Tom Lewis – CFO, IPA

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1. Where’s the value: buying investments; why purchasing behaviour matters Tom Lewis Finance Director Institute of Practitioners in Advertising 2. - Marketing’s two…

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  • 1. Where’s the value: buying investments; why purchasing behaviour matters Tom Lewis Finance Director Institute of Practitioners in Advertising
  • 2. - Marketing’s two (main) levers - The manifold effects of marketing - Short-termism vs effectiveness
  • 3.  The myths - linearity - shareholder value concept - financial savings vs economic losses - the professional-buying myth - fixed value - buyer’s behaviour irrelevant - minimising seller’s profit as a proxy for value
  • 4.  The reality – Effectiveness (IPA research) a series of short-term effects does not necessarily lead to successful long-term effects; long-term effects are more than just an accumulation of short-term effects volume growth is quickly achieved (via activation); reducing price sensitivity (via branding) takes longer. Optimum profit growth requires both long-term effects are generated differently from short-term effects
  • 5. Salesuplift Time Sales activation Focus on immediate sales Big volume uplifts Fast decay The short term approach Source: Binet & Field 2013
  • 6. Salesuplift Time Brand building Focus on long-term “saleability" Smaller volumes, but slower decay Reduced price sensitivity The long term approach Source: Binet & Field 2013
  • 7. Salesuplift Time Sales activation Short term sales blips, but no long term growth Short term strategies under-perform Source: Binet & Field 2013
  • 8. Salesuplift Time Brand building Long term sales growth, Increased margins Brand-building drives profitable growth Source: Binet & Field 2013
  • 9. Short-termism is rising 0% 5% 10% 15% 20% 25% 30% 2006 2008 2010 2012 2014 2016 %casesshort-term 10 years endingSource: Binet & Field 2016
  • 10. Is effectiveness declining? - 0.5 1.0 1.5 2.0 2.5 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Avg.no.VLbusinesseffects Source: Binet & Field 2016
  • 11. Buying investments as investments
  • 12. The Challenger approach:
  • 13. How are you buying? “You can’t table thump for genius” (David Meikle, How to Buy a Gorilla)
  • 14. What are you buying? And what does that mean you are getting? - inputs (hours, timesheets, staff costs) - outputs (spots, campaigns, media plans) - outcomes (reduced base erosion, price increases, market entry)
  • 15. Final thought: - would the Sex Pistols have gone on a reality talent show?
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