Metrics & Marketers
Introducing James Hankins
Friends,
I hope that all is well with you and yours.
Quick personal updates before we go-go
My international speaking schedule for Q2 is becoming full. I still have some time in mid-April and the first two weeks of May, but June is entirely booked. Should you be on the lookout for a speaker for your conference or corporation, now is very much the time to get in touch.
I have set up a second Substack – Typing Aloud – and it is a bit of a weird one. It will have no cadence, nor any thematic consistency. Rather, it will be an outlet that serves one purpose and one purpose only: to provoke thought. By form, it will be a series of unfiltered considerations. By function, it will be a series of essays written by yours truly. Each will be entirely free. You may choose to support me if you desire to, and I shall be ever grateful, but I hold neither expectations nor hopes.
The first piece to be released on Typing Aloud will be the precursor to the second book I am currently writing: The Model Corporate Citizen: How Good Management Leads to Bad Results. And it will be a bloody good one.
In the news
Ryan Reynolds is doing alright for himself and will soon be doing even better. T-Mobile is reportedly acquiring Ka’ena Corp, the parent company of Mint (of which Reynolds owns roughly 25%), for $1.35B. How much the star of Deadpool stands to make remains to be seen, of course, but it would appear that his highly visible approach to investment continues to pay off.
Meta is laying off another 10,000 employees in the next phase of what Mark Zuckerberg has dubbed “the year of efficiency”. That is the equivalent of roughly 13% of the remaining workforce. While the increase in revenue per employee caused a 7% market cap increase, Meta has reduced its full-year expense range for 2023 by only 3%.
Greggs has been named the strongest restaurant brand in the world, showing how utterly pointless brand valuations are. That is nothing against Greggs, a company which James and I have repeatedly highlighted in positive terms, but the suggestion of global domination is, on objective grounds, infantile.
Item of the week
Benjamin Bratton is a professor of philosophy of technology and speculative design at the University of California, as well as a director at Antikythera, a think-tank on the speculative philosophy of computation. In this TEDx talk called What’s Wrong with TED Talks?, he provides a brilliant polemic to the scientismic inspirathon that the event has become.
“TED, of course, stands for Technology, Entertainment, Design. To me, TED stands for middlebrow, megachurch infotainment. The key rhetorical device in any TED talk is the combination of epiphany and personal testimony. The speaker shares some personal story of insights and revelation, its trials and tribulations. … I am sorry, but this is not up to the challenge of the problems we are ostensibly here to face. They are complex and difficult, and not given to tidy, just-so solutions.”
Moving on.
As always when we conclude a theme, we do so with a practitioner’s insight interview. And today, I am proud to announce, we are joined by none other than my partner in e-commerce crime, James Hankins.
For those who do not (yet) know you, could you give us a short summary of who James Hankins might be?
Currently I’m the Global VP Marketing Strategy and Planning at SAGE. We are one of the original SAAS companies, having supplied B2B accountancy software solutions for over 40 years. I’ve only been in situ for just over a year though.
Prior to joining, I ran my own marketing consultancy primarily off the back of my work with the Share of Search metric and a few other “papers”. A core part of the offering was the utilization of the metric for contextual analysis purposes for clients such as McKinsey, Nestle, SAGE and others. Before then, i.e., for the majority of my career (some 18 years or so), I was a strategist/planner within a variety of media agencies, working on some of the biggest brands in the world and UK. Particularly proud achievements included co-authorship of IKEA’s brand platform/creative strategy “The wonderful everyday” and two of the most effective smoking cessation campaigns in the world for the Department of Health in the UK. A slightly less “proud” achievement, but no less effective, was my role in unleashing Gio Compario of GoCompare fame onto the world (if you know, you know).
So, the past few weeks, we have been discussing the importance for strategists to understand financial analytics. You clearly do. How has it helped you in your work?
Funny one this one. I am absolutely not a financial analyst; I don’t profess to have the skills to deconstruct a balance sheet (oh the irony of working for an accountancy services business) or a P&L. However, I do have patience and I do know what to look for in terms of certain metrics – and I will search for definitions if I am unfamiliar with a term.
A lot of it is just reading and following key numbers, while looking out for misrepresentations. Over time, it becomes pattern recognition.
It is also important to remember that what you see is “the best” a company wants investors to see; value investing is all about understanding the business and how it makes money. Firms use annual reports as a communication device. Whilst official standard accounting terms are consistent, it is useful to try to see behind the numbers and work out what isn’t being said.
I must admit that UK submissions are a lot easier to read and more entertaining than US ones, but they all have something to say and it’s usually quite interesting. As part of our recent paper, I dived into a load of company reports from the 80’s and 90’s. They’re less “produced” than they are now, but still really useful and certainly help with trend analysis, i.e., how metrics evolve over time.
Where do you think that metrics go wrong, in other words, where can an over reliance on metrics lead you astray?
Individual metrics are single measures and a single measure isn’t sophisticated enough to tell you everything. Even a balanced scorecard requires a narrative to direct the conversation and provide context. A good example is the statistician’s lake; how can you drown in a lake that’s 2 cm deep on average?
You also have to assume that numbers are gamed, because if they can be, they will be. Goodhart’s law and all that.
To the degree that one can say such a thing, what do you consider to be the most important metrics, and how would you go about calculating them?
I’m a big fan of market share and penetration; two different measures that provide a short- and long-term view on performance vs the competition. They may seem like simple calculations – % of market value or volume total, and % of value or volume in year – but when calculated over time they provide a clear view of the dynamics of the market. It’s why I love the simplicity of share of search; it provides every company with a view of their market performance. Although it’s true that there are weaknesses, as long as you factor them into your conclusions, you should be OK.
Much of that which needs doing in order to move the corporate needle – the original 4Ps, if naught else – used to fall on marketers. It still does in top echelon organizations such as P&G, but elsewhere marketing has been reduced into comms, and the metrics used have gone from company relevant to campaign relevant. I would bet money that a lack of commercial savviness correlates with that, though in what direction might be up for debate. How do you think marketing might get back that which it lost?
The realist answer is that I don’t think it will, purely because it takes such will of character by marketing leaders to shift the dial and reorganize. I have seen it done by a number of directors in the past and it’s one helluva task.
Can marketing become more commercial? Yes. In fact, much of marketing should. At the end of the day, marketing is commercial, a driver of growth and money flows. Balancing commercial intelligence with the creative output required to attract consumers is certainly a way of stepping up the ladder in terms of corporate influence.
Obviously, we also have to discuss e-commerce. How would you sum up what you have seen on the market since our Cannes talk last year?
Winding back a few years to when I became unconsciously aware of something “not quite right” with many e-com players, it felt like it was against the orthodoxy. Which was odd, because whilst it may seem blindingly obvious that paying someone to do something for you will cost more than doing it yourself, it was entirely hidden to many. And it still is.
The worst part is the complete and utter disregard for history. We analyzed the old catalogue companies in our recent paper, including how they made money (finance offers, multiple business models, etc.), and there were so many things to learn from those who had done it before. Yet nobody even bothers to do the due diligence because, well, the internet (the proponents of which continuously fail to acknowledge that the real issue is distribution).
And, without going too deep into our new paper, what do you think we might see in the market going forward?
In some ways, the last 18 months have been a demonstration of a quantitative destruction (as opposed to creative destruction) that has reset expectations of businesses and innovators the world over. Clearly, the route to profit isn’t about singular approaches. With profit horizons shortened for the foreseeable, there will be a greater onus on proper creative destruction. Launching products and services and marketing them appropriately with a decent route to profit is THE challenge now. That means proper business cases, reasonable assumptions, and so forth.
The honeymoon is over. The world just got serious again. It is time to be creative.
And there we have it. A massive thank you goes to James for generously sharing his experiences.
Next week, we are moving away from financial metrics to a rather different topic: culture. Stay tuned, and have the loveliest of weekends.
Onwards and upwards,
JP
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