Returns on Marketing Integrity

What Is Your 'Return on Marketing Integrity'?

by Lynn B. Upshaw October 16, 2007

A Yankelovich study a few years ago found that as many as two-thirds of Americans believe that businesses would take advantage of the public if those businesses did not think they would be exposed. As many as one-fourth of Americans agreed that there is literally nothing that business can do to recapture their trust once it is lost. ("State of Consumer Trust," 2004).

We live in a time of omnipresent scrutiny by citizen journalists, regulators, attorneys general, and virtually anyone with a computer and a point of view. The risks of shaky integrity have never been more real. Now would be a good time to measure how well a brand's marketing helps or hinders its perceived integrity, which is to say its ability to build and hold customer trust.

Metrics for a New Kind of ROMI
Most marketers may be honest in the sense that they do not habitually break the law, but the definition of "honest" is shifting to a higher plane, just as it has for stock-option grants and board directors' liabilities.

Marketers need to consider a new calculus: "return on marketing integrity"—that is, a new type of "ROMI"—which can lead to stronger business performance.

Traditional return on marketing investment is calculated using gross margin generated by marketing efforts (GM), minus the marketing investment (I), divided by that investment: ROMI = (GM - I) ÷ I. The calculation for return on marketing integrity is identical, except that investment is replaced with marketing integrity. Simple enough to explain, considerably more difficult to measure.

One of the advantages of an integrity metric is that the additional investment is not like any other factor that could confuse the calculation. Consequently, it may be difficult to extract the market impact of a specific marketing effort from the effects of sales development drives or unexpected distribution gains. However, integrity investments are unique and thus—at least in theory—should be more trackable.

For instance, if a company invests significant person hours and some out-of-pocket spending behind ensuring that every marketing claim is ruthlessly checked for accuracy, then any attitudinal or behavioral gains among customers can be at least partially credited to those investments.

Patagonia asks its people to continually check the earth-impact of its fabrics and to be certain that what it claims in its catalog is as accurate as it can be. Kiehl's Since 1851 does the same when it comes to its cosmetics lines. Herman Miller screens all its marketing materials through a simple filter suggested by a former CEO: "The truth is good enough."

These extra efforts cost resources and time, and some portion of what those companies reap in terms of positive customer attitudes and loyalty can be rightly attributed to such actions.

Exactly how much is attributable would be based on a weighted factoring system that could be established by the marketing teams, with the concurrence of other contributors to company/brand performance.

Why Integrity Is a Return Worth Measuring
Here's why measuring the impact of marketing integrity may be well worth the effort:

> Measuring the impact of integrity can help marketers learn some key reasons why customers may remain loyal, leading to increased profitability. Infosys is a Bangalore, India-based IT services company with a growth rate that is the envy of its industry. The 90% of Infosys customers who return year after year are there for one major reason: They can count on Infosys to deliver what they promise because they believe in the company's integrity, not just its past performance.

> Tracking integrity impact may yield new ways to attract more new customers than if the company had not adhered to such standards. Kiehl's, since 1851, has operated like a neighborhood apothecary, which means that the people of each store have a personal stake in what they sell. The products they serve and the service they provide are uniquely superior to so many other alternatives, and customers return because they know authentic integrity when they see it.

> Measuring a return on integrity can help build strong competitive strategies that could provide an edge in the marketplace. A competitor may gain some ground over the short term by stretching the truth or endangering its brand's equity, but this is an arena where what goes around tends to come around. Companies that demonstrate "disruptive integrity" stand out as organizations that customers believe, and which deserve their competitive advantages, as has been repeatedly demonstrated by Trader Joe's, W.L. Gore, and Timberland Shoes.

> By regularly evaluating integrity performance and its impact on the financials, a company may also be able to reduce or eliminate the unforced integrity errors that have cost other companies major brand equity and sales declines. For example, the business decline and fall of Guidant Corporation was prompted by alleged integrity flaws in its products, and the ultimate liabilities of those problems were gauged to be well into the billions. At last check, the Guidant brand itself was slated to be ash-heaped and, with it, an enormous amount of brand equity. A simple set of integrity metrics and measurements might have prevented such losses in both of these cases.

> Maintaining a measurable sense of integrity can protect brand equity when a company's integrity is under scrutiny. Hewlett-Packard has historically been a company that operates with exceptional integrity, but that ethos did not prevent members of its management from allegedly making serious ethical mistakes when investigating an information leak on its board of directors in the fall of 2006. On the other hand, when CEO Mark Hurd promised a Congressional subcommittee that such an integrity breech would not happen again, his promise may have carried a bit more weight because of the company's 68-year legacy of spotless integrity prior to the scandal.

Aggressive Integrity
The probabilities of such companies making serious integrity errors are much smaller than for other companies because they have committed to aggressive integrity through organizational and cultural honesty. That makes an enormous difference in how they create their products and services and how successfully they market them to their customers.

During a credibility crisis involving the troubled General Re acquisition, Warren Buffet once observed, "Berkshire can afford to lose money, even lots of money; it can't afford to lose...even a shred of reputation." If the Oracle of Omaha can't afford it, neither can the rest of us.
Whatever success a brand or company has in generating revenue with its marketing programs, that success will be enhanced and protected by aggressively cultivating and tracking marketing integrity.

Print Ad of the Day - II

Client: The Economist

Category: Publication & Media

Agency: AMV BBDO, UK.

Print Ad of the Day - I

Client: Sanctuary, India

Agency: Ogilvy & Mather, India.

Print Ad of the Day - VI

Client: MTV

Category: Corporate Image
Agency: Y&R, Buenos Aires

Print Ad of the Day - V

Client: MTV

Category: Corporate Image
Agency: Y&R, Buenos Aires

Print Ad of the Day - IV

Client: MTV
Category: Corporate Image

Agency: Y&R, Buenos Aires

Print Ad of the Day - III

Client: Nat Geo
Agency: H Paris, Luxembourg

Print Ad of the Day - II

Client: Ambi Pur

Agency: Grey Hong Kong

Print Ad of the Day - I

Client: Ford Expedition - Animalandia

Agency: JWT, Mexico

Partnership Brand Marketing

Partnership Brand Marketing—It's About Distribution Channels


October 2007

Walk down any supermarket aisle. What do you see? Brands, brands, and more brands. And, individually, each has its own equity—along with consumer appeal, value, unique brand-defining characteristics, and a brand essence that evokes loyalty among target consumers.
The smart marketer uses strategically planned distribution to enhance brand equity. Although gaining new distribution with an alliance partner is less common, it can be extremely powerful. In fact, especially during challenging economic periods, the power of marketing partnerships brings expanded credibility and a cost-efficient means to gain distribution.

Many companies and managers today have mastered and are effectively using promotional programs, which can range from couponing to licensing and merchandising, among others.
However, such marketing tools are often used independently or in more of a silo approach. And it can take a long time to create these programs, especially if another partner brand is included or a promotional overlay is involved—such as an entertainment property: theatrical, DVD, or otherwise.

And today many companies and brands are engaging in "Partnership Marketing," "Marketing Alliances," "Strategic Partnerships," and even "Partnership Brand Marketing" programs. But often they boil down to just promotions, perhaps maybe even on a larger scale.
But the true success of partnership brand marketing lies in its power to open up new and alternative channels of distribution for both the companies and the brands involved.

Finding Customers Where You Aren't

The whole idea behind partnership brand marketing is to find customers where your company and brand do not compete: It not only provides your brand with additional credibility in aligning with another company but also opens up distribution channels, allows you to reach and market to customers that may not be aware or thinking of your brand, and—most important—it captures the attention of new potential buyers who may not have your brand top of mind.
But the key ingredient is integration. It is not enough to create a promotion or align with a licensed property. It is not enough to create a joint merchandising display.
Well-crafted partnership brand marketing should include every possible touchpoint that your business has with its customers—both traditional and nontraditional marketing, including Internet, special events, advertising, promotions, public relations, packaging, merchandising, and a host of other marketing components.

Accordingly, strategic partnership brand marketing programs not only need to be created and designed at the senior level in each company but also need to involve the brand group and marketing managers that will run, implement, and monitor the program's success on a daily basis.
Marketing alliances don't just present an opportunity to create promotions; they also establish a base from which to create distribution opportunities, providing a great chance to leverage either geographic distribution or merchandising within a store.
An example: if an entertainment property links with a packaged-goods brand to create a promotion, there could (and should) be advertising program overlays in the form of television, print, FSIs (free-standing inserts), and event packaging.

But to extend this to a true partnership brand marketing program, other elements such as a joint selling and distribution team between both companies should occur with the goal of gaining incremental and sustained distribution. Other elements, including corporate programs, could come into play.

And even greater challenge and desirable end result is to create an umbrella strategic Partnership Brand Marketing program in which at least three companies and brands align to share in their distribution and marketing programs, with the goal of providing even greater value to all three company's customers.

And the best part is that, ultimately, the customer, the consumer, and the buyer win: They are introduced to several brands, initiatives, new products, new features, and a host of other promotional activities designed to induce trial and build loyalty while providing value.
Though targeted distribution has been proven a clear and successful strategy for ensuring success for a brand, fewer brands are actually capitalizing on marketing alliances to obtain alternative distribution for their brand.

Case in Point

Recently, our company, PBM Marketing Solutions, created a national strategic partnership brand marketing program on behalf of LEGOLAND California and Volvo Cars of North America.
Rather than creating just a marketing sponsorship or promotional program, we developed a multi-level marketing partnership that now extends far beyond the promotional arena. This includes cross promotions, joint advertising, a dealer component, marketing exposure on the national auto show circuit, a life-size Volvo LEGO car placed in high-trafficked areas, Volvo cars placed at LEGOLAND California, LEGOLAND marketed in the Volvo auto dealer channel, special events, corporate/employee programs, as well as safety awareness activities.
As a result of this partnership brand marketing program, Volvo can now reach customers in a channel where it does not compete—the theme park industry—and LEGOLAND California and the LEGO brand can now reach customers in a channel where it does not compete: automotive.

It is key to realize that companies and brands have two types of equity. First is their brand equity—but of equal validity is a company or brand's distribution equity.
The brand equity is the value that consumers and buyers feel about the brands that they are loyal to, whereas distribution equity is a brand's foothold, strength, and presence where the products are actually sold.

Being able to parlay a marketing partnership into an ongoing alliance to help gain further distribution and sales takes partnerships to a higher level. In fact, often a marketing alliance can have more than just one promotion built into it—it can feature multiple program layers that can transcend the supermarket to include the Internet with web-site links, on-pack messages and co-branding placed in alternative channels as well as unique locations where consumers are most apt to see your product.
In today's busy world of brand marketing, utilizing the strength of marketing alliances to get product into new channels and venues is an essential marketing tool to generate incremental sales.

(with inputs from Gregory J. Pollack - Gregory J. Pollack is founder and president of PBM Marketing Solutions (www.pbmmarketing.com), a partnership brand marketing company. He can be reached via gpollack@pbmmarketing.com. )