March 2007

IN THIS ISSUE

A Letter from CEO Michael Dunn

Marketing effectiveness. Two deceptively simple words with deep implications for marketers. Intellectually, marketers get it. But delivering is a whole different matter.

Helping businesses improve the effectiveness of their marketing strategies and initiatives has been a key underpinning of Prophet’s offerings for some time. But in recent years, we’ve seen the mandate for marketing effectiveness take on heightened urgency. With marketing budgets continuing to be flat (if not shrinking), investments must work harder and better than ever before. In fact, in our just-completed study on the subject of marketing effectiveness, 75% of respondents said “improved marketing effectiveness is one of their business’ top three priorities.”

A sneak preview of some of the Study’s findings is among the highlights of this issue, and we are pleased to feature an interview with Chris Gibson, CMO of UnitedHealthcare, who helped create a marketing organization whose initiatives demonstrably support broader business imperatives.

As always, we welcome your thoughts.

Best,

[Signed, Michael Dunn]

Michael Dunn
CEO & Chairman
m_dunn@prophet.com

Interview with Chris Gibson, CMO, UnitedHealthcare

Since joining UnitedHealthcare as Chief Marketing Officer in 2004, Chris Gibson has seen her purview expand as marketing’s role in and influence over the success of this multi-billion dollar business have increased. For this dynamic organization, achieving marketing effectiveness is a critical imperative. Prophet interviewed Gibson to hear her perspective on how this has played out at the nation’s largest health care insurer.

Q: What are UnitedHealthcare’s current marketing challenges and goals?

A: Accelerated growth is our biggest challenge and goal. Market dynamics in the healthcare industry are making it harder for everybody to grow. Rising costs have caused an increasing percentage of small businesses to fall off the rolls, leaving some individuals out in the cold. As a business, we are trying to drive greater affordability and increased quality, and also reach out to individuals in the uninsured space. We’re leading the industry to become far more consumer-focused. One of my main efforts is to create a brand that consumers recognize and prefer. To that end, last year we undertook research that revealed our advertising wasn’t breaking through. Our ads were funny and clever, but no one associated them with our name and brand. No one really understood what we stand for, so we lacked awareness, loyalty, and preference. Clearly, we needed to take a hard look at how we were positioning our brand and how we could be more relevant to consumers.

Q: How did you achieve Senior Management buy-in for this initiative?

A: We are a very data-driven organization, so I had the tools and intelligence to show these efforts weren’t working. We weren’t getting our money’s worth in terms of building our brand loyalty or preference. In addition, UnitedHealthcare has acquired a number of other companies, and it was time to evaluate bringing multiple brands together. Finally, I also emphasized with senior management that brand is really about our mission and reaching our business goals – it isn’t just a “marketing thing.” It worked and now our CEO is one of the biggest champions for what we are doing.

Q: Had marketing previously been on Senior Management’s radar?

A: Yes and no. It wasn’t a natural act to think marketing was actually able to drive proven results. One of our earlier projects with Prophet was focused on our small business group, to prove through pilot testing that marketing really does work. We changed price, product, and place across the board and then accelerated promotional activities in some markets. Through that exercise we proved how much changing the price moved the mark vs. how much additional business growth we achieved by creating the right marketing and advertising mix. We tested different combinations of print, radio, and outdoor, tied them to business goals and proved effectiveness through data. This work helped many people move up the learning curve to understand that marketing is not just communications – rather, it can be a driver of growth.

Q. Did weighing different vehicles against each other shape your investment mix?

A: Absolutely. Once we had supporting data on how to most effectively communicate our brand and benefits across a variety of tactics - and saw how well it worked, we took that marketing communications combination and deployed it in 20 additional markets to test its success. And it worked. Don’t get me wrong, the same mix doesn’t work for everything. But in this particular case it did, even when we expanded it to additional markets. It not only shaped our investment, but also helped us develop and refine our internal tools and process to ensure that this test-and-learn mentality sticks. We now have a better system to understand how our brand awareness and attributes are being received in the marketplace.

Q. Do you have any key takeaways to offer others embarking on this path?

A: Absolutely! First, data is your friend! And I’m not just talking about market data, but financial data as well. Marketing is so much more technical, measurable, and scientific now, and in order to make progress, you have to learn to love data. Second, don’t forget the basics. At the end of the day, it’s about people – emotional triggers, how you use your brand as an impression in people’s minds. It’s about data, but it’s also a blend of art and science. You need the right and left sides of the brain to create unique ways to reach your customers that will make an impact. The “four P’s” are basic, but a great marketer still needs to understand the full marketing mix – and use it in innovative ways. Finally, surround yourself with a good team. It’s very important to have a solid team of people, both creative and analytical, to develop, implement, and track your strategies and tactics.

To hear more about the work Prophet has done with UnitedHealthcare, please view our webcast titled, "Evaluating Marketing Mix Tradeoffs: A case study of UnitedHealthcare."

Preview: Prophet’s 2006–07 State of Marketing Study

How important is marketing effectiveness to today’s senior marketing executives? Exceedingly, according to initial findings of Prophet’s 2006-07 State of Marketing Study. It’s getting there that’s problematic.

The Study, due for release in April, was conducted among 100 plus senior-level marketers to better understand how they allocate and measure their marketing investments. It uncovered, as in our 2005 Study, that they continue to look beyond marketing to achieve business growth -- and business strategy, new products, and the customer experience are among the most critical drivers. It all requires executional excellence and a focus on innovation, they agreed.

It makes marketing effectiveness a key imperative. When it comes to supporting business growth and its drivers, only 1% of respondents said increased marketing spend was the answer and only 3% pegged cost-cutting and operational efficiencies as solutions.

Still, only one-third of respondents ranked the marketing tactics they use as effective. And measurement falls short of where it should be. No marketing activity was consistently measured by more than 54% of the companies participating in the study.

Shockingly, respondents revealed that some of the tactics that are the most measurable – loyalty programs and Internet banners, for example – are among the least measured. And fewer than half the respondents measure their direct marketing – long considered one of the most scientific of marketing disciplines.

Small wonder that more than 75% of the study’s participants ranked marketing effectiveness as one of their businesses’ top three overall priorities. It would appear, however, that marketers have a long way to go to achieve it.

View the complete Study results here.

Prophet Recommends...

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Other articles of interest

Radio Listeners Don't Touch Dial During Ads
Advertising Age, February 12, 2007
Radio has been flat in revenue and declared the least engaging medium in recent years, but new electronic measurements and surprising statistics may help the medium rebound quicker than expected.

No Accounting for Design
Fast Company, February 1, 2007
It's the design world's dirty little secret. Despite the growing consensus that "good design is good business," most companies lack objective financial metrics to help them calculate whether increased investment in design will, in fact, generate increased profits.

Google Tests Cost Per Action Tests
Media Post Publications, March 21, 2007
Google has launched another limited beta of pay-per-action advertising--a model that allows advertisers to pay for a specific consumer activity, like signing up for a newsletter or making a purchase.

News and Events

Announcing BackPocket – Prophet’s new blog!

BackPocket is a blog tailor-made for busy marketers like you. Don’t have time to keep up with the latest media coverage on brand and marketing? Looking for a “backpocket” case to support a pitch? Our editors collect interesting articles, ideas, and examples for you, conveniently organized and searchable by brand and topic. And as a bonus, we share our observations on marketers and marketing today, featuring such Prophet thought leaders as David Aaker, Michael Dunn, and Scott Davis.

Aaker Converses in ‘Marketing Masters’ book

Prophet Vice Chairman David Aaker is featured in a new book, “Conversations with Marketing Masters.” Authors Laura Mazur and Louella Miles offer compelling insights into the often-controversial concept of marketing by assembling the collected wisdom of some of the world’s most influential marketing gurus, including Aaker. To read an excerpt of the chapter featuring David, click here.

¿Habla español?

If you answered “¡Sí!” then be sure to check out Prophet’s new Spanish web site. It’s a reflection of our expanding global footprint, with the opening in January of our newest office in Madrid, Spain. The office is headed by Partner Joseph Gelman, who has significant experience devising impact-oriented brand and marketing strategies and programs. Prior to joining Prophet, he was co-founding director of BBDO Consulting in Madrid, and before that, he worked for McKinsey & Company. Joseph is joined by a team of experienced marketing consultants that include Pablo Barrientos, Silvia Velasco and Luis Eduardo Rodríguez Baptista.

Spotlight on Speaking

Prophet’s soon-to-be-released 2006-07 State of Marketing Study will be the focus of Senior Partner Andrew Pierce’s keynote presentation at the Conference Board’s 2007 Senior Marketing Executive Roundtable, April 18 and 19 at New York’s Millennium U.N. Plaza, and May 17 and 18 at Chicago’s Drake Hotel. As sponsor of the event, Prophet is happy to offer a $200 discount off the registration price. To register, please click here and use priority code CD2 to receive the discount. 

Pierce will also present the findings from the study at the ANA’s Regional Meeting on April 26 in Chicago. For information please click here.

“Innovation: Balancing Theory and Reality” is the theme of the AMA Strategic Marketing Conference 2007, chaired by Prophet Associate Partner Mitch Duckler and being keynoted by Prophet Vice Chairman David Aaker. The event is set for April 30 through May 2 in San Francisco. Be sure to register before April 23 to take advantage of the $100 Early Bird discount.


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