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 If you want to know my feelings about these out-of-date relics, just Google “Newfronts are an affront” and read to your heart’s content.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.