoing concern about the mystery of the media process. This once-ever event has it all. Most of the top players are here: Sarah Armstrong of Coca-Cola is set tomorrow to review their Value Based Compensation system, but today it was the turn of Kimberly Clark, Ford and Nationwide to kick things off. Sheryl Connelly made us all jealous of her job—global head, trends and futuring for the Ford Motor Company. She gets paid to use her crystal ball to gaze into future trends and help deliver those to the company. One cool new idea was Ford’s 'MyKey'—a parent- controlled car key that limits the speed a car can travel, and does other neat things like switch off the radio unless the seat belt is buckled. I can think of some wives who would also want that. Many will be familiar with FOMO (Fear of missing out) but she’s now exploring JOMO—the joy of missing out—of escaping the rat race and technology, and how marketers are tapping into this. I was impressed with her knowledge of China ('the 4-2-1 dilemma') and of Japan’s aging population ('In Japan, adult diapers now outsell baby diapers').

Diapers were the perfect segue to Lowell Turner, global head of marketing procurement for Kimberly Clark. He created a neat link between Thelonious Monk and the way procurement and marketing work together. The coolest thing Kimberly Clark is doing is sending marketing people to train in their Global Procurement Academy, and procurement people to their marketing university. It was timely as the ANA-released survey results today showed that both sides are learning to love each other.  He encouraged procurement to focus on the right type of savings; it wasn’t about making 15 second spots, or reducing effectiveness—it was more about optimising each other’s roles: “Marketing drives effectiveness, and procurement has to drive efficiency within that.”

Not to be forgotten, agencies had a voice through the day, with the 4As releasing a new member survey looking at agency compensation. While marketer data suggests 61 per cent of relationships are on an incentive, the 4A’s study of 500+ relationships shows the opposite, with 61 per cent not on incentive. To be fair, this was driven mostly by smaller partnerships, where as few as 10 per cent have skin in the game. There was an open debate about whether companies are truly committed to paying bonuses: more than 50 per cent of agencies report incentives of less than 5 per cent, and the metrics varied between a mix of agency and business results. What was clear in the debate was that neither side has their heads around value-based compensation yet. In an industry where the principle of pay is that the slower you work, the more you make, someone—soon—has to come in with a bright idea to revolutionise things.

Believe it or, when the sun set over Naples, there was a round of applause. Time to prepare for Day Two.

Greg Paull is principal of R3


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