The CMO Show: Firebrand Mark Ritson on why digital is overrated

Platform 'bells' and analytical 'whistles': Is digital not all it's cracked up to be?With the digital overhaul facing marketers and business strategies today, do all the new platform ‘bells’ and analytical ‘whistles’ actually amount to anything? When he looks out across the marketing industry, what Professor Mark Ritson sees is clients and agencies who have largely lost their business direction. The Melbourne Business School professor attributes a lack of industry training in the basics as feeding the perpetual gap between how marketers think consumers behave, and how they actually do. “If [marketers] had been properly trained, the first thing they would have been trained on is market orientation, which means you are not the consumer," Ritson says. "What you do and think is highly, highly unrepresentative of your consumer, because you're being paid to market a product, ergo you don't see that product or service the way the consumers do.”In part one of our two-part series, CMO Show hosts Mark Jones and JV Douglas sit down with the oft-notorious Ritson to discuss why the industry today is a broken one. Tune in for a contentious look at the role of automation, how media agencies will shape the future, and why digital is overrated. Listen to the podcast above and subscribe on iTunes and SoundCloud.

Ready for more? Check out part two: Mark Ritson talks disgraceful digital marketing metrics

Resources:

• Ritson vs Social Media - 'Cigar Man' presentation
• Guardian Programmatic Audiences launches with Eurostar and iProspect
• ‘No-one will believe data for the next five years’: Mark Ritson urges marketers to focus on results

More Great Episodes:

• Why WSU’s rebrand smashed the hall of conservative mirrors
• The opposition speaks: JJ Eastwood on the power of programmatic marketing
• The Guardian’s Ian McClelland talks native advertising

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The CMO Show production team

Producers - Megan Wright & Tom van Leeuwen

Audio Engineer - Jonny McNee

Design Manager - Daniel Marr

Got an idea for an upcoming episode or want to be a guest on The CMO Show? We'd love to hear from you: cmoshow@filteredmedia.com.au.

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Transcript:Participants:Mark Jones (MJ)Jeanne-Vida Douglas (JVD)Mark Ritson (MR)MJ: Thank you for joining us on the CMO Show this week.  Our very special guest this time is Professor Mark Ritson from Melbourne Business School.  Thanks for joining us.MR: My pleasure, guys.  Lovely to be here.MJ: Now we have a lot of things that we like to cover with you today, but actually the first thing is we want to go back in time and myself and JV, we've been fascinated by the cigar man story.  Tell us about that and how it came about, because this really kind of put you on the mapMR: Yeah.  It was an interesting one.  I mean I remember seeing the story of the cigar man, it must've been five or more years ago.  It'll be hard on radio to explain this one.  During the Ryder Cup, when it was actually at the Celtic Manor, I think, so we're going back many years now.  They caught a wonderful picture of Tiger Woods actually mis-hitting his drive.  It goes literally straight into the camera lens.  The photographer just happens to catch it mid distance between Tiger Woods and his lens.  By that dint alone, it would have been one of the world's most famous sporting photographs, but that's why it initially got fame.  Increasingly over the years, people's attention been drawn to a guy on the right hand side.  He's wearing a ginger wig, a Groucho Marx moustache, and smoking a comedy cigar.  And the guy…JVD: And looks totally out of place.MR: Completely out of place.  Now there’s a long backstory around this chap.  He's an Anglo Indian guy who loved one of the golfers.  He was just having fun is what he was doing.  He's looking in a completely different direction from everyone else and clearly stands out.  That was the best photo I could find, came back to me.  As time went on, and I just sort of saw this tidal wave of, we're not swearing on this podcast, are we?  Are we swearing a little bit or…JVD: Occasionally.MR: On a scale from 1 to 10, how far can we go?  You give me a…MJ: We don't have an explicit rating, so I guess if you go too far, you might change us.  So how about we...MR: Don't tempt me.  I'd love to change you.  It's the tidal wave of bullshit that began to just emerge around about the same time 5 to 10 years ago.  And I waited for someone – I'm not a media professor, so I have absolutely no clue in this.  I work a lot in practice, but it's mostly on strategy side, with brand management, with very large companies.  I don't get involved with tactics or media.  So certainly my biggest vulnerability is I really have no clue what I'm talking about.  But I just waited for someone to step up and say, "Yeah, but a lot of that's bullshit." And nobody did.  In the end, I did that speech at the...  Phil Kotler came to Melbourne, Professor Phil Kotler who's a very famous marketing professor.  Phil came to Melbourne and kicked off this big marketing conference.  I would like the local talent who was just jammed in there, you know what I mean, just to give the local sponsor a gig.  I just thought, "Well, screw this.  I'm going at it."JVD: Tell us about it, though.  Are marketers still overestimating the power of digital and social?  And what is the rationale behind that?  Why do they want to get so much more out of it than it's actually giving?MR: It's a couple of things.  First, many of them are not very good at their jobs.  That's the first point.  That's a bold statement, but unfortunately entirely true.  Many marketers aren't trained.  They muck and mince about with no real clue what they're meant to do.  That's unfortunate, because if they had been properly trained, the first thing literally they would have been trained on is market orientation, which means you are not the consumer.  What you do and think is highly, highly unrepresentative of your consumer, because you're being paid to market a product, ergo you don't see that product or service the way the consumers do. And if you look at any of the data that comes out on a regular basis, what you see is a massive perceptual gap between what marketers think is going on and what actually is going on.If I give you an example, there is a great bit of research, it isn't even out yet so don't look for it until the end of the first week of November, from the Think TV, which is the wonderful British industry body, but unlike most industry bodies actually makes a massive difference.  Think TV do a thing about every two or three years called TV Nation, where they interview a representative sample of marketers.  We're talking about 400 or something.And a representative sample of consumers for the UK.  It's about 700.  Then they compare what they think with what the actual barb data, which is their version of Oz-Cam, tells them.   So here are some of my favourites.  If you ask a representative sample of marketers what percentage of television is viewed live, they estimated 49 percent.  The reality is 87 percent.  If you ask representative samples of marketers what proportion of TV watching is now multi-screen with people using no other digital devices, they'll tell you 50 percent.  The correct answer is 19 percent.  You know what I mean?JVD: Mm-hm.MR: Let me keep going, because it's so much fun to me.MJ: They're actually very interesting stats.MR: They really are, aren't they?  They're frightening, and their brand spanking new.MJ: This is, sorry, just to clarify though, this is UK only?  Is the audience sample...MR: This is only UK, but I'm fully ready to bet you money that it would be way worse in Aus.  It would be no different, let's be generous.  YouTube, right, marketers are asked, "What is the estimated average number of minutes in a day that the average consumer spends watching YouTube?" They say one hour and two minutes. The correct answer is 16 minutes.  That's off by factors of four or five.  Then this is my favourite: how much video on demand does an average consumer do in a day?  They think an hour and twenty minutes.  The answer is 8.JVD: Wow.MR: So you see what's going on here, right?  We've got a whole army of Muppets who are not looking at the data.  Right, not looking at the data. Job one, prime directive.  And as a result, they let their own biases and sexy media habits and idiot conferences drive their perception of what's really going on.  I'm like a bad penny.  I just turn up at these things and say, 85 percent.  That's the proportion of video today that will be watched on a television set.  85 percent.  And I…JVD: But are people actually watching?  Because the traditional push back, and I'm totally playing devil's advocate here because it's going to be fun…MR: No, no, no, I appreciate yeah…JVD: But your traditional push back from people who are digitally focused is going to be, "Yeah, but TV is a sit back medium.  People aren't paying all that much attention to it.  They've got it on the background.  It's not engaging." So how can you tell that the people who have that set on are actually watching and engaging with the content?MR: In actual fact, and I think that's a great version of what we hear a lot of, it's exactly what we do want from an advertising medium.  One of the problems that Google and Facebook have got going forward with their video strategies are, you don't want to have an animated, engaged, active, can scroll through, move up, move down viewer.  You want someone sat at home.  I used to do much research on this back in the day.  It was academic stuff.  Your ideal consumer in Australia was back, remember when SBS used to occasionally have the cricket.  The optimum consumer was a bloke on his own past midnight watching the cricket out of the UK slightly pissed, can't remember where the remote is.  His consumption, both in terms of exposure and then recall of advertising was off the charts.MJ: Aside from the fact that he'd been drinking?MR: Because of the fact he'd been drinking!JVD: Or perhaps because of it!MR: Exactly!  So yeah, this is what this - is TV a passive medium?  You bet it is.JVD: So we actually want them partially comatosed and not engaged, actively engaged?MR: You really do.  There's some great research back from the early 90s where they did a terrific experiment in US where they measured advertising recall rates during the Super Bowl, and they compared the city where the team were playing and a city where the team weren't playing, just to get that sense of one sample would be hugely engaged in the game versus the ads, and the other team wouldn’t be, you know, the other city wouldn't be engaged at all.  The end result basically demonstrates you don't want super engaged people, because they sit glued to the screen.  The minute the ads come on they sit back, head to the kitchen, talk to other people, blah blah blah.  So yeah, the passive nature of TV is one of its advantages.JVD: So there is an inverse relationship between the level of engagement with the actual target content and the engagement with the advertising that goes around the side?MR: There can be.  It's not a single linear relationship.  You can make exactly the same counter argument for news media in the sense that probably the two biggest advantages of advertising actually in a newspaper, imagine that.  One, because people are perceptually open to learning stuff from a newspaper, so they are interested in the ads, and do actually read the ads.  You're getting data to show that.  That's the opposite of TV.They're going to spend 35 minutes with a newspaper.  They're going to treat the ads, pretty much with some exceptions like the editorial, they're going to look at them eyes on screen etc, or eyes on page in this case.  So you can make a definite argument for newspapers. So it does vary, it varies. But this conversation is entirely inappropriate for the model or the marketing, because it involves research and discussions of the relative merits of different media, apples to apples.  You see what I mean?JVD: Yep.MR: So we can say Google, search advertising, has tremendous advantages, disadvantages.  So indeed does digital video.  So does digital display, so does news advertising, so does TV. This conversation isn't ever happening in Australia because again, we have an idiot divide between traditional and digital.  That prevents apples to apples comparisons, which if we were to do them would completely dispel the myth in about 25 minutes.MJ: I was going to say, because we could keep going down the path of pros and cons for each one...JVD: Make it just digital versus TV, but there's something else.MJ: Well we could spend the next four hours doing this, I think.  What I'm interested to know is, you talked about this idiot divide, and you said that marketers aren't trained, and all these kinds of things which I'm sure people would be up in arms about, and all this kind of stuff.MR: Good, good.MJ: What's behind that from your point of view?  Are you observing that there is a lack of critical thinking?  Is that where it's coming from?JVD: Mathematics, what do we need?MJ: Or do you have some other kind of covert agenda going on here?  You're missing your MTV?  What's going on?MR: I think the lack of critical thinking is definitely part of it.  There's a few things going on, in my opinion.  One is this desperation not to look out of touch, which has always been a marketer's Achilles' heel.  I'm forty-five. I'm not a particularly streamlined or impressive looking dude.  You know, I wear socks and don't have a beard, et cetera et cetera.  You have to be pretty confident...  I have a massive ego or no ego.  You can argue either way, to stand up and say I don't think it's particularly impressive.  Because the nature of marketing is if I invented an app called Thwako, which I just made up now, and started tweeting about how awesome it was, I could get 200 marketers to retweet and say, "Yes, I'm into Thwako as well," by teatime. You know, there's a real sense of whatever's new must be better.  That's part of it. The lack of training is part of it.  You know I despair of the…You know, we’ve entered a – we’re not going to leave it, so there's no fix for this, but we’ve entered an era where marketing is predominantly seen as being about the promotional P.  That's about ten percent of marketers job. Not anymore, because of the heroes of the new generation for marketing (a), again have no training in marketing, and (b), are almost exclusively focused on communications, which isn’t the main part of our job.  So you’ve got that bit going on as well.MJ: So in other words you're neglecting the other traditional Ps, is that what you're saying?MR: No, that's part of it.  That will get you to about 30 percent of the job.  A marketer's job is to do strategy.  By all means, get some agency guys on and get a couple of beers in them.  They'll tell you exactly the same thing once they're sure no one knows they're saying it.  Because of what you would get from almost every agency in Australia is when they work for very large clients, there isn't a strategy there.  What there is is a bunch of hoo-ha and tactical desires.  What's missing now is I call it the tactification of marketing.  This traditional digital nonsense is part of that preoccupation.  We don't do the strategic part anymore.  Most marketers don't know the difference between tactics and strategy, literally. So when they're briefing agencies, they're briefing them on about tactical requests with no inherent strategy.  So all of that's missing.  Pricing isn't there anymore. Marketers don't do pricing in Australia, because they're too busy working out how to get onto social media. Product design been taken out of their hands.  Distribution, we have huge grey market problems.  That's a marketing challenge, not anymore.  Most marketers I meet in Australia, the majority don't actually do research or brand tracking on their consumers.  How do you square that?  It's pretty depressing.  I'm aware that I come across as being I don’t know dismissive and a bit of a prick, but the reality is if you see what I've been seeing, you would have exactly the same opinion.  It is a pretty bad place out there at the moment.JVD: So your concern is predominately with internal marketing and what they're going to the agencies for, as opposed to agencies.  It sounds like agencies have the capacity potentially to provide the strategy.  They're not being asked for it and marketers aren't thinking about that as a first pass.MR: Yeah, that's a good point.  A couple of things there.  The agencies are not capable of developing strategy.  They think they are, but they're hopeless at it.  They're fundamentally tactical beasts.  By the way, there's nothing wrong with that.  Because if you look how it's done properly, or how it was once done here and how it's still in properly elsewhere, what is a brief to agencies?  It's the strategy period from the client.  It's the start of the agencies picking up the strategy and saying, "Here's how you'd execute."  Right? So I think yeah, agencies have been asked in Australia to swim upstream for many years to do strategy.  And they've done of the best they can, but they do a crap job.  It the client's job.  The agencies have done the very best they can.  The other thing is, the research I've been doing at the moment tells me that around about 80 to 85 percent of media choices, and this is based on a lot of data, are either completely or partly responsible to the client.  So the agencies do have a say both creative and media, but that say is relatively minor.At the end of the day, I think agencies will do what the clients ask of them.  What I've learned, which is very interesting, is I don't think media agencies are bent at all.  There’s a famous old question called the Parramatta question which is, everyone in media talks about this, your typical media planner is 29, male, lives in Parramatta, doesn't drive so doesn't listen to the radio, doesn't read the newspaper, doesn't have a TV, or claims he doesn't.  Therefore, he is entirely unrepresentative of Australian consumers.  All of that is partially true, but whenever I look at the with quite complex data how they plan and recommend media to clients, then they do pass the market orientation test.  There's a little bias there in some places, but not that much.  I think they are professionals and they play it straight.  The problem is on the client side, back to your question, the data I've got shows very clearly that clients (a), as our little data example from earlier shows, have no idea what real consumers do and (b), don't let that ignorance get in the way of recommending media for their brands.  They are the problem.MJ: A good question I'd like to actually interject into this is, "What do you think the role of consulting firms will be?" Because we're seeing the likes of Deloitte and Ernst & Young... JVD: The big four professionals, yeah.MJ:  Your big four, but also I would suggest here there’s a growing tier of the mid-tier and if you like a boutique tier again underneath that.  Consulting firms have come out of the big for, these startups and so on, that are really tapping into this strategy idea.  They're inserting themselves between the client and the agency side.MR: Yeah, it's happening.  I think it's definitely a trend.  I think we'll see is they're a real threat to media agencies.  There's an argument that says that for a variety of reasons the PWCs of the world could well one day be handling media decisions for clients. MJ:   Media buying?  Or just the decision-making?MR: The media buying part is pretty much where the action...  Here's the interesting point.  Everything that involves skill and time, we've always given away for free in marketing.  The media planning part is a skilful part, but we don't make any money for it.  We make it all from the buying part.  The account planning and creative agencies is where all the skill really is, but we used to get it back off commission and buying the stuff as well.  So it's interesting, because we've never been able in marketing to really monetise the strategic part.  I personally think the big consulting houses will also struggle, but they'll probably at the questions increase about marketing your own homework and media reach and programmatic, I think they will find a place there.  And it's a threat to media agencies.MJ: In what sense, though?  In the sense that they can do a better job or...MR: Sure.MJ: Because there's the strategy side.  So if you can talk the talk at a CEO board level, is that what's going to make the difference?MR: Yeah. There's never been any money in that.  If you had to guess, one percent of marketing money is spent on strategy and ninety-nine percent on execution, right.  So I do think they do have the ear of the boardroom, but more importantly, as we know with media agencies, and let's put Google and Facebook in there as well, the number one concern of marketers in Australia right now, and again I have data to show this, is, "Am I getting what I'm paying for?" That wasn't there three years ago.  So they're spooked. I think that's when you call a McKinsey or a PWC, because you go, "Oh, it's PWC.  Everything is going to be fine here." We've lost the perceptual war that media agencies can be trusted.  That's unfortunate, because the vast majority of media agencies, both the planning and buying functions, have played it completely straight.  A few have not.  That's clear.  But the majority of them are in a good shape.  That golden era of media...  You remember when media agencies came up and around mid-nineties and suddenly were the best looking operation in marketing in terms of profits and sexiness?  That era is coming to an end.MJ: Just to clarify, do you mean that the media itself is not working, or that you think there's a credibility gap with the agencies in terms of what they’re charging for what they deliver?MR: Well both, unfortunately, the answer is both.  If you look at the media themselves, there's always been a bit of wobble between...  Even eyes on screen.  Oz-Town doesn't measure eyes on screen.  It measures room population.  Now with Google and with digital video and so on, man there’s so many questions there.  So the media themselves is a bit wobbly in the eyes of clients, but the media agencies have not helped themselves.  What we've seen in America, and to a more limited degree here through the AA&A, et cetera.  And programmatic, man, programmatic stinks real bad, real bad – real bad.JVD: I was…MR: If you look at programmatic, right, go back three, four years.  It was the hottest word in marketing.  It was going to be automated buying.  It was going to be the future of media.  Da-da-da-da… You look at it now, any decent client doesn't trust it at all.  It's a box of turds and spiders.MJ: You've got data for that too, presumably.MR: Well yeah, I've got loads of data.  If you look at the Guardian, for example, the Guardian's new head of chief commercial officer bought some of his own, brilliant man by the way, bought some of his own advertising through programmatic.  He got 30 percent of the money back.  That's progress in market right.  We used to complain about 15 percent commissions. Programmatic is now at 70 percent.  How do you like them apples?JVD: So what's fascinating about this is now that we've sort of insulted about ninety percent of our audience...MR: Yep!  Still ten percent ago!JVD: What do we do now?  You're describing an industry which is pretty comprehensively broken in terms of how marketers are positioning themselves, what they're asking for, what agencies are able to provide, what they're capable of doing anyway, the level of dependency we've got on digital marketing, our understanding of metrics, it's all broken.  Where do we start, how do we fix it, who's getting it right?