When Old Marketing Terms Hurt New Marketing Strategies

A while ago, I wrote about terminology I wanted to rid the industry of, with immediate effect. It was (to date) one of my best-read and most responded-to columns on MediaPost. But it is not just the over-usage of industry lingo that is bad for the industry. Even worse is that the industry is still holding on to marketing terminologies and definitions of yesteryear.

No, I am not going to get on my soapbox and rail against upfronts and newfronts. If you want to know my feelings about these out-of-date relics, just Google “Newfronts are an affront” and read to your heart’s content.

Instead, I wanted to talk about another example of using “old-school” terminology, which came to us in P&G’s latest earnings call. In it, CFO Jon Mueller stated that P&G had cut its marketing costs by reducing “non-working dollars” and being more efficient in its operations across its design, creative and marketing programs.

He said: “We have improved marketing effectiveness and productivity through an optimized media mix. Marketing spend will be below the prior year but overall effectiveness will be well ahead. We are at a point where looking at dollars is not representative of the strength of a marketing program in a rapidly changing marketing landscape.”

I agree. Looking at dollars in ad spend or marketing support is not indicative of the actual effectiveness of a marketing program. But neither is reducing non-working marketing dollars. In fact, reducing this number may be an indication of being less efficient, and it should be actively discouraged as a strategy for P&G or any other marketer to improve their marketing bang for their buck.

For those wondering “What the heck are non-working dollars?” I’ll explain: All money spent on consumer-facing activities is classified as working dollars (think of paid media spend, sponsorships, in-store activation, etc.). All dollars spent before anything reaches consumers -- like TV commercial production cost, content creation development cost, but also agency fees, strategy development and research, etc. -- is classified as “non-working.”

Non-working dollars were for a while a really dirty term in the industry. All marketers were trying to reduce them. In my career, I have seen goals of 20/80 or 25/75 as acceptable non-working/working ratios. You could get punished by headquarters if you were off the mark. The reason “non-working dollars” were to be kept to a minimum is because they sound like monies spent on stuff that doesn’t work. They are “non-working,” after all.

Nothing is further from the truth, of course. Just think of any viral campaign. Typically, for these types of campaigns most of the dollars are “non-working,” since the actual spend on third-party media to support the campaign is usually far smaller than the amounts spent on creating the content in the first place. So a ratio of 90% non-working vs. 10% for working is not unthinkable.

If your goal is to reduce non-working dollars in order to maintain your levels of ad spend (which seems to be implied by P&G), P&G’s Old Spice team is in a heap of trouble. Fire them all, I say, spending all that non-working money on Isaiah Mustafa’s antics and then sharing it via “free” media like YouTube!

Stating that your strategy is to reduce non-working dollars to maintain your share in overprized, upfront/newfront-committed paid mass media is an awful strategy. In my mind, non-working dollars are probably your hardest working and most important investment in today’s #zeropaidmedia world.

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4 comments about "When Old Marketing Terms Hurt New Marketing Strategies".
  1. Alan Boyd from ikolo , May 20, 2014 at 3:22 a.m.
    I have to agree Maarten but I believe P&G's statement hides a different approach to their commissioning strategy with regards to non-working and working dollars. Yes P&G have for some years employed a multi-agency supply structure, which is ultimately necessary in an era where there is a requirement for a huge array of specialist skills crossing both offline and online. But reading between the lines and based on personal experience, I feel it may indicate that they are moving towards a distributed and outsourced supply model using platforms such as oDesk/Elance. These networks allow big brands to significantly reduce non-working dollars, provided that is, they are utilised correctly! Their statement I feel points to this approach. Kindest regards Alan
  2. Maarten Albarda from MLA Consulting LLC , May 20, 2014 at 12:44 p.m.
    Alan: thanks for responding. If it is true that P&G is going to shift its dollars to an outsourced model, wouldn't that ad cost to the non-working dollars column rather than reducing them?
  3. Emmanuel Klotz from SAYG , May 21, 2014 at 10:02 a.m.
    Maarten, I agree that the opposition between working vs non working dollars is not as clear cut as it used to be, now that media is not just paid for but can also be owned, earned and shared. The Old Spice campaign is a great example of this. But that distinction still is critical in the specific context of paid for media, which for a company like P&G remains by far the bulk of the investment. If your pitch is that they should increase the "non working" part (or call it content production, development, whatever) to the detriment of the working part (ie paid for media, how much overprized it may be), because great content becomes viral and eventually reaches its audience, then good luck with it... It sounds like an other spray and pray approach to me. TV networks are still alive and kicking (and charging the overprized spots), there must be some sort of a business reason behind....
  4. Maarten Albarda from MLA Consulting LLC , May 24, 2014 at 6:34 p.m.
    Hi Emmanuel: I guess what I am saying is: "get rid of the definitions and do what is right in light of great consumer insights". To me, all these definitions and classifications often get in the way of doing what is best for the brand/consumer relationship. For instance, choices in connections and creation might be made that are sub-optimal in order to hit the working/non-working ratio. I have seen this happen in my prior roles. In our ZERO book we recommend doing away with all of this; they become an outcome of the process, not an input or a precondition.