230 Max Mrktg Dollar

Delivering with Precision Marketing Effectiveness and Efficiency Robert Shwetz

When $1 doesn’t equal $1 If the often repeated adage by the creator of the American department store Wannamaker is true, that 50% of my advertising spend is wasted, then over $4 billion is wasted in the Australian media marketplace, based on an annual spend of over $8 billion.1 Most organisations focus on the implementation side of marketing communications, with the majority of budgets going towards media and creative. Demands are now being placed on Marketers to be more accountable, and deliver a quantified number as to the return they are generating for what may be one of the largest line item expenditures for an organisation. Added to this a much more complex environment has been created with a highly fragmented marketplace, multiple channels, brands and customer touchpoints, along with consumer cynicism about advertising. With this myriad of marketplace variables, plus intangible brand variables, models for marketing ROI can only be very subjective. These models can also be constructed to place the expenditure and the return generated in the most positive of light, building a case for additional funds. However, often it is not additional funds that are required, but a greater effectiveness and efficiency with which the current funds are being allocated.

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AFR, April, 2004

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Not all marketing dollars are created equal, and the greatest challenge of today’s marketer is to drive efficiencies and generate greater effectiveness with their current allocation.

As a result, the most progressive Marketers are ripping apart the marketing value chain, and re-examining the traditional marketing model. The new focus is on precision, and as a result rapidly moving budget allocations to the segments of the chain that are delivering the greatest business value – both strategy and measurement.

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Here are six key areas in which you can achieve greater efficiencies throughout the value chain, including strategy and measurement, to deliver an immediate impact which ensures your marketing budget is much more effective. I. Evaluating Marketing Focus Developing a clear and meaningful focus for any marketing team ensures less expenditure ‘wastage’ and greater precision in execution. Clearly this focus must centre around what will deliver towards the bottom line – a clear understanding of the consumer needs, behaviours, attitudes, and a prioritisation of these target groups. More often than not, internal agendas begin to cloud this focus with operations, finance, and other non-consumer focused silos driving what should be delivered to the market. The consumer ‘bullseye’ must be generated, and provide the strategic foundation for the marketing team, and be advocated throughout the organisation. Questions to ask and issues to raise when creating a greater focus for your marketing team: Do we fully understand our target consumer needs, behaviours, habits, living patterns, and can these be fully articulated by each and every member of the marketing team? Have we prioritised our consumer segments, understanding what share of wallet we can obtain, what value they represent to our category, and how our competitors excel in engaging with these consumer groups?

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Do we look at our marketplace in the same way in which our competitors do, and is there a more effective and efficient way to view this window to our consumers? Do we have advocates of our consumer groups in each of the functional divisions in our organisation, and are they able to provide a consumer voice within their silos? II. Systems and Processes Often viewed as a creative inhibitor, particularly within the communications and advertising world, systems and processes are vital. This ensures that roles and responsibilities are clearly defined, accountability is clearly communicated and understood, and goals and objectives are aligned from functional and cross functional roles, from board level down to individuals. Developing marketing systems and processes requires a full understanding of the business planning processes at the most senior level, and how that process will ultimately drive the goals and objectives for the basis of the marketing plans. Bottom up zero-based budget planning and forecasting will impact the marketing groups processes quite differently from top-down mandates for incremental growth year on year. Environmental factors may also impact these processes, from boomtime economic conditions when a higher proportion of funds should be allocated to R&D versus promotion, to recessionary times when the proportion should be reversed.

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Yearly planning processes with monthly and quarterly checkpoints ensure that all team members, both internal and external, are on board with the vision and goals, and are empowered to deliver on these objectives. Improved efficiency in these planning processes and the systems to support will maximise all resources, minimise wasted time and money, and provide a clear and focused direction. Questions to ask when looking for efficiencies in the planning process: Have we ever had to completely rethink/revisit/redesign a campaign/logo/package due to issues that have only arisen at the executional stage? At the beginning of the year/quarter/month are we completely clear, and have we bought into what needs to be accomplished for the upcoming year/quarter/month? Has that been communicated clearly to my team? Have our external suppliers ever discussed having more time to deliver better quality, or expressed frustration at not being involved at an ‘earlier stage?’ III. Resource Allocation Resource allocation need not be a guessing game. Business goals and objectives based on a strategy developed through robust qualitative and quantitative analysis should be the key driver to allocate these resources: financial, human and time. This driver should provide the focus of allocation – where and how do we get the biggest bang for our buck?

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Questions and issues to raise when allocating resources: Are resources matched to the skills required for delivery, or is it more economical to outsource to a specialist skill set? What proportion of the budget or our time is allocated to strategy versus execution? Have we re-evaluated our channels to consumers based on changing needs, new technology, and more effective channels? IV. Assessing Strategic Partners Part of a marketing director’s reputation is based on their ability to manage external resources. The ‘churn and burn’ mantra of some directors in going through external suppliers often results in challenges down the road regarding sourcing the ‘best of breed’ partners. Alternately, tables have recently turned as a Singaporean-based advertising agency recently culled clients when they were not able to generate a profit margin of 10%. All strategic partners, from R&D to communications and promotional, should be well versed in the goals and objectives of your business, and be able to translate these into pragmatic and measurable action plans. A partnership philosophy based on transparency and strict corporate governance, while ensuring fair and equitable profits balanced with performance and the systems to monitor these will provide the foundation for a win-win relationship.

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Questions and issues to raise when seeking to optimise the relationship: What is their policy regarding open book accounting and spot-check evaluation? Do our communication partners understand our priority consumer needs, and tailor recommendations around these? Are they willing to recommend alternate methods for reaching and bonding with our target markets, or do they automatically provide ‘same-old’ recommendations? Do they proactively seek to provide initiatives, efficiently use resources, and provide recommendations which are aligned with our business objectives?

V. Executional Efficiencies Have you ever gone through an audit to collect all printed collateral and estimated the waste in replicating production processes? Often, with the left hand not speaking to the right, a multitude of duplication occurs, and in some organisations, this represents the quickest win in terms of cost reduction, while also increasing efficiency. A communication and promotional audit can quickly gather requirements from all stakeholders, and develop a standardised set of tools and frameworks. With the goal of reducing duplication and increasing time to market, this promotional knowledge management system can quickly enable all sales and marketing teams. Questions and issues to raise when looking for efficiencies in execution: Do standardised templates exist for all collateral, and are these templates being utilised? What proportion of our budget is production versus media versus strategy?

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How are ad hoc communications managed, and what work flow is in place to ensure efficiency? Do our strategic partners work with us to streamline production processes, even down to paper size and colour use?

VI. Measurement and Evaluation This is possibly the most challenging exercise in the marketing value chain, as the results are so often subjective and no industry accepted measurement model exists. Models must be tailored, as measurement metrics and benchmarking standards are category and industry specific. This resulting dashboard, which should have a balance of fiscal and ‘soft’ measurements, will close an ongoing loop to feed back into planning processes. Or in highly competitive environments such as Telcos, provide intelligence to make immediate and swift decisions. Questions and issues to raise when establishing a measurement and evaluation tool: How are we using tools, such as econometric modelling or other quantitative methods, to drive intelligence on media performance into our marketing planning processes? Are the measurement and evaluation tools pragmatic and actionable? Do we walk away from an evaluation presentation with a clear picture of items to action? How are we integrating multiple channels, and are these integrated campaigns working to achieve our objectives? How are the measurement mechanisms captured into ‘corporate knowledge’ so past learnings build on future campaigns?

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Market segmentation, rapidly evolving consumer needs, fragmented channels are driving the need for more efficient approaches to linking with your consumer, based on a solid consumer focused strategic foundation. From business strategy, to marketing strategy, down to implementation and measurement, the value chain needs to be ripped apart and rebuilt to deliver greater value. If you are not getting the result, its because the pieces in the puzzle are in the wrong order, or the focus is on the wrong piece.

For more information on ‘Marketing Maximiser’ Delivering Efficiency and Effectiveness from your Marketing Budgets contact: Robert Shwetz Principal BBDO Consulting Tel: +61 3 8601 1161 M: +61 (0) 400 509 667 [email protected] www.bbdo-consulting.com.au