John Lewis and Diageo on how budget cuts can create opportunities

Brittle consumer confidence, uncertainty over Brexit and relatively weak GDP and productivity growth in the UK means there is pressure to be more frugal and more accountable in proving the effectiveness of marketing activity, regardless of the size of your budget.

Having to do more with less is therefore becoming increasingly common.

Turning to the audience at a recent event held by The Marketing Society, its president and Diageo CMO Syl Saller asked if this was a familiar situation. The majority of the audience raised their hand.

To help its marketers make better strategic and planning decisions, the drinks giant has invested in Catalyst, an effectiveness platform developed with partners to provide instant data. Thanks to savings it has delivered, the business was able to invest £60m more in marketing during the first half of its financial year.

READ MORE: Diageo claims marketing effectiveness drive is making its ‘pounds work harder’

Referencing the platform and responding to those that answered yes to having to do more with less, Saller said reinvesting the money saved in places where it has proven to be more effective – and not just letting it sit on the balance sheet – is empowering.

“I believe what you focus on fuels what you feel. So if your focus is ‘I need to figure out how to do this cheaply’ you’re going to feel pretty crap. But if your mindset is, ‘we need more media against our brands and we are going to do it by having more money behind the growth of our brands, and the growth of our brands helps people flourish in their career’ [then] it’s a virtuous cycle.”

Saller was on stage alongside The Marketing Society chairman and John Lewis customer director Craig Inglis, in an interview conducted by the organisation’s CEO Gemma Greaves.

We have shown a preparedness to look at any budget conversations in terms of the broader business dynamic.

Craig Inglis, John Lewis

In alignment with The Marketing Society’s purpose, ‘inspiring bolder marketing leadership’, being bold was a key theme of the night. Both argued that marketers shouldn’t be cowed by having to do more with less, but be bold and see it is an opportunity.

Talking to Marketing Week following the event, Inglis said: “Sometimes cutting the budget is the right choice. If you can have an adult conversation in a holistic way, ironically it makes budget conversations a lot easier, much more two-way.

“I have had lots of moments in the past two years where we have chosen to invest more tactically, because there has been an opportunity, and we have had the really tough conversations as well. We have shown a preparedness to look at any budget conversations in terms of the broader business dynamic and therefore when an opportunity comes up you’re more likely to have a good adult conversation and secure more investment.“

Alongside boldness, the need to balance creativity and commerce, and the requirements of brand, company and customer were also discussed.

Saller said: “It is about holistic thinking. It is about being total business people. I really want to put the message out there because I do see people running around, fighting their corner, which is really different from standing for something that is right for growth in the company.”

Short term versus long term

Finding the balance between long-term brand building and short-term activation is a hot button topic in the industry. Many are concerned the latter is trumping the former, a foolish endeavour that will ultimately erode equity, it is argued.

Diageo is wedded to building its brands over the long-term despite being a publicly-owned company required to report every quarter, according to Saller, a culture that is “deeply embedded” in the business. It is essential, she added, that marketers do not succumb to short-termism.

“Our brands have been around for decades and centuries and they don’t move like FMCG brands so we can’t have that maniacal short-term focus,” she said. “It is the job of a marketer to deliver [in the] short, medium, and long term.

“We talk about short as in the half or the year but it doesn’t force us into short-term tactics. You can see econometrically that is a road to nowhere. You’re going to erode your base, you’re going to have to rebuild that back in, it’s a problem. There are some companies that are so driven that way that that is marketing for them – short-term tactics, one after another. “

Although because it is part of the John Lewis Partnership, John Lewis isn’t legally required to deliver quarterly results, Inglis said growing influence with key stakeholders is key regardless of whether you are investing in brand building or performance marketing.

“I don’t find the story about why you have to invest in brand that difficult but we have to be really rigorous about it. We have to invest in econometrics but there’s a lot more to it than that. I certainly find that the finance directors I have worked with and the one I am working with now really understand that.

I believe what you focus on fuels what you feel. So if your focus is ‘I need to figure out how to do this cheaply’ you’re going to feel pretty crap.

Syl Saller, Diageo

“In the same way we have got to speak their language and step into their world, they have to [understand] ours. And if you get that relationship in a good place it works both ways. We can have a really good, rounded conversation about performance marketing, what we invest in our brand, what we invest in our categories and how we work with suppliers. It’s a difficult maze that we have to navigate but we just about get the balance right most of the time.”

READ MORE: How marketing is working with finance to shake off the ‘us versus them’ attitude

Inglis said for John Lewis, it is about finding the balance between the possibility technology has offered and serving genuine customer need.

“It’s the single thing I find the hardest to do both personally and collectively within John Lewis, because there is a huge desire to drive change to grow and experiment [because of digital and technological developments]. Consequently, you have to make choices and it’s difficult to make those,” he said.

“It is partly informed by insight, it’s partly all the work we do around return, but there are times when we have to lead for innovation but we also have to lead for the customer. We have to place the bets that perhaps don’t make sense on the face of it or maybe you don’t realise the scale of what they become.“

Inglis cited the introduction of a click-and-collect service with its sister brand Waitrose as an example of something that ended up being more successful than anticipated.

“It’s a prime example of something where maybe the economics didn’t necessarily stack up but we took the leap and it paid off. What weighs heavily for me is making sure we allow enough space for the next one of those to be found because we have to find them so that’s the balance we have to find.”