Consumer Strategies Report / July + August 2006

This particular company had a specialized marketing department with some proprietary software to track its efforts, customized to their needs, but suitable for their competitors. They called in the consultants because they wanted to make money from this combination of software and personnel, without impacting their own internal productivity from this department.

So, the first thing we did was develop a report card just for them. The report card showed that the CEO was indeed accurate in his assessment - his software was unique and exploitable. Regrettably, neither the people or internal processes were set up to exploit it. Despite your impressions about consultants, our recommendation wasn't to fire everyone. In fact, their people were quality people and their culture still new enough to change, so our final recommendations suggested role additions, simplifications, and changes, enhanced recruiting, training, and healthier churning, and better knowledge management. From these changes and anticipated client relationships, it was possible for this department to break a $1 million in revenues in less than 5 years.

This is an extreme example of how a consultant may increase the value of a marketing department to an organization, but the idea remains the same: investing to audit your marketing department may discover hidden value and value-destroyers.

Imagine being able to stretch your seemingly already-overstretched budget without sacrificing even the least critical program in your portfolio?

1) During an engagement for a cable network, we learned that by following the "party-line", which they had been contributing to because of their sizable marketing budget, they were overspending by about 20%, entirely due to distractions from the overwhelming workload by their executives. Upon studying the workflow bottlenecks and giving them the templates to better evaluate the performance of their media partners, after a single month, they were able to realize promised savings. There is no law that states you can't modify your relationships with media and creative partners. The challenge is in having the right personality in place to take the moderated lead on these sort of efforts, particularly since so much of the business is based on "valued" relationships. If you can't find that person, the next best thing is to piss off the people who are currently in place enough with data that proves their "friends" are ripping them off.

Regrettably, buying creativity can't quite have a spending benchmark, (a lesson this author learned from having taught college-level copywriting), but it can have a formal framework on how to manage, which include metrics like total number of ideas acceptable; not daily limits, but definite deadlines; full disclosure and support from clients; and most importantly, non-exclusive agreements. Agencies sell ideas and it's not rational (financial or otherwise) to have a single agency of record as the sole source of external, "objective" ideas. (This argument doesn't entirely exclude media buyers, since consolidated buying is a proven source of savings. But when concentrating spending, media buyers always overlook more relevant, better targeted channels. Fee-based media advisors are recommended here.)

The current structure of agency competition where accounts are "in play" also perpetuates this irrational delivery of ideas. When advertisers open their accounts to multiple agencies and vendors, adjusting fees in the process, and open-ending their agreements to allow agencies the freedom to perform their duties at their optimal levels, rather than treating them like machines operating off legal and accounting instructions will ensure the delivery of the maximum number of relevant, executable ideas. (Signs of this sea-change in the advertiser-agency relationship have been emerging for the last two years, but it has been achieved by elevating the account management contact point to the holding company level instead of the agency level. Whether or not this delivers the variety of ideas a marketer truly deserves is still in debate)

2) In an effort to win back a former agency-of-record client, an agency hired our firm to help them evaluate the intricacies of their beverage client's audience by region. The information they wanted included: drinking, media, and recreational habits. But they also wanted to understand their audience's religions and relationships with family. Although these latter datapoints are important to understand the audience, we suggested that for the purpose of this study - defending their account - it wasn't necessary. But they insisted and ended up spending 26% more on this study than they should have.

Rather than waste precious marketing dollars over-studying without reason, advertisers should manage innovation in their area. An innovation management program within a marketing department is similar to the business development function of the larger organization, where marketing departments engage in active and on-going tracking of emerging and new tech, new consumer segmentations, and realistic expectations inside the marketing department. This incremental investment means that at crunch time, a marketing department won't have to allocate unexpectedly and wildly to any initiative. And simply having a presence at industry conferences and subscribing to all the trades isn't enough either, if learnings aren't shared with the rest of the department, or worse, executives aren't incented to care enough to even learn for the benefit of the organization.

(Note that when these resources are provided by the company easily and freely, their value may be lost upon workers. What greater proof of personal interest can there be than when workers seek industry insights out themselves, and pay for them from their own pockets? If you measure brand loyalty when your customers do it, how can you measure your own worker's brand loyalty when you don't give them a chance to spend on the brand? Henry Ford figured it out almost a century ago. Why haven't you caught on?)

3) It seems simple enough: if sales increase, marketing worked. If sales decreased, marketing failed. This, actually, is the greatest sign of how marketing has failed to evolve. Sales is different than marketing and requires an entirely different skillset. Those who sell enjoy facing people; those who market, don't. How can a marketing person then be responsible for how a sales effort succeeds or fails if they themselves don't have the prerequisite personality to understand it?

There should be little doubt that marketing and sales are collaborative efforts, but what isn't clear is that both require separate metrics to evaluate. In other words, sales metrics are inaccurate metrics on which to gauge the marketing function. Thus, marketing should invest in identifying and measuring every possible metric of their performance, to drive the internal discussion of why they exist, what their objectives are, and how successfully those objectives are met.

During a 6-month analysis of a public relations promotion for a large fast-food restaurant chain, our firm discovered that awareness of the promotion decreased 57% upon entering a second phase, then decreased another 12% upon entering the third phase. Intent-to-participate in the promotion followed awareness downward with dramatic drops through the end of the campaign. The obvious is that the campaign should not have lasted longer than 1 month, or at least changed monthly.

But not so obvious is that with hundreds of media mentions, this campaign was judged successful by traditional means of measuring public relations. In fact, this success was an utter waste of millions, particularly since there were 21 other similar promotions occurring during the timeframe this campaign was running (out of 300+ promotions that occur during any given 6-month time-frame); one promotion even carried a name that sounded so similar to our tracked campaign that consumers already thought they were participating! Overall, less than half of 1% of the general population that we tracked during this campaign were aware that they were being marketed to by our client. Based on this number, our client would have had to repeat this campaign nearly 5 billion times to generate an awareness level of the brand worth 100% of their entire investment on this effort!

As marketers respond (or react) to changes in the consumer landscape and evolving media habits, they tack on additional roles in a quest to grow headcount rather than productivity. The more that's being spent on the greatest number of channels reaching the highest number of consumers is not the best gauge of marketing productivity, contributing to the challenge of accounting to bean-counting chiefs and boards. A marketing department audit is the ideal opportunity to re-align your marketing strategy around corporate or business goals by adjusting partner relationships and managing innovation in your area and most important, reassess those productivity benchmarks to ensure that each quarter really is more attractive than the last.

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