Google Australia MD: Marketers failing to reinvest are ‘cost saving their way to decline’
Maile Carnegie speaking at The Australian Digital Marketing Forum
The local boss of Google has told a small business forum that Australian marketers are moving savings in their marketing budgets to the bottom line rather than reinvesting it, with the result they are “cost saving their way to decline.”
“I’m trying not to get on my soapbox,” said Maile Carnegie, managing director of Google Australia.”What I find quite troubling is that as a marketing industry, or fraternity, we have lost the ability to position what we do as a growth driver.
“When you actually ask CEOs about marketing and ask them how they categorise it, they class it as a cost of doing business versus a growth engine. So when you look at a lot of Australian businesses they are cost saving their way to decline.”
Carnegie was speaking at The Australian Digital Marketing Forum at the Sofitel in Sydney, and argued that businesses – particularly small businesses – need to reinvesting money saved in marketing and use it to drive growth in the business.
“There is no doubt in my mind that what digital can do is drive a much higher return on investment,” she said. “What saddens me is that increasingly the savings on that are going to the bottom line as opposed to being reinvested.
“Businesses, including small businesses, look at marketing as a cost line versus an investment line… they should look at it to drive growth.”
Asked by moderator Alan Kohler, editor-at-large at The Australian, what the former Procter and Gamble Australia boss thought were major mistakes made by marketers Carnegie said businesses need to focus on growth.
“What I see, particularly in pre-internet companies, is that they are managing themselves as if they are yield companies,” she said. “It is a fundamentally different mindset but it drives a different result.”
Citing examples Carnegie said other mistakes included failing to measure results and adjust strategy based on those results and also a broader failure to take responsibility for digital.
“I see too many CEOs of companies delegating their digital strategies, to either their chief technology officer or their CMO,” said Carnegie.
“At the end of the day today your digital strategy is so intertwined with your business strategy you have to own it as the head of a company.”
Carnegie said on the senior level a lot of business leaders failed to adequately understand the digital space.
“There are a lot of leaders of companies not putting enough time into understanding this space, they are delegating it, and are pretty much delegating the future of their business. ”
Nic Christensen
Only two problems I can see here.
1. Advertising =! Marketing.
2. I’d take Ms Carnegie more seriously if Google paid the appropriate level of tax in Australia on their actual profit derived here. i.e. revenue less costs associated with operating in Australia.
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Funnily enough what does google do….search and…sells advertising
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Yes agree, delegate your online presence and you are starved for growth
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@I wonder.
Who pays more tax in Australia: Google or News Corp?
Are Google paying tax to the threshold’s permitted by legislation?
I am interested to know, because you must be very knowledgeable when it comes to tax; evidentially!
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Yep, it’s the marketers that are banking the savings. Anytime you ask them if they’d like less money they go “yeah sure, I’d love for that to happen”
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This problem is actually at the heart of advertising’s Kodak moment.
In 1976 two academics (Michael Jensen and William Meckling) wrote a paper called “Theory of the Firm”. This article kick-started the ‘maximise shareholder value’ strategy adopted by most listed companies.
Whilst shareholder value sounds like a sensible measure for commercial success, it actually creates a bias towards the short-term and makes it harder to create sustainable long-term growth.
One negative effect – among many – is that the creative industry is becoming commoditised because it is increasingly used to drive immediate behavioural responses (do this now, click this, buy this, etc) instead of building long-term memory structures (i.e. a strong brand that is worth paying more for).
So, yeah. Blame those two dudes as to why the client keeps rejecting ‘brave’ creative for the safe idea.
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As a small business owner just starting out, I knew it was absolutely VITAL to establish my “digital footprint” ASAP, which is why I have invested in a paid & managed True Local, Yellow Pages/Sensis, and Start Local Featured Listing for 1 year, as well as any social media I could think of, Facebook, twitter, Google+, Google Maps, etc.
I have also had a quite surprising result from Gumtree, although I had to spend plenty of money to achieve those results.
The end results? After 3 months, no orders yet, although “expressions of interest” from various government departments and 1 South Australian Mining company.
My BIGGEST issue is establishing “brand awareness” because Hydrogen Fuel Enhancers are a VERY controversial topic. If I could afford radio and TV, even those “shop-a-dockets”, then I might have a chance.
The best possible outcome is if some media outlet could do a story on my business. Now THAT is advertising money can’t buy! 🙂
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