“I think marketing is a waste of money.” “Marketing doesn’t matter in our business.” “It’s just the colouring in, isn’t it?”
Many marketing heads hear this kind of backchat in their business – especially when asking for budget or defending investment with sceptical C-suite colleagues. Your CEO can ask “How do we know if and when marketing is working?” with the CFO chiming in “What exactly are we getting for our money?” In their minds, there is usually some other pressing budget need – like investing in plant / equipment, funding R&D or hiring more salespeople.
The Conundrum Facing CMOs
The frustration and seemingly endless need to prove your worth doubtless drives many CMOs to jump ship rather than wait to be pushed.
Last year, the Wall Street Journal reported that the average tenure of CMOs fell again in 2019. The average CMO is in post for 41 months, down from 43 months in 2018. Other C-Suite executives typically hold their posts much longer. Executive search giant Spencer Stuart noted that this the lowest CMO tenure number they’ve seen since 2009.
Is there a solution to the problems that can send CMOs running out of the building (often screaming) in search of a new job? Or even lead to termination for a perceived lack of performance?
As the WSJ reported “Marketers do face challenges including proving the effectiveness of their work, which is complicated because customers, competitors and larger forces continually change” said Christine Moorman (right), the T. Austin Finch, Sr., professor of business administration at Duke University.
“It’s a noisy laboratory in which a marketing leader is going to try to make the connection between an action and an outcome,” Ms. Moorman said, adding that other executives might not fully appreciate that complexity.
This situation is especially true in sectors where marketing is not considered a key driver of success in the company’s business model. While C-level executive usually agree that there is need for the marketing function, they often don’t embrace it or even understand how it works.
Many senior executives do not see marketing as a strategic growth driver. It’s commonly considered as another line-item expense, versus a strategic investment that can pay positive economic returns.
In light of these challenges, what can or should a CMO do?
As the Cheshire Cat in Lewis Carol’s Alice in Wonderland pointed out, “If you don’t know where you are going any road will get you there.” A good place to start is with understanding what a brand is, ways to think about it, then sharing these insights with senior management and the board in the context of a marketing plan.
Branding in a business context is the process whereby a company makes itself known (and appreciated) among its employees, customers, prospects, investors, analysts, the media and public in general. It should help differentiate the company or product from its competitors, be relevant, believable and typically includes a phrase, design or idea that is easily identifiable.
How are Brands Built?
Ad agency Young & Rubicam pioneered a tool known as the Brand Asset Valuator® many years ago. They identified four key dimensions of brands – that have stood the test of time. Looking at your brand on this basis can help inform strategic and creative solutions for marketing and help build brand equity:
- Differentiation: The perceived distinction and uniqueness of the brand, its ability to stand apart from its competitors.
- Relevance: Personal appropriateness of the brand, how well consumers relate to the brand’s offering. A significant driver for a brand’s market penetration.
- Esteem: Regard for the brand – based on perception of quality and popularity. Does the brand deliver on its stated promise?
- Knowledge: Understanding the product / service. Reflects the degree of awareness about a brand in the minds of its target consumers.
Clearly defining these points for your brand will help grow repeat business from existing customers and attract new customers. It will improve your CX / customer experience and help drive long-term growth.
Then developing a well thought out annual marketing plan should come next, grounded in the company’s business objectives and strategies and benchmarked by as many credible marketing effectiveness metrics as possible.
Balancing Between Long-Term Brand Marketing and Short-Term Demand Marketing
An important consideration for any marketing plan is balancing long-term “brand building” efforts with generating short-term sales. A study from the UK Institute of Practitioners of Advertising (IPA) and LinkedIn by econometricians Les Binet and Peter Field in 2018 looked at 4,000 B2B marketers across 22 markets to get a better handle on the relationship between brand messaging and activation oriented promotional marketing efforts.
The study concluded that neither of the two extremes can work in isolation. In order to effectively drive long-term growth, the two need to be balanced. Businesses need brand building campaigns to create awareness / demand that drive long-term growth (e.g., thought leadership, corporate social responsibility, mission-vision messages). Demand marketing / activation campaigns focus on specific offerings / services to drive short-term sales growth, and usually they are highly targeted efforts.
The study suggests that marketers will do well to apply the 50/50 rule as they allocate budget brand vs. activation-oriented marketing budgets.
The study went on to find that investments in brand marketing helped grow businesses – as buyers are willing to pay premium prices for well-known brands and organizations that invested 50% of marketing budgets in brand building saw better financial performance.
The Digital Marketing Solution
Demonstrating the effectiveness of marketing can be done by using KPIs or Key Performance Indicators. Savvy marketing directors and their teams are becoming increasingly adept at using excel spreadsheets to demonstrate marketing “cause and effect” with these measures.
A good place to find objective data is by using digital marketing channels – where credible information is readily available and different marketing approaches can be tested and measured in terms of their efficiency and effectiveness.
According to the most recent CMO Survey, digital marketing is paying off big for a majority of companies in 2021, with B2B companies indicating the highest performance contribution from digital marketing. Marketing used to be what a company said about itself in traditional media – its name and brands, its product / service configuration, distribution and marketing / advertising. This business model thrived in the post-WW II “golden age” of mass media when TV and print media could garner the captive attention of people – who were willing to view ads in exchange for access to “content” – TV shows, movies and written articles.
Madison Avenue became a commercial force by creating innovative advertising for some of the world’s most iconic brands. These marketing efforts fueled the huge growth of dozens of packaged goods and other companies.
Then technology disrupted this business model. People can now get whatever content they want, whenever and wherever they want it – usually without commercial interruption, using smart phones, smart TV sets and laptop computers. Think of Netflix, Amazon Prime, Disney Plus and Spotify.
Marketing is now much more about what people have to say in terms of the experiences they have with a brand or company online and / or in person – as word of mouth marketing is still the most effective way to help sell any product. The internet allows people to get nearly instantaneous product / service rankings and pricing information.
It’s not to say that marketers should sit back and do nothing. As the old saying goes “If you don’t know where you are going any road will get you there.” A well-thought out marketing plan is still a smart idea for any business enterprise, grounded in its business objectives and strategies and benchmarked by as many credible marketing effectiveness metrics as possible.
Developing the Marketing Plan
Start with a brand marketing strategy – that spells out the intended purpose of your brand marketing, the “value proposition” or promise, the target audience (demographic / geographic and behavioral descriptions needed) and then compelling support / reasons for the target audience to believe what is being promised. Including a strong “call-to-action” is also a good thing.
A brand needs to be easily found online by people who are seeking to meet a particular need. Therefore, attention should be paid to SEO / search engine optimization that improves a company’s organic search results based on relevancy and popularity of key terms, and SEM / search engine marketing – which are paid listings based on the search terms selected.
The USP may have been coined by Rosser Reeves of the Ted Bates ad agency back in the 1940s, but you still need one. Your Unique Selling Proposition is a differentiated compelling marketing property which you’ve developed in the context of an audit of competitive products or services currently available in the marketplace. You don’t want to promise exactly the same benefits as your competitors. Online shopping allows for near instantaneous comparisons – so your brand needs to stand out in order to be considered.
A well-conceived / executed brand marketing plan can create awareness / consideration by amplifying the brand image online. This will happen faster by creating a great UX / user-experience (on your website), SEO / SEM and content marketing, social media marketing, outbound email marketing, paid digital display ads and “influencer marketing” (getting people with large social media followings to say nice things about your product / brand).
Your marketing messages needs to be relevant and engaging, with a strong emphasis on the benefits being offered vs. features expressed as a “value proposition.” They should be as unique as possible, relevant and believable to the target audience. For example, nobody really buys a 3/8” variable speed drill from Black & Decker, they buy the hole in the wall or wood. (Or, at least, assurance that the tool will accomplish the job.)
The consistency of the “value proposition” and brand identity are key. It should be employed across all customer & prospect “touch points” from your logo / tagline, website, social media to packaging, from your sales team to customer service operations – especially in B2B marketing, when a company’s salespeople can “reposition” the brand every time they open their mouths.
Measuring Marketing Effectiveness
The “silver-bullet” for sceptical C-suite executives can come in the form of KPIs or marketing effectiveness measures. They can reflect “top of the funnel” metrics like quantitatively measured unaided / aided brand awareness and purchase consideration. In B2B it can get even more granular by measuring engagement in terms of cost-per-inquiry, cost-per-lead and cost-per-customer acquisition.
The Marketing Funnel: Goals / Tasks / Tactics
The data informing these metrics is often best managed and tracked by CRM / Customer Relationship Management platforms like salesforce.com, supported by marketing automation platforms that help manage outbound marketing messages. Their benefit is getting the right message, to the right person, at the right time using automated technology. Then you can track people through the sales / conversion process from prospect to customer, even to “brand advocate” – when satisfied customers start saying nice things about a brand / product online.
The great thing about digital marketing is the amount of data it can provide. Google Analytics can measure website traffic. Well-crafted marketing message offers can either drive e-commerce transactions or help generate sales leads. KPIs can help inform marketing spend “optimization” – which tracks how well various marketing channels / message are driving engagement. The marketing investment in each channel is measured against the results it produces. More effective (producing results) and efficient (lower cost-per-inquiry / cost-per-lead / cost-per-customer acquisition) channels are then selected helping “optimize” the marketing spend.
All’s Well that Ends Well
Well documented marketing programs can reflect the fiduciary responsibility of a marketing team, as well as have a tangible impact on increases in sales and profitability. At the end of the day marketing can help drive long-term revenue growth – which is often the key to fueling increases in equity valuations.
This will in turn get the immediate attention and enduring appreciation of C-level executives. Handsome incentive comp payments are often the end result for the CMO and marketing team. In this scenario – marketing is far from a waste of money – It is an investment with positive returns, a catalyst for growth and value creation.