Boardrooms have ignored the importance of marketing to the growth of businesses – but it is up to marketers to prove their worth, according to a new report by Core Media chief executive Alan Cox and economists Jim Power and Chris Johns.
The report, Marketing Multiplied, suggests that €1 invested in advertising in Ireland typically delivers a gross sales return of €8.26 and a net return on investment of €5.44.
It also highlights a raft of international statistics that point to an “astonishing” lack of marketing experience within top management.
One study of companies listed on the S&P 1500 index found only 2.6 per cent of some 65,000 board members had managerial-level marketing experience.
"Over the years, one of the reasons why advertising hasn't had the respect of the boardroom is that it hasn't proved its worth," said Mr Cox, who was interviewed on this week's Irish Times Business Podcast on www.irishtimes.com.
Marketers need to “up their game” and adopt a more rigorous scientific approach, he said.
Economic growth
“The advertising agencies have let marketers down by not giving them the support and the evidence they need to prove their case in the boardroom.”
The report is being launched on Thursday by Core Media, which is Ireland's largest buyer of advertising, and the Association of Advertisers in Ireland.
It makes the case for marketing as a major driver of economic growth, given its role in encouraging consumer spending, promoting competition and triggering innovation.
A recent study by Deloitte and the World Federation of Advertisers found that advertising contributed €643 billion to GDP across the European Union.
"The absence of marketers from boards cannot be good for companies," said Greencore chief executive Patrick Coveney, who is chairman of Core Media.
“It means that a critical part of the business is not being given sufficient voice or respect, and it goes a long way to explain why marketing budgets are thought of as an expense rather than an investment.”
Campaigns
The Dublin-based Core Media has invested €1.1 million in data analysis, hiring 10 data scientists. But while big data case histories can be commonly found in financial services and politics, they are still rare in marketing. “We are just reaching that tipping point,” Mr Cox said.
The report also suggests that spending on campaigns is weighted too much in favour of short-term “buy now” messages, to the detriment of longer-term brand building.
“One of the drivers is this in my opinion is the plc quarterly reporting cycle. The quarterly cycle is why marketing budgets are so often one of the first things to be cut,” said Mr Cox.
Since the end of 2014, public companies in Europe are no longer obliged to issue quarterly financial updates to investors. “But old habits die hard,” he said.
Critics of quarterly reporting say it shifts company resources away from their long-term strategies in favour of short-term targets.
