Advertising has managed itself into a position where it’s the ‘corporate System 1’ go-to for almost all growth challenges. And why? Because advertising is just, well, really good at advertising itself, writes Paul Kelders, CEO of jump! Innovation.
Real growth shouldn’t be seen as the sole preserve of advertising. Real sustained profitable growth comes through the development of strong, price-inelastic brands – and these come through innovation. So why isn’t innovation seen as ‘the ‘corporate System 1’ go-to for almost all growth challenges?
Quite simply, there’s an innovation gap that’s stalling growth; innovation needs to become more accessible and reframed; and a simple ‘innovation nudge’ can start great change.
Marketers and business leaders need to bridge, what I call, the ‘say–do’ gap when it comes to innovation. But, of course, this is challenging.
Here’s a story. A few years ago, we developed a blue ocean innovation for a category-leading client operating in a staple goods sector rife with branded and unbranded competition.
There was no CAPEX required; it was exceptionally difficult to replicate, and it was a Giffen good! ‘Home run!’ we thought, but the client backed down, opting instead to pump the money into advertising to support their under-pressure core brand with additional spend. “Paul, innovation is the riskiest thing we can do”, I was told, and by implication, advertising was the safest.
We had been stopped in our tracks by the innovation gap.
And we’re not alone. Some 60% plus of business leaders claim that innovation is important to their company’s success and yet 40% of leaders reject disruptive ideas because of a fear of failure and only a quarter of boards make innovation a priority, something’s clearly awry.
There is reams of evidence out there as to innovation’s growth dividend: Innovative companies outpace the competition (Boston Consulting Group), Kantar’s Brand Z report states that the top 20 most innovative brands outperform others in their 100 most valuable brands rankings, and 63% of consumers expect companies to introduce new products or services frequently.
We’re in a bit of a ‘circular reference’ situation – we want to innovate but we fear the consequences and so don’t focus on it. This trickles down then to practical barriers such as not having a dedicated innovation leader (only one-quarter of c-level executives surveyed said that had such a person in place).
If it’s nobody’s job, it won’t get done. This is part of the challenge that companies face when it comes to innovation: if a company has to take a risk, it seems that a known risk (advertising) will be taken before an unknown one (innovation).
CMOs, in particular, are under pressure to deliver both short and long-term growth that is profitable, strengthens brand equity, reduces price sensitivity and positively impacts share price. Time and the ability to wait for results are modern luxuries.
Across every element of the marketing process, visible; measurable, and immediate actions, are expected. Sometimes that leads to ‘corporate’ System 1 thinking – and the advertising default of ‘communication works; let’s go!’
However, as Mark Ritson posted on Linked In: “We overstate the importance of comms within marketing. Most Twitter “experts” conflate marketing and comms as the same thing. Missing the point that it’s less than 10% of the total marketing game.”
What if we can create some space for ourselves and think about the other 90% of which innovation could, and let’s throw caution to the wind here, be 20%, given its wide-ranging positive impacts.
Now don’t get me wrong. I’m a fan of advertising. I started my career in advertising before moving ‘brand-side’ and amongst other things was responsible for Guinness advertising in Ireland. Great advertising is beautiful: gorillas, horses, meerkats, bouncing balls. Great advertising, given time and space, delivers fame (and often growth).
But there’s no fame without surprise. Innovation brings that surprise.
Take Mark Anthony Brands International – makers of Mike’s and White Claw amongst others. For the past three years, they have added hundreds of millions of dollars to the business through innovation. They know they couldn’t do this by advertising alone. What innovation does, even via a relatively simple line extension, say White Claw Peach, is give the ad agency something new to play with, a new source of inspiration instead of constantly looking for new ways to sell ‘old’ things.
Sarah Keenaghan, their Global Director of Innovation/Brand Development RTD, is super clear on the role of innovation. She told me: “There's something about the added levers that innovation can deploy, as well as mental availability, it brings physical availability, high feature levels, guaranteed space, POS at the point of purchase, sampling and experiential possibilities. All of these levers help disrupt the shopper at the moment of truth. No amount of advertising can deliver the physical availability win of an innovation (especially one that retailers have embraced).”
Innovation, either brand extension or something ‘new-to-world’, because of the important novelty it brings, works for existing users and critically, for new ones, driving penetration.
Growth often depends on acquiring new customers but, according to Les Binet and Peter Field in ‘The Long and the Short of It’, this will be difficult without major product innovation.
I believe the use of advertising to deliver long-term gains – volume, price sensitivity etc – is often asking too much from the discipline, particularly without new news, and it’s not always afforded the time to deliver (3 years according to the IPA).
Innovation naturally delivers on immediate, or ‘short-term’ volume goals, whilst also delivering longer-term objectives – equity building; penetration gains etc.
Having something great to give to consumers – especially potential recruits – and having it regularly, delivers in both the immediate and longer terms. New news stimulates interest and sales, feeds equity, endures. Perhaps we should stop asking advertising to do all this.
But to enable this step change, innovation should not be regarded a serendipitous, opportunistic, or tactical event.
It should be planned for, scheduled, be driven by either insight or foresight, prioritised and used to inspire advertising to the heights of highly efficient fame campaigns. Achievable if there’s a plan, grounded in strong foundations, managed and known.
Innovation doesn’t have to be disruptive or cost intensive. The earth doesn’t have to move. Simple gains can deliver not only for the brand but also improve ROI in fixed assets, keeping COGS down. Incremental innovation – solving a pain; improving an experience; extending a range, can have enduring effects.
The key is to make sure it’s important to many people, not just a niche.
Which brings me back to my opening question: what happens if we think of innovation as the new advertising, and learn from it to change our expectations of innovation?
Thinking in this way should get us thinking about what we ask of innovation: how often we ask this of it; the resources we put behind it; how we frame innovation and therefore how we approach it, mentally and practically within our organisations.
Imagine if we allowed innovation to assume responsibility for being the primary growth driver in both the long and short terms, driving acquisition, price inelasticity, etc. and also creating tangible assets for the business.
This could lead to advertising’s efficiency increasing as it has more to talk about: new news spoken about in new ways, promoting familiarity with the brand and making it easier for innovations to succeed.
But to have any chance of this happening, that ‘say–do’ gap which allows the innovation gap to persist needs to be bridged, and so my one ‘simple’ thing – my nudge – is that you: move innovation to be the first item on your strategic or delivery plan for the next year (and then keep it there).
It demands that you create a dedicated resource with appropriate support.
It means that every board or management meeting starts with: “tell me about our progress on…our pipeline, our innovation metrics, brand challenges, potential CAPEX, impact on value, etc.”
Instead of thinking ‘what’s our next ad going to be?’ Think, ‘what’s our next innovation and what will it deliver for us?’
And then hand the baton to advertising to build the fame for the innovation – the real growth driver.