Making a cola-flavoured sugary drink isn't difficult. But making it stand out requires a unique skill set that many NZ boards currently don't have. Photo/123RF.
Making a cola-flavoured sugary drink isn't difficult. But making it stand out requires a unique skill set that many NZ boards currently don't have. Photo/123RF.
You have probably heard of Coca-Cola. It's a brown fizzy drink which is simple to make and so easy to replicate that its most faithful consumers get confused in blind taste tests. Despite this, the intangible worth of the company is estimated at $100 billion. That's not the factory, nor the machinery, nor the recipe, it's the positive thoughts that Coca-Cola triggers in consumers' minds. Also known as the brand. And, to repeat, it is estimated to be worth $100 Billion dollars.
Warren Buffett, the most successful investor in the history of successful investing, puts his financial accumulation down to buying up companies with strong brands like Coca-Cola. He does this because experience has taught him that a strong brand provides a protective moat around a business and maintains margins, particularly in tough times.
Therefore, when a brand can contribute such a phenomenal amount of money to a company's value it seems common sense to have members of the board with training and experience in nurturing and growing the brands that they control.
But they don't.
Figures for New Zealand are hard to find but it's doubtful that they are much different from the US where less than 2.6 percent of board members have active marketing experience. Why would Chairman be so flagrantly neglectful of their own brand? I can only presume that it's because everybody thinks they can do marketing. They look at the market output: a new product, an ad, a redesign, a promotion and they see their opinion of it as being as valid as anyone else's.
Most people can't taste the difference between Coke and Pepsi, but the difference between two companies shows why marketing needs to be taken seriously. Photo/123RF.
As the disrespectful might say: opinions are like arseholes, everyone's got one.
A such, boards are incapable of discerning the difference between their role as corporate overseer and opinionated couch potato. They think that watching ads on TV gives them as much right to pass judgement on their company's marketing work as a marketer with 20 years experience of initiating and overseeing projects through from market opportunity, to brief, to testing, to output. It's the equivalent of a board director dismissing a legal council's recommendation on the basis of having watched the first series of 'Suits'.
The problem is not just that boards don't know anything about marketing, the bigger problem is that they think that they do. This is a classic example of the Dunning-Kruger effect where people are so ignorant of a subject that they fool themselves into thinking that they are knowledgeable. Everyone on the board is keen to share their opinion on the company's marketing, usually pre-empted by the words 'I don't know anything about marketing but…' closely followed by an uninformed, totally subjective point of view based on personal prejudice. It is commonly held that the most loudly voiced examples of these views come from the all-powerful Chairman's wife.
Last year, I joined the Institute of Directors of New Zealand as I wanted to learn more about where and how board members are educated. The IoD NZ annually run around 25 different courses to help train the directors of tomorrow, a very noble purpose. Yet despite including courses on areas with such limited scope 'Rural Governance', 'Cybersecurity' and 'Advanced Health and Safety' they feel no need to run a course on 'Marketing'. In fact, the word 'Marketing' does not even appear on their website.
The recent Congressional Facebook hearings in the US demonstrated what a difficult subject online marketing can be for those whose only digital experience is being shown pictures of their grandkids on Facebook. And the IoD Digital Essentials Course, which I recently attended, illustrated the local deficiency of teaching in this area. The course lasted for around eight hours of which the digital marketing section lasted for around ten minutes, consisting of little more than a couple of social media anecdotes. Not a mention was made about the revolutionary effect of the internet on marketing, the ethics of data breaches, the cost and efficiency of programmatic buying, guidelines on the ratio of digital to traditional channels, digital's lack of success at brand building, or Facebook's pivot from dating site, to fan-aggregation market, to good old-fashioned media outlet.
Ignorance was dripping from the walls and there was nobody there to mop it up. Accountants may be able to value a brand but they sure as hell can't build one. Lawyers may stop you getting sued but won't help a business grow.
For those of you who like numbers here are some nice ones:
In 2016 the total advertising revenue in New Zealand was $2.572 billion. This money was spent by marketers. That's a lot of money to be okayed when nobody on the board has any expert knowledge on whether or not it was spent wisely. Was it a cost or an investment? Did it provide a short-term fillip to the figures or a sustainable investment in brand growth? What would happen to the brand if the budget was halved? Or doubled?
Let's burrow down and look at the mighty Fonterra. In 2016 Fonterra's stated policy was to move from 'a commodities position to adding value through brands'. That sounds like a sound strategy, yet there is nobody on their board with any formal marketing training or experience to help that vision come to fruition. What does a board comprised of farming, accounting and legal experts know about adding value to a commodity through brand building? Would the Fonterra board let a group of marketers lead their views on milk production?
So, chairpeople of New Zealand, it really is about time you added some marketing smarts to your boards. In fact, while you are in the process of building diversity by adding women, why not kill two birds with one stone and add one of New Zealand's highly talented female marketers? The numbers show that your business would deliver a 3 percent higher return for shareholders with a marketer on the board. If nothing else, it would free your wife up from the dreadful responsibility of having to oversee your company's marketing strategy.
Paul Catmur is the chief executive at Barnes, Catmur & Friends Dentsu. (paul.catmur@BCFDentsu.com
