Marketing is not a profession - Update 0906

What marketing is not

Marketing is often described as a profession. It is not. If it were a profession no one could be a marketer without having completed the requisite training and having the certificate on the wall. As it is almost anyone can call themselves a marketer and many marketers have no qualification to do the job. Significantly, that does not necessarily made them any the less successful.

I might know instinctively how to treat a broken leg, but I wouldn’t try because I do not have the training nor do I belong to the brotherhood of educated medical professionals qualified to fix a fracture. If I have an idea in business my success depends on how I find and keep customers. That is marketing and in theory anyone can do it.

This is very offensive to many in the industry. They refer to the “marketing profession” and they would like companies to hire only those who are properly qualified. The problem is that some of the world’s greatest marketing successes could not then be described as such. South Africa’s late Dr Anton Rupert understood exactly what marketing is about. More than that, he created many of the common marketing wisdoms employed today. He was the first to appreciate the value of the outside back cover of top magazines. He bought them all so wherever you went you saw a Rothman’s or Peter Stuyvesant advertisement whether you were reading the book or simply staring at the outside pages of the one being read by the person opposite you in the train. Rupert used scarcity as a tool to make his brands more valuable and he drove ad agencies wild with his views about what drinks and tobacco advertisements should look like. They hated the result, but the success of most of his brands made the point: this was a person who knew what worked in marketing.

Others who have this remarkable gift are Sir Richard Branson of Virgin, Jeff Bizos of Amazon.com and, in my view, South Africa’s Nelson Mandela who marketed the notion of reconciliation to a divided and angry nation and to a sceptical outside world.

Educated instinct?

These are people who instinctively know how to communicate to the public those packages of information that make the difference between “buy” and “don’t buy”. More than that they know how to keep customers once they have them and, most important, they recognise that the brand is the post to which all mentally held perceptions of what the brand is and will do for them, are tied.
I have spent three decades teaching marketing to aspirant marketers and many have used that training very well. I know. I often meet them now as successful senior executives in client companies. I also meet and work with many excellent people who have no formal marketing education. Some are chemical engineers, others studied botany and more than a few have no special qualifications at all.

But that’s not all

Now let me throw another spanner in the works. Marketing is a function. It is not an end in itself. When marketing academics call for their discipline to be given investment status, they are failing to understand what its role is.

Take a building. The building, when it is complete, is an asset in the books of the company that owns it. The value of the asset is the present value of the signed leases plus an estimate of new leases to replace those that lapse and inflation related escalations. The architects, quantity surveyors, engineers, builders and decorators who built it were functions in the construction process. The companies that clean the building, maintain its plumbing and electricity supply and keep it looking fresh are functions employed to maintain and enhance the value of the asset.

In that sense marketing is also a function. It is not the asset. The brand is the asset and marketing is the tool used to maintain and build the value of the brand. Brand owners employ marketing specialists to build and manage the brand asset.

Marketing metrics have been the key topic for research and debate over recent years. Some believe that these are the measures that the board wishes to hear. But marketing metrics primarily refer to ways of measuring the work of the marketing function. The end result of any marketing programme is to defend and enhance the value of the brand asset.

This is contentious in the marketing industry and the ground has been deeply ploughed. I raise it again for a reason that I believe is the future of marketing. If the brand is the asset, all expenditure on it is appropriated for the sole purpose of increasing its value. Today, in the light of new and anticipated accounting standards, there is no question that brands are assets and increasingly boards of directors will want to know what management is doing to protect the brand.

What marketers must do

There are certain skills that the modern marketer must acquire if he or she is going to rise above the rank of functionary.

It goes without saying that the basic skill is marketing itself. Understanding concepts such as brand equity, customer lifetime value, brand knowledge structure, brand image and brand salience are essential. Equally, technical knowledge of market research, pricing, segmentation, integrated marketing communications and what metrics are applicable under different circumstances and how they are applied, are (or should be) a marketer’s stock in trade. But there are two additional sets of skills that are now vital to the future of any marketer who has board ambitions and wishes to rank equally with executives in finance, production and operations: accounting and finance.

1. The advent of accounting standards that recognise brands as assets has changed the landscape. Under new standards that are globally applicable, brands that are acquired in a merger and acquisition (or business combination as the accountants describe it) must be valued. This has imbued brands with newfound status in that they are now balance sheet assets. In time it is quite likely that the standards that deal with intangible assets will be changed so that all brands – acquired and internally generated – will be recognised as assets. At the very least marketing people need to know what these standards say and what they mean. They also must gain a working knowledge of the various methods that are and will increasingly be used to value these assts. A working knowledge of the income statement and balance sheet and what lies behind them is fundamental.

2. Gaining that knowledge points towards corporate finance. This is not as frightening as it might sound because the aspects that apply are relatively simple. The time value of money underpins the theory of present value and net present value. Once this is absorbed the idea of discounted cash flow becomes easy to understand. How discount rates and in particular the Weighted Average Cost of Capital (WACC) is calculated, is slightly more complicated, but should not be beyond the comprehension of most people who work in marketing. It just takes some application.

Marketing will never be a profession in the true meaning of that term, but marketers will most definitely become more professional in what they do if they augment their competency with these additional skills. The present deficiency is the inability of most marketers to communicate with the board in the appropriate language. Once marketing concepts and measurements are transformed into the idiom of finance and accounting the proficient marketer and the work he or she does will gain new respect where it counts: among the people whose money and wealth the enterprise is all about.