Switching to earned from paid

Many brands are switching the emphasis in their marketing from a paid media-led to a more balanced approach, which recognises the potential of non-paid or earned and owned media in the digital age.

As we discussed in a previous post, earned media is our preferred term at Brilliant Noise, but it is also referred to as…

  • Inbound marketing
  • Content marketing (this can mean everything and nothing – since it is currently used so many different ways, but that’s a subject for another time)
  • Integrated or Cross Channel Marketing
  • Converged marketing

The past couple of years have seen the shift in strategy and spending picking up momentum. Leading brands such as Coca-Cola and Proctor & Gamble switching larger proportions of their resources into non-advertising.

For marketing departments and their agency partners this represents a classic innovator’s dilemma. Their current business models, team structures, job descriptions and fundamental assumptions about how marketing works are all being challenged.

To understand how to start that difficult process of change, it is helpful to look at brands who are already committed to radical change in their marketing.

Coca-Cola’s journey

When Coca-Cola was was looking at how to adapt its marketing strategy in response to the social web, its senior marketers were frank and realistic about their core challenge. The company was built around its brands and those brands had been built by buying attention: they were finely optimised for developing big creative and buying the time or space to engage with their customers.

Change would be strategic, would be root and branch, not just a case of adding some content and social media to their existing media mix.

Radical changes at a small scale were piloted – nice campaign ideas, a story-led corporate website in the UK, later copied by the US site. These experiences built confidence in new ways of doing things and most likely helped build a business case for change.

In 2011 they unleashed that change on themselves, with a number of strategic business proclamations from their leadership: CEO Muhtar Kent went on the record in Harvard Business Review saying that 20% of its £2.5 billion global marketing spend would go to inbound media (primarily content, social media and SEO). Meanwhile their creative leadership had made a parallel pronouncement, telling their global teams and their agency partners (as well as the rest of the marketing industry) that Coca-Cola was shifting to a storytelling approach.

The company’s change process seems to be well underway in 2012. Stories about the company considering an  investment in Spotify and continuing to champion storytelling are signals of bold change and marketing innovation happening at Coca-Cola.

Many will wonder what proportion of Coke’s global marketing budget will be earmarked for inbound in 2012. Will it be 20% again? Less? Or will they grow their investment?

Burberry’s journey

In 2008, with its back against the wall after several crises, culminating in the financial crash and global slump in demand for luxury brands, Burberry’s CEO Angela Ahrendts made a radical marketing vision part of her fightback strategy. In a close partnership with the brand’s creative director, Christopher Bailey, she declared that Burberry would be the world’s first “digital luxury brand”.

With 60% or more of Burberry’s budget now allocated to digital marketing, the company is said to have a large digital earned media marketers at its UK HQ (content, editorial and community). Over the four years of its transition to date, the brand successfully piloted and expanded its digital marketing in a steady, determined manner, with earned media taking centre stage.

Making the transition

The switch from a brand where 90-95% of marketing spend went to advertising-led approaches to one where earned media marketing accounts for 20%, 40% or more of their budgets is a disruptive one, to say the least.

Coca-Cola’s 20% is a radical starting point – the company has used a significant budget shift to spur its marketers and agencies to change and innovate faster. Brands will discover the right balance between paid and earned media, but a model of 40% earned and 50% within three to five years might be a feasible extrapolation of Coca Cola’s approach, assuming success in current programmes and a continuation of the strategy its leaders have laid out.

The right stuff

It’s all well and good sketching out a model for change – and we could come up with several others, of course – but to get change happening at all we need to bear in mind the likely challenges. These will be familiar to anyone who has encountered the innovator’s dilemma and of course largely relate to vested interests and overcoming the inertia of existing systems. For instance :

  • Budgets: Companies have evolved their marketing budgeting approaches around bought media and investing in paid media. Earned media may not even be a line item – some CFOs will see and / or think of all of that marketing spend as being synonymous with advertising – and reasonably so. Round the numbers up and it was all advertising. And earned, meanwhile exists as a scattered set of disciplines – SEO, PR, social media, content – perhaps not all even within the marketing budget.
  • Measurement: Measurement is often media-centric and disconnected – for real change, we need to look at customer-centric, connected approaches to measurement. Measurement of business outcomes can then be better connected to marketing activities and build the future business case.
  • Planning: Cycles of marketing planning are based on quarters and years – they should shift to models that are used to plan for infrastructure and other things with longer-term value. Imagine if customer relationships were invested in as capital expenditure – but they aren’t. They are seen as flimsy, ephemeral, transitory, intangible: when they should be the most tangible thing of all.
  • Legacy agency business models: Last, but by no means least, the business models of brands’ advisors are a drag on change. If the brightest people you can find for advice make their living from selling media, even indirectly, they are going to be the last people to suggest you slash media budgets and move to a customer decision journey model where content and earned media get a larger investment (see McKinsey & Co’s CDJ model).

As we said in a previous post, brands that have gone furthest fastest in digital and the switch to earned attention, have overcome these challenges  with a combination of the following behaviours and approaches:

    • Leadership: Is there a senior sponsor or leader within the organisation who is committed to radical transformation in response to the industry’s disruption? It is notable that many digital strategies have been part of corporate fight-backs, for instance Howard Schulz at Starbucks, Michael Dell at Dell and Angela Ahrendts at Burberry.
    • Values and vision: The clearer the company is about its purpose, and what it thinks is the right way to pursue it, the easier it is to translate its approach into earned media.
    • Principles-led: Developing a clear set of principles for digital and communicating them universally will give licence to the boldest and most innovative people in the company to spark new ideas and change.
    • Pilot and scale projects: They will to try things out and the sense to take successes and scale them, make them repeatable practices and business processes.
    • Governance and frameworks: To make change stick, there need to be strong processes in place. Developing an organisation-wide governance process for digital and innovation will break down divisions that could slow or stop change.
    • Literacy: Spreading new digital skills, such as the effective use of social computing tools, helps spread change faster and gives more people in the organisation a deep understanding of the changes and opportunities.