From marketing ROI to AMP: the free ride is over …

Excerpted from Brandchannel, “Achieving Accountable Marketing: Six Critical Value Levers Must Be Pulled” by Michael Dunn, April 13, 2009

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Senior management continues to push marketers to demonstrate a strong return on investment, demanding more accountability and evidence that marketing investment is driving business growth.

It requires marketers to demonstrate disciplined planning, rigorous tracking and evaluation and, above all, continuous improvement in performance. They must also show cause and effect, quickly diagnose the root causes of any spending performance issues and make timely, fact-driven decisions to improve returns.

Call it accountable marketing performance (AMP), a goal that requires six “value levers” to be pulled effectively.

1. Strategy
This critical lever sets up a series of choices that inform most of the subsequent activities across the other levers. It encompasses a series of decisions about strategic marketing choices:

  • With which set or sets of customers does your company have the best business opportunities?
  • What are the most achievable behavioral responses from these target groups?
  • What unique benefits, attributes and ideas are most likely to elicit the desired behavioral response?
  • What specific brand or business challenges are standing in the way?

Getting smart and shared answers to these questions requires a fact-based foundation involving customer segmentation and targeting, customer-driven analysis, pathway modeling, brand equity modeling and purchase funnel analysis. When combined with equally valid qualitative insights and intuitive thinking, you create a strategic value proposition that is worth its weight in gold.

2. Content
The strategic foundation must be translated into compelling, engaging and medium-appropriate messaging ideas. The best content platforms originate from a magical combination of strategic insight and creative expression and connect in authentic yet emotionally compelling ways.

Most companies rely heavily on external agency partners at this lever. But it’s the best collaborative partnerships that inspire great work, and great content ideas can come from anywhere—agencies, similarly briefed internal teams pursuing independent and somewhat competitive paths, or single contributors who find inspiration on a walk or in the shower. Whatever the source, smart companies validate multiple messaging ideas with robust testing before deploying them across a full-scale creative campaign.

3. Marketing Vehicles
Effective vehicle choices should enable your messages to reach and connect with audiences in a timely, relevant, cost-effective and multi-platform way. But you must understand where your audiences interact with media or media-enabled experiences as well as their openness to receiving messages in that setting. You must understand the optimal strategic applications of each vehicle, their trade-offs and the underlying economics.

The wrong choices can endanger accountable marketing. You risk failure by mismatching vehicles with marketing objectives or audiences, or by having inadequate coverage across the mix. It’s equally dangerous to fail to weigh the underlying economics and potential revenue response dynamics. Finally, balance between new and traditional media is a must.

4. Investment Levels
This value lever should diagnose whether the overall marketing investment amount is too high or too low vis-à-vis the intrinsic financial return characteristics of the proposed marketing activities in relation to strategic marketing objectives. It also helps determine whether the amount invested in particular vehicles, programs or activities is too high, too low or just appropriate relative to intrinsic return characteristics and those of alternative investment options.

But it’s complicated. Marketing program returns are not static. Changes in brand maturity levels or competitive intensity can impact program-level returns. Changing media habits and changing cost dynamics of various vehicles can affect their returns. Nor are returns always linear. Despite such challenges, there’s considerable upside potential to this lever.

5. In-Market Execution
Great content still needs a great delivery mechanism; execution diligence ensures that your marketing content and your delivery mechanisms work together harmoniously.

Many tactical decisions underpin a successful and cost-effective campaign. Planning requires choices about reach and frequency, geographic coverage, and scheduling in light of insights around seasonality, purchase frequency and key decision points in the purchase cycle across all types of programs. Be warned: if poor in-market execution prevails, your failures may well be amplified in an embarrassingly public way through Web-based channels.

6. Fixed Cost Management
This lever aims for improved cost efficiency and effectiveness through both cost cutting and cost containment. Your fixed cost base depends on your mix of marketing programs and can account for 20 percent to 60 percent of the overall marketing budget. And savings can be redeployed into programs that may improve overall effectiveness.

This value lever requires applying a purchasing or procurement manager mindset. One way to start is by understanding the ratio of “working” to “non-working” spend on the fixed costs of marketing program production. If this ratio is off, try selectively applying strategic sourcing principles to pay a little less for what you buy, redefine some core programs so they can be executed more cost-effectively or re-engineer overall processes to reduce costs without compromising quality.

Accountable marketing performance is an achievable goal. By focusing on and unlocking the power of the six critical value levers, the marketing organization will prove its value to the business as a whole as the creative yet rational source of future growth.

Edit by NRV

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