Marketing Efforts Must Begin with Accountability

Advertising Age’s Michael Fassnacht has a great column titled “Producing Accountability in Hard Times.”

In these days in which even U.S. Senators are clamoring for accountability for TARP Funds, Michael’s message should be heeded by anyone involved with marketing and sales communication expenditures.

My strong beliefs about being accountable for results shouldn’t be that surprising to readers of this blog. See, for instance, this post on the ROI/accountability conversation from 2006.

Expanding Your Reach through Strategic Alliances

Is it better to have actual facilities in far-flung places, or just friends there?

For many companies, there’s no debate. Owning bricks and mortar in foreign lands just isn’t feasible. That’s probably never been truer than in this tenuous economy and tight credit market. Nevertheless, for more and more businesses, having a global presence is still essential.

The good news is that there’s a way to expand your reach without taking huge risks in terms of capital and credit: through well-crafted strategic alliances. That’s what many of our international clients have done. And it’s what we’re doing, too.

Last week, I attended the annual conference (in Boston, Mass.) of IPREX, one of the world’s largest networks of independent public relations agencies. IPREX puts us in a valuable partnership with reliable, accountable PR teams on the ground all over the world. So we have immediate access to cultural knowledge and communications expertise—whenever and wherever our international clients are doing business.

We not only support each other’s communications programs. We stretch our thinking, we provide each other access to both geographic and market-specific competencies, and we share best practices with a diverse group of professionals. It’s a far cry from the “not invented here” mentality or partisan politics that too often put individual success and the greater good at odds.

So perhaps it’s time to think differently about your competitors. Beneath the surface, you might just find a strategic ally and a company whose market and niche expertise may actually complement yours.

In an increasingly sophisticated, volatile and interconnected global marketplace, you might say that’s the best of one world.

Even CPAs Agree: Marketing Investments Still Make Good Business Sense

CPAs can be very stingy people—even more so when the economic seas are churning, as they are now.

But even some of the most conservative accountants recognize that now isn’t the time to shut down marketing efforts. Here’s an article from a firm called Vrakas/Blum suggesting that this is a critical time to invest in your future through marketing.

Why? For the same reason it’s good to invest in quality stocks when the market is down: The bull will be back, and you’ll be able to take advantage. Right now, while many of your competitors are cutting back on marketing, it’s a great opportunity for you to gain an edge. When the economy picks up again, you’ll be better positioned to pounce on new business.

Now, we don’t recommend throwing more money around indiscriminately (although we’d sure benefit from that, if you insist). You should invest as wisely as possible. The Vrakas/Blum article offers four tips to approach marketing in a tough economy. (Never mind that the author actually promises six suggestions.)

For further reading, you can review a similarly helpful post we offered back in February with five tips on marketing during the downturn.

Advertising and the Internet: Time to Rethink the Relationship?

As a follow-up to our two recent posts on the obsession with ROI and the way information moves on the Internet, a new Advertising Age column dovetails nicely: Matthew Creamer’s “Think Different: Maybe the Web's Not a Place to Stick Your Ads” (subscription needed).

For marketers and agencies, says Creamer, big changes are happening in the way we do business—or at least they should be happening. He quotes Trevor Kaufman, CEO of Schematic, the interactive agency recently purchased by WPP Group:

"It's easy for clients and agencies to think about banners and email because buying banners is like buying outdoor and email is like direct. That is very different than nurturing the community of your customers, providing great content or executing transactions."

Lessons to mull over:

• We can’t simply jump into the digital game with a traditional-media approach that isn’t suited for the social dynamics of the digital environment. Banners can work well on niche websites, but don’t overlook the countless other opportunities to connect with customers in new ways.
• We shouldn’t obsess over tactical metrics like click-through rates that track how many people we’re reaching instead of how well we’re getting through to them.

The biggest lesson, however, is that we have many lessons to learn. The digital media landscape is rapidly maturing, and there’s a real need for serious reflection on what we’re doing there.

Meanwhile, many marketers and advertisers haven’t even gotten past the “brochureware” stage of Internet content—literature conceived for print, converted to digital. So it seems that we’ve got a lot of thinking to do …

Why ROI isn’t everything (but it still matters a lot)

In an interesting take on the current obsession with ROI in marketing, blogger Justin Cooper laments that the phrase “ROI” was the top marketing buzz phrase of 2007:

For a marketing executive to say "This sounds great, but what's the ROI?" demonstrates that they are missing the point. The person that asks this question is caught up in the evaluation of their tactics and not thinking about the content of their customer's experience. It's like focusing on the buttons of the phone, rather than the conversation.

Now, for us marketers, this is a hairy argument—especially in B2B, and especially especially in uncertain economic times. Clients pay for our services, so we need ways we can demonstrate the impact of what we do. We even recommended using ROI-measurable tactics in a recent post.

But true marketing ROI can’t be determined by the handy numbers you can claim from an assortment of tactics. It’s got to be part of a larger strategy aimed at meeting big-picture goals like entering new markets, gaining market share, etc.

As Cooper points out, customers must be involved in shaping that strategy. They’re the ones whose interests will make or break your company’s success. So ask yourself: Are your customers full collaborators in your marketing conversation? If not, you’re just talking at them, not with them. And they probably aren’t listening much.

That’s why, absent a marketing strategy based on what customers actually want, reader impressions or basic response levels don’t count for much. But integrated with a comprehensive strategy to advance business goals, ROI-measurable tactics can still help you understand how well you’re supporting the cause.

The AMA’s New Definition of Marketing Misses the Mark

What is marketing?

Now, there’s a can of worms. And here comes the American Marketing Association to further confuse the issue with its new definition:

Marketing is the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large.

Sounds more like the definition of overkill. Around the office, we had to pass this around and read it 20 times before it made any sense to anyone. First off, isn’t an “offering” something you do at church? …

OK, so maybe this is an academic definition. But really, that’s no excuse. Marketing is a professional service, paid for by clients. We have to be able to explain ourselves in a way that makes sense to “customers, clients, partners and society.” In an era of tight budgets and fierce international competition, clients demand—and deserve—to know exactly what’s in it for them.

Instead, we get the AMA’s new spew of verbiage, and it’s just the sort of toothless, garbled communication-by-committee we warn clients against all the time.

As a BtoB Magazine story points out, we aren’t alone in furrowing our brows. Marketing blogger Mike Smock has been one of the most vocal critics of the new definition. Here’s his version: Marketing is ideas and actions that generate increasingly profitable market share.

Not sure if Smock’s new take is perfect, but it’s got a lot going for it. It’s clear, it’s concise and it takes a stand—like today’s best marketing communications writing. And it also emphasizes an indispensable element of marketing that gets lost in the AMA definition: business results.

When the dust clears on this debate, whatever way we end up defining the activities and audiences of marketing, the focus must be on helping clients achieve their business goals.

5 Ways to Fight Back during the Downturn

We don’t have to tell you that there’s concern about the economy right now—both in Scheibel Halaska’s hometown and across the country.

But maybe we do have to tell you this: Strategic communications are important to the future of your business in both good times and bad.

So if the economy is on a downtown, the vast array of marketing channels makes it easier than ever before to maximize the value of your marketing spending. The current economic uncertainty may be the impetus you need to think and execute creatively.

Without further ado, here are five marketing communications tips for 2008:

1. Blend tactics. Don’t be afraid to make marketing investments. But like any smart investor, you should diversify your portfolio—in this case with print and online ads, email marketing, pr, targeted direct mail and more.

2. Try more ROI-measurable programs, such as email campaigns. You can keep a closer eye on the value you’re getting from your hard-to-come-by marketing dollars.

3. Pursue a key customer strategy. Focus on your best, most profitable accounts—because when the economy is slow, the strength of your relationships will determine your success. In addition, profile your most successful customers and use that to build your prospect database.

4. Emphasize PR. If there isn’t enough room to do as much advertising as you’d like, public relations is a way to get your message out more efficiently. Plus, you can turn every media win into a winning streak by sharing the coverage in other vehicles, such as your website, email marketing and more.

5. Plant seeds for ‘09 and beyond. Potential clients may balk at spending at the moment, but start the conversation now with targeted direct marketing to build leads for the future. Use marketing rather than feet on the street to more cost efficiently stay in front of your targets.

A New Study Shows Many Are Beginning to Embrace Emerging Media Opportunities. Are You?

“Never before in history has innovation offered the promise of so much to so many in so short a time.” - Bill Gates

Although Mr. Microsoft’s words referred to today’s pace of technological innovation in general, they’re especially relevant in the specific context of new media opportunities. No other period in history has seen the emergence of as many distinctly new media options as the one we find ourselves in today.

But most major advertisers have been reluctant to leave the comfortable embrace of traditional media (TV, radio, newspaper, magazines, etc.). Sure… they’ve talked about and dabbled in new media, but their budgets have remained firmly entrenched in the old stand-bys. However, recent survey data shows that the major players may finally be ready to “put their money where their mouths are.”

According to the 2007 Media Investment Survey conducted by the American Advertising Federation (AAF)—on whose national board I serve—nearly three-quarters of respondents are reserving up to 20% of their media investment budgets for experimentation in the new media ecosystem. In fact, 52% say… “I am more likely to anticipate, prepare for, and get out in front of changes in the media landscape.”

Many recent developments in new media were long-anticipated (TV programs on the internet, text messaging, social media). However, the pace of innovation is such that there several also caught the industry by surprise, including:

• The rush to Second Life-type virtual community space
• The rise of YouTube
• The popularity of mash-ups or Web applications that have more than one source

"Without change there is no innovation, creativity, or incentive for improvement."
- William Pollard

All these new options are a boon for the creative output of the advertising industry. In fact, a full 87.4% of respondents believe that media innovations inspire creativity, and they’re willing to invest their budgets to harness that creativity.

When asked about approaches to media planning in the coming year, respondents ranked “I am always open to new ways to use traditional media” highest (at 78 percent), followed by “the right media mix almost always includes a balance of traditional and nontraditional media” (at 75.5 percent), and “the search for new media properties to grow my brand never stops” (at 57.7 percent).

The AAF survey makes it abundantly clear that there will never again be “business as usual” regarding media options available to the advertising and marketing industry. The pace of change is such that those that are not in a constant state of experimentation and will fast find themselves at a severe competitive disadvantage.

The AAF Media Investment Survey 2007 included nearly 1,000 advertising industry leaders, spread across agency (38 percent), media (26.9 percent), advertiser/client (13.6 percent) and other (21.4 percent, composed mostly of suppliers and academics) sectors, with the majority being at the director (19 percent), owner (18 percent) or manager (17.6 percent) level. Nearly 31 percent of participants are part of a team that makes the final media investment decision for their company. A full summary of the survey results can be found here (PowerPoint document, 891k).

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The Small Business Times' BizBlog posted this entry on their daily blog. Check it out!

The Glass Onion

“I told you about the walrus and me – man; You know that we’re as close as can be – man; Well here’s another clue for you all….”

This is my final, retrospective entry on the concept of developing communication strategies that use purpose-appropriate tactics to produce both short-term ROI and longer-term, sustainable increases in enterprise value.

Why should we all care? To me, enterprise value is the language of CEOs, be they leaders of public or private companies. It’s the language of CFOs, too. These people are fundamentally oriented to play the enterprise value-creation game. If we want to have them value what we have to offer, it is imperative that we speak their language, understand their concerns. If your offer can connect along these lines with the CEO, you’re almost ready to transact. And if that connection extends to the CFO, they’ll allocate the funds to invest.

Last week, Ad Age sent out an e-mail soliciting feedback on the recent trend of management consultants like IBM, Accenture, and McKinsey making offers to assess the value being provided by their client’s marketing partners. I think this trend speaks volumes, and I assert that it is further grounding for what we have written about over the past two months.

I have no idea whether Paul was or was not the walrus. But if you are open to “…looking through the bent back tulips, to see how the other half lives…”, then I recommend the following for your review:

1. Value Based Marketing; Peter Doyle; John Wiley & Sons Ltd.; 2000
2. The EVA Challenge; Joel M. Stern and John S. Shiely; John Wiley & Sons Ltd.; 2001

I am sure there are even more places for us to look in order to continue to improve our proficiency with the language of CEOs, CFOs, and management consultants. If you have any further recommendations, please help us to keep this dialogue going.

The lyrics above are from Glass Onion, The Beatles, © Lennon & McCartney

Want ROI? Don’t Forget What The “I” Stands For!

While I haven’t been in the advertising industry my entire career, my background as a CPA and former CFO probably affords me an unusual amount of direct experience dealing with ROI’s, Payback Periods, Discounted Cash Flows and Economic Valued Added (EVA). During my tenure in the agency world, I’ve noticed many people talking and writing about ROI. And I have watched with both amusement and concern as our industry seems to break out into sweats, convulsions and hives whenever the topic is seriously broached.

I also have witnessed what I think is a fatal flaw with regard to ROI in our industry: the propensity of leaders (both corporate and agency) to forget what the “I” in “ROI” actually stands for. Lest anyone forget, it stands for “investment." Then why do so many move around and act as if expenditures in branding/positioning and B to B communications are really expenses?

Yeah, I know that the Financial Accounting Standards Board requires you to record these expenditures in your income statement as expenses. But if you know this, you are also no doubt aware that pharmaceutical companies, biomedical companies and start-ups in the nanotechnology industries are also required to record all of their research and development expenditures as expenses, too. It is safe to speculate that none of these companies diminish their R&D activities solely because of the FASB’s accounting and financial reporting rules. Rather, these companies “know” that R&D expenditures are their path to increased future revenues, market shares, and enterprise value for their organizations.

Safe to say that Coke “knows” this, too. Ditto for Proctor & Gamble. And Microsoft, Nike and Gatorade. In the B to B world, more and more organizations are moving similarly.

So why the change? My speculation is that for many of these companies, the shift to seeing marketing as an investment begins with a dramatic change in their narratives about the value of marketing and marketing communications. It's likely that enlightened leaders in these companies knew they could no longer look at these annual expenditures as merely operating expenses, or a drag on their earnings per share. Rather, they began seeing marketing dollars wisely spent as strategic investments in their company—investments that must be recurrently made. And, most importantly, investments that are rigorously reviewed and assessed from a “return” perspective.

I seriously welcome conversations with clients (current and prospective) which evolve into ROI discussions. Why? Because, if they truly are committed to producing a return on their communication programs, there is a pretty good likelihood that they know what the “I” stands for, and that they understand what it really means: before you can have “return," you first have to start with an “investment."

ROI Drives Professional Services To Outsource Marcomm

As pressure increases to produce billable revenue, more professional services firms are partnering with marketing communications agencies as a powerful way to maximize marketing-related return on investment.

Lawyers, accountants and financiers have less time than ever before to build and maintain crucial relationship-driven business models. Necessity, being the mother of most innovative thinking, has driven many to conclude marketing communications can play a strategic role in developing these relationships. Simultaneously, however, they’ve realized creating and executing these strategies is not their core competency.

This is all part of a mind shift in professional services firms from “if we do good work, clients will come” to “we must communicate who we are and why we are better” to differentiate in the marketplace and attract profitable clients and powerful recruits.

Managing how a firm is perceived in the marketplace requires constant communication about actions taken by the firm to maintain perceived value, effectiveness, quality, credibility and competence with key audiences. Perception—good or bad, accurate or inaccurate—becomes reality and impacts a firm’s bottom line.

By retaining professional outside communications counsel, firms can leverage the unvarnished, more powerful perspective that is crucial to effective marketing communications while cutting internal overhead costs. Where internal staff retreat from confrontation, outside counsel serves as loyal opposition to tell firm leaders what they need to hear—how to truly differentiate their firm from other firms in the marketplace.