Leaders are under more pressure than ever to justify their marketing investments, ad agency CEO says

  • Ogilvy CEO John Seifert said businesses can track how marketing performs but it is still a challenge.
  • Advertising is under pressure with big spenders Procter and Gamble and Diageo talking about marketing efficiency this week.

Proving that marketing works will continue to be a challenge for businesses and advertising agencies this year, according to the worldwide chair and chief executive of ad agency Ogilvy.

John Seifert was speaking to CNBC's Karen Tso at the World Economic Forum (WEF) in Davos, Switzerland, on Thursday.

When asked about whether issues such as ads being seen next to inappropriate online content and the "viewability" of ads had been resolved, he said: "I'm not sure any of them have been resolved. I think they are all of a theme, which there is just a new expectation of accountability. Business leaders are under more pressure than ever to justify the investments they make, the expenses they authorize on behalf of clients."

"In the area of marketing, one of the most challenging parts of our job right now is validating that the spending that our clients are doing creates results that really matter for their business," he added.

John Seifert, chief executive officer of advertising agency Ogilvy
Bloomberg | Getty Images
John Seifert, chief executive officer of advertising agency Ogilvy

"We are going to all have to get much smarter. We live in a world of big data, we can track (marketing) performance better than ever before, we have the ability to attribute the communications, both content and media activity, in a far better way. But advertisers and marketers need to be able to see it in proof."

Indeed, big ad spenders Procter and Gamble (P&G) and Diageo have talked about making their marketing more efficient during results briefings this week.

Jon Moeller, P&G's chief financial officer, talked of "eliminating non-viewable ads," as well as being more precise with digital ad placement, in the company's second half results call Tuesday.

"We see further cost reduction opportunity through more private market placed deals with media companies and precision media buying, fueled by data and digital technology," he said. P&G said it had reduced ad agency and production costs by $750 million ($1.07 billion) and expected to save another $400 million.

Drinks giant Diageo said Thursday it had increased its overall marketing spend in the first half of its 2018 financial year to £968 million, up from £908 million a year earlier, but said it was "delivering more improved marketing efficiencies" with savings across media buying, live experience marketing and point of sale, in a statement emailed to CNBC. The company reported a 1.7 percent increase in sales for the half-year.

Marketers are attending WEF to work out how to communicate their companies' values and beliefs, according to Carol Potter, European president and chief executive of PR agency Edelman.

"I think a lot of marketers come here because they are figuring out… the kind of values, the kind of beliefs that are holding sway, and that they need to figure out whether those are the kinds of beliefs and values that they as a company feel suit them and that they want to start communicating about," she told Tso.

Referring to Edelman's Trust Barometer, released this week, Potter said: "There are some real issues now for marketers, for CEOs, people have really got a crisis of trust in social media, there is a huge difference between journalism which has had increased trust and social media which is facing a lot of distrust from people."