Why your marketing investments need to be sustainable from now on (1/3)

Because we believe that the sustainable transformation of organizations is the revolution of the next 10 years — in the same way that digital technology was for the past decade — we want to re-imagine a Marketing Mix Optimization capability to accompany a change that is profoundly shaking up our clients. While marketing has been one of the cornerstones of our activities, we no longer see it only as a promotional tool: We are firmly convinced of its immense potential to change the game on decarbonization.In this first article in a series looking at How Marketing Mix Modeling can become a powerful tool for sustainable business performance, we explore why and how marketing can reconcile business performance and sustainability goals.

Toward a decarbonized market: adapt or die

New carbon taxes[1] that are tightening existing regulations (both on European soil and for companies in other countries); consumers increasingly demanding responsible products[2] ; the COVID-19 crisis and pandemic; and new brands entering the market whose business model is entirely based on sustainability... do we need to convince you that the planet's problems — climate, pollution, health, biodiversity, etc. — are becoming very real business issues? That these new forces are already shaping the economy?The increasingly tangible urgency of climate change will sooner or later force the global market to align itself with the decarbonization objectives of the Paris Agreements. Consider just one example: The ban on internal combustion engines announced in Europe for 2035 is forcing carmakers to completely rethink their most traditional products, with all that this implies in terms of investment, skills, strategy, and design time. The risk here would be to become a new Kodak[3]: a company that did not anticipate the profound changes and that in fact did not know how to adapt to the new realities. The future belongs to those who anticipate this market evolution to perpetuate their business model's very raison d'être. Otherwise, they risk obsolescence or extinction.Another example: fast food. Remember Burger King's slogan in 2020 "Since we are part of the problem, we are looking to be part of the solution"? This slogan drew attention to global warming, and in particular, to the methane produced by cows at the very top of the hamburger production chain. Could the restaurant chain possibly get away with not reassessing its previous offerings, and not pushing alternatives to meals that emit less CO₂? So far they're getting away with it.There aren't any truly innovative sustainability initiatives in the fast-food sector. Pressure from consumers or competitors for veggie/vegan alternatives has probably given brands the right insight into their sector, but it's a safe bet that they won't really move until the day a carbon tax on beef[4] is introduced.“Comfort is not the objective in a visionary company. Indeed, visionary companies install powerful mechanisms to create discomfort — to obliterate complacency — and thereby stimulate change and improvement before the external world demands it." This is what Jim Collins and Jerry Porras write in their book "Built to Last: Successful Habits of Visionary Companies[5]." In other words, organizations that think, invest for the long term and anticipate change are the winners of systemic change. Something to think about.

Balancing business and sustainability goals: the new normal

The marketing trade-off today is to rethink investments both to get the best of today's products — which no longer correspond to tomorrow's needs — and to promote the most responsible products in the long term.If this constraint seems a contradiction in terms to you — the search for traditional business performance versus "sustainable" business performance — it is no longer a question of knowing if you should do it, but how you will do it. By calling into question entire sectors of certain companies' activity — here we give the examples of the internal combustion engine, which is on the verge of disappearing in favor of electric vehicles, or vegan cosmetics, which are disrupting the beauty market — the energy transition is forcing companies to rethink their previous offerings and consequently calls for a profound, inescapable transformation of traditional business models.In concrete terms, what does this mean for a marketing department? It means a need to be proactive in the change to accompany the new decarbonization strategy that your company will surely implement. Where to start?

• Assess your new mission. You need to make a profound paradigm shift and change your vision: It is no longer a matter of implementing "green" actions but of making sustainability a business strategy in its own right by integrating decarbonization into your decisions. This paradigm shift can be formalized as follows:
  • Step 1: Move from "green marketing" (reducing your media's emissions) to "marketing for green" (reducing your company's emissions)
  • Step 2: Move from "marketing for green" to "sustainable business performance" (be an actor in the transformation of your company's business model)

• Steer the change.You are now supposed to have a clear vision of your mission and objectives. Implementing them, however, will require you to combine two (seemingly) contradictory demands: On the one hand, you will be expected to preserve the historical business, since it underpins your entire current economy. On the other hand, you will be asked to move away from it in order to prepare the economy and business model of tomorrow. This is a balancing act that requires very fine-tuned operational steering at several speeds: in the short term, so as not to lose your customers; in the medium and long term, to respond to climate change and reorient your business model. In other words, you will be asked to answer this question: What media plan should be put in place to redirect demand toward more virtuous, low-carbon products, while continuing to perform well on iconic products? Your investment trade-off will therefore involve getting the best out of today's products — which no longer correspond to tomorrow's needs — and at the same time promoting the most responsible products in the long term. And your strategy will have to question this very notion of "responsible products": It's not just a matter of directing your marketing efforts toward more "sustainable" products, it's a matter of refocusing them on "essential" products, with the slightest obsolescence, even if it means probably selling less, and, also, promoting new models and/or services such as the circular economy.

• Reset your capabilities. As sustainability becomes an operational steering issue, you'll need to infuse it into all areas of your business. And embarking your whole organization on a new project, transformative by nature, is probably your most important challenge. It's all about upgrading your capabilities: training your teams, adapting your tools. It seems to us that there is perhaps a tool that you were not expecting in the field of sustainable performance management: Marketing Mix Modeling (MMM). Often used by marketing departments to simply evaluate the efficiency of media investments, this method has only begun to show its potential. And this potential seems to us to be immense: Until now, MMM was only the hub for steering marketing resources; as a champion of optimization, its holistic capacity to aggregate multiple objectives, multiple constraints, multiple granularities, through its optimization capabilities will make it the new hub for steering a sustainable strategy. That's why we have evolved our own MMM platform — we have twisted, redesigned, reinvented its original use to adapt it to the challenges of sustainability: Each of its marketing mix optimization functionalities can now be integrated and applied in your business decisions regarding environmental constraints. A game-changing approach to reconciling business performance and sustainability goals.

Interested in finding out more?Read the other articles of the series:

• Understand your real marketing carbon footprint to crack sustainable business performance
• How to leverage MMM practices toward a more sustainable performance

[1] Since 2021, the European CAFE regulation imposes on car manufacturers an average CO₂/km emission threshold that must not be exceeded. If they do not meet this threshold, the manufacturer will be subject to severe financial penalties. And in December 2022, the European Union adopted a new border carbon tax that aims to limit climate-damaging foreign industrial imports. It will come into effect between 2026 and 2027. This tax is intended to force companies from non-EU countries to comply with the European climate standards already in force (EU Emissions Trading System).[2] We think of organic cosmetics, vegan and/or locally produced food, second-hand approaches, etc., which informed, demanding, attentive consumers are coming to expect.[3] A leader in the photo industry since its founding in 1880, Kodak did not take the digital turn — which meant rethinking its business model — thinking it was a fad. The company went bankrupt in 2012 and became a textbook case.[4] The idea of a meat tax has already been considered by agriculture ministers in countries such as Germany and the Netherlands. It is also being studied by NGOs and universities.[5] This book studies the characteristics of American "visionary" companies (case studies of IBM, Boeing, McDonald's, Walt Disney, etc.), businesses that endure and succeed even long after the death of their founder.