Mktg - Tips to maximize efficiency of Marketing Spend

Marketing budgets—often among the early casualties of a recession—are declining faster than at any time since September 11, 2001, according to IPA’s most recent Bellwether Report.Yet, as Hugh Davidson, author of Offensive Marketing, points out: “Studies show that brands that maintain or increase marketing spend in a recession tend to do better than their rivals in the long run.” He cites Reckitt Benckiser’s results as an example. Due to strong NPD and heavy marketing support, the company’s sales rose 20% between March 30 and June 30. However, to escape hatchet-wielding finance directors, marketers must take steps to make their spend more efficient in ways that don’t harm demand. Marketing asked a panel of experts for their tips. STREAMLINE YOUR PROCESSES “Our research shows that most companies can make 10-20% efficiency gains or more, without harming demand, by overhauling inefficient systems and processes,” says Robert Shaw, professor of marketing metrics at Cass Business School. “For example, you can cut up to 50% from production costs by eliminating costly reworking, additional print-runs and bureaucracy that involves one piece of collateral being reviewed by 100 people.” MANAGE AGENCIES MORE TIGHTLY Clients should push media agencies to justify their choice of media in financial terms, says Shaw. “It’s amazing how many brands still target difficult-to-reach markets through ad spots in Coronation Street, for example,” he says. Tim Ambler, senior fellow in marketing at London Business School, cites market research as one area to cut back on. “A lot of this is done in a ritualistic attempt to ‘keep in the touch with the customer’, but doesn’t affect what the company does,” he says. DO THE MATHS “Most companies have a portfolio of brands, and if they know how big they are, their profit margins and so on, they can quickly get a rough idea of which ones are worth supporting and which aren’t,” says Les Binet, European director of DDB Matrix and author of Marketing in the Era of Accountability. “If more marketers did those sums, they would realise how much of what they do is uneconomic.” OPTIMISE PROMOTIONAL BALANCE Karl Weaver, a director at Data2Decisions, a marketing consultancy that uses statistical techniques to help clients manage their budgets, advises companies to wean themselves off price promotions. “Advertising can help reduce responsiveness to price,” he says. HARNESS THE POWER OF EMOTION The financial payback from emotionally led ads is greater than that from more rational ones. “People are motivated by how they feel, rather than what you tell them, which is another reason to resist brand-eroding tactical activity such as price promotions,” says Mr Binet. He adds that positive word of mouth can increase the efficiency of marketing budgets by about 40%. CREATIVE IS KEY Data2Decisions research shows that creative execution is the second-biggest determinant of an ad’s profitability, after market size. Mr Weaver stresses its importance in a downturn. USE POWER OF INTEGRATION Integrated campaigns can increase efficiency by up to 100% because of interaction between different channels, claims Mr Binet. “Similarly, using one-stop shops for all your communications will presumably result in significant cost-savings, too,” he says. MANAGE HEADCOUNT Don’t cut marketing staff only to re-employ people on inflated salaries as ‘consultants’, advises Mr Ambler. “By creating more clarity about what people do and relating it to clearer marketing goals, with focus on target markets, you will find you need fewer people,” he adds. COSY UP TO FINANCE DIRECTOR The finance director runs a business, so being able to engage with them is vital. “You do that by talking in terms of investment, rather than spend,” says Andrew Challier, managing partner of media analytics specialist Billetts. Michael Uzielli, head of pricing and promotions for British Gas and finance director of British Gas Premier Energy, adds: “Marketing spend is discretionary and easy to cut. British Gas spends about £40 million annually on marketing, and you think, ‘If we spent £20 million, would our world fall in?’” LEARN FROM WHAT YOU DO Evaluate everything in business terms to identify what works, advises Mr Binet, who claims that Dell has increased its marketing efficiency in the US by 50% in the past two years by testing everything it does. “If you want to learn and improve, you have to recognise and admit to failure, rather than brushing mistakes under the carpet,” he says.