VK, a marketing veteran, and now the CMO for a large consumer durable company is a disappointed man, post his board review that is. Despite his passionate attempt to convince the board’s members that the company needed to increase investments in its brands during the downturn, he could not get the budget approvals. Instead, the pressure is on him to cut back on marketing expenses. One of the board members even gave him a competitor’s example on marketing spends optimisation. The CEO has been asking him take a hard look at spends which have been going northward at a fast clip for last few years. Now VK is beginning to wonder, is there a real issue with the way spends are being managed and can be identified and fixed? He needs to quickly understand if there are issues with efficiency and effectiveness of marketing spends and if he is really getting the maximum bang for his marketing rupee.
Marketing spends have grown at more than 20% annually since 2005 and the overall media spend figure crossed Rs22,000 crore in 2008. In the recently concluded growth phase, marketing enjoyed significant war chests and creative freedom. And in a rising tide, assessing the effectiveness of these spends were not a priority. Today, the economic slowdown is focusing the spotlight back on where marketing moneys are spent, because as a whole, it can account for 6-10 % of sales in many consumer-focused industries. Reductions in advertising spends are expected across most, if not all, sectors. In fact, within boardrooms, there is a call for greater accountability of marketing spends.
The excesses of the last few years – proliferation of products, brands and communication platforms resulted in over communication, low brand recall and consumer indifference. In this scenario, it is imperative for CMOs to look for ways to burn fat and build muscle. A starting point is to closely examine five key signals of inefficiency. If the assessment throws up three or more of these warning signs, it’s time for some serious action. Our recent experience indicates that a zero-based review of the marketing spend, in these times, will generate benefits of at least 5-15 % in terms of improved return on each rupee spent enough to fund other business initiatives or simply, make a valuable contribution to bottom line.
With leading marketers already adopting an integrated approach across marketing levers, a large number of players still do not display rigor in understanding the true impact of each customer-contact opportunity available to them. Specifically, some key tradeoffs are not explored. For example, should an integrated brand retailer in a sales downturn situation, spend more on catchments area promotion awareness or on broad based TV advertising? How can OOH spends be compared against those on traditional media? Such questions are seldom asked or answered in a rigorous fashion.
Attaining excellence in brand activation calls for redefining guidelines for an integrated marketing mix in order to breathe life into the creative idea across all consumer touch points. Often, spend analysis across different marketing platform is uncoordinated and unshared. To support an integrated marketing mix plan, an integrated briefing process is critical. This means not only briefing across creative, BTL and PR agencies but also including packaging, sales organisation and channel partners to truly magnify the impact of the initiative. This can be supplemented through periodic team meetings across various marketing agencies and the internal organisation team which are useful for perspective building and in determining a holistic and robust marketing plan.