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Marcom Touchpoints
Are They Measurable?
Michael Walters, Managing Director, True Integrated Marketing
www.trueim.com
This article is exclusively written for G-CEM.
How to justify your marcom expenses
In this article I want to illustrate that modern MARCOM requires a very different mindset and approach compared to just a few years ago, if it is to deliver results at an acceptable cost.
Let's start with a quote from a senior Product Manager from P&G -- a company with a long standing reputation for marketing capability and effective use of MARCOM. It was made at a CRM Symposium in Paris 2002.
"Branding isn't working as well -- generic goods are gaining market share.
Traditional advertising isn't working as effectively as in the past
Products are easily copied -- competitors can develop and deliver similar products in 3 months or less?
What a prophetic set of thoughts these have proved to be, especially in relation to marketing communications. So let us home in on "advertising" - what appears to be happening and how leading companies are using the challenges to better engage with consumers, by using real insight and metrics rather than intuition.
The simple truth is that marcom is now highly fragmented. Traditional mediums such as TV advertising and press are heavily saturated and it is increasingly difficult for advertisers to stand out. Indeed recent research in the UK by Manchester University proved (by the use of set top cameras) that when advertisement breaks came on families moved into other activities such as reading, making a drink etc, until the programme that they were watching returned.
We are now seeing that word of mouth (WOM) is becoming increasingly important. Not only can it prove to be very cost-effective when compared to other channels but it strikes at some fundamental truths about human beings. Consumers have become more cynical as well as immune to traditional advertising. With the internet providing free information, comparison reports, test drives, consumers are better informed than ever before, plus what better than family or friends recommendations!
However truly creative advertising will always cut through the clutter and there are many memorable strap lines from ads over 30 years ago that are still commonly remembered.
It's still about insight and good targeting
In spite of what may seem to be some negativity on my part, all things being equal, brand marketing based on a superior understanding of how to influence consumer attitudes in a given category will result in improving the brand's market share position and profit margin. The basics of good marketing planning and targeting are more important than ever:
1. Who are we trying to target?
2. What is our offer or unique value proposition?
3. How are we going to reach our target audience?
4. When would be the most appropriate timing for them to be most receptive?
One of the key issues that arrives from the above questions is how do we arrive at the appropriate marketing/channel mix and budget to deliver effectively on the above?
In my travels as a consultant -- I often find that companies have forgotten these basics or completely devolve them to third parties such as their agencies.
I have now reached a simple point of clarity in what I believe the role of marketing activity and MARCOM should be. Put simply its purpose is to generate demand at an acceptable cost. Through proper analysis I should be able to optimize my marketing activity and spend, leading me to generate demand at a lower cost (hopefully below my competitors) - in other words increase my MARCOM efficiency and effectiveness.
Before we look at how you can possibly analyze the cost and performance of instore sampling, say with a branded website and TV advertising, let's look more closely at how the brand/consumer relationship works.
Consumers relate to brands via attributes.
Research methods to probe how consumers relate to brands are well developed, as are the strategic processes to establish the content of brand communications.
But consumers connect with brands via contacts.
A contact is any opportunity for the brand and the prospect/customer to engage. There is a growing need for an empirical management process to prioritize the vehicles which brands use to communicate with consumers. And this in turn requires a method to measure and compare the effectiveness of the many different ways a brand and a consumer can encounter.
All current techniques tend to measure what the consumer receives. Traditional media surveys give marketers insights into the potential reach, frequency and Gross Ratings Points (GRPs) of their advertising plans and those of their competitors. Recently, marketers have also been increasingly turning to stochastic research in an attempt to assess the communication weight of competitive marketing activities, beyond mass media.
The inherent weakness of this approach to contact measurement lies in the fact that it measures weight and efficiency of dollars spent in a given category, rather than the effectiveness of marketing activity. Furthermore, it is almost impossible on a regular basis to keep track of all brand activities that go into a market.
A fundamental shift in the economics of information is under way - a shift that is less about any specific new technology than about the fact that a new behaviour is reaching critical mass. Millions of people at home and at work are communicating electronically using universal open standards.
This explosion in connectivity is the latest - and for business strategists, the most important - wave in the information revolution. (EVANS & WURSTER in 'Strategy And The New Economics Of Information' - HBR / April '98)
Decisions, decisions, decisions
The net effect of these changes is that consumers by-pass advertisements as they have become more sophisticated and more selective.
So today, brand managers need to identify, manage and track how to effectively and efficiently encounter consumers across a large number of different contacts. There is an urgent and on-going need to answer questions such as:
1. Which contacts to use?
2. How to allocate marketing spend beyond mass media and across the wide variety of choices?
3. How to optimize?
It is no longer the case that the brand with the biggest budget wins. It is about using marcom in a more intelligent way, to ENGAGE consumers. You can only make these decisions if you have appropriate metrics.
I am a great fan of the term "engage". Engagement implies a mutual exchange, it implies interest and involvement. Our marcoms have to engage if we are to be successful. Given these keywords, it can be seen that customer engagement in its truest sense is also a great measure for ascertaining true customer loyalty. However my views on loyalty are for another day!
Rising Marketing Costs
The following chart also demonstrates another unpleasant fact - that relative to the cost to manufacture goods or services, MARCOM costs have increased significantly over the last 30 years.
It is therefore no surprise to see that there is a growing trend from CEO's and CFO's to demand more marketing accountability.
With the fragmentation and introduction of new media that we have already alluded to, it is more important than ever to know which contacts/channels to employ to better engage with our target audience AND whether they are viable on a cost versus results basis - ROI.
A Marcom effectiveness model
We have developed our own model to help assess marcom performance that also takes into account:
1. Marketing processes - including planning
2. Communication effectiveness
3. Customer performance, especially related to attrition
We are interested in attrition from the dimension of whether the marketing campaigns are attracting the right kind of customer, with propositions that they believe in, or are you achieving opportunistic share that is difficult to sustain. Within this framework we are also evaluating the processes around marketing planning and execution to ascertain whether results of marketing activity are analyzed and used to improve the planning and targeting activity. In other words is the marketing function a "learning" operation?
Process is one part of the execution chain but what about metrics? In order to undertake marcom planning, execution and evaluation we really need a methodology and robust metrics. Typically 90% of marketing budgets are spent on channels or contact marketing.
The Marketing Contact Audit ( MCAtm)
Until recently we thought that no such methodologies exist. However following extensive global research we have identified one source that really does seem to have addressed marcom evaluation. You also do not just have to take my word on this - the methodology in question has been evaluated by both Insead, France(Chattopodhyay and Banerjee, 2001), the University of San Diego and most recently The Advertising Research Association (ARF). They all concluded that a tool called MCAtm not only measures MARCOM effectiveness, irrespective of channel, but also produces an output that we shall call "x" that directly related to actual market share - which we shall call "y". So if between measuring periods we see that our x measure increases, we can anticipate an increase in sales or market share on an average correlation of 0.85 or better!
Now we have the means to understand not only what is driving our brands forward, which contacts or aspects of marcom are more effective than others but also establish a quantifiable link between marketing and sales.
On a positive front it does provide a marketing director with the means, when challenged by the CEO or CFO with a real justification for marketing funding.
The MCAtm was run against most of the lead sponsors of the FIFA World Cup 2006. The results made really interesting reading and some quite stark conclusions could be drawn:
1. Those brands that were intrinsically linked to sport, or could establish a real link performed many time better than those who had no real links.
2. Those brands that used marketing creatively to reinforce the event and their linkage were rewarded with increased market share or sales.
3. Those that could not establish links, or simply increased their levels of spend to capitalize on the extra exposure had a flat performance, even though by traditional measures they were obtaining more GRP's.
Summary
Marcom will always be important for brand building and acquisition (to differentiate from CRM or customer development activities. The issue is how to allocate marketing budgets into Marcom contacts that will prove to be effective as well as efficient and at the end of the day produce real value for the brand via increased sales or market share.
It has long been the paradigm that metrics to accomplish this were either not possible or unreliable. We can now see that a new paradigm exists not only is it possible - the most enlightened companies are already using them. Marketing Management is therefore going to continue to experience increasing pressure for accountability, but have the means to provide the answers.
However we smug individuals who have been around data driven marketing (the predecessor of CRM) have known for a long time, that what we achieved was measurable and therefore accountable.
What companies around the world must remember is that marketing is the only way to grow a business. As Peter Drucker has written, "Because its purpose is to create a customer, the business enterprise has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are 'costs.'"
Good marketing practice leads to good Marcom results.
Footnote:
MCATM references contained in this document remain the copyright of Integration (Marketing & Communications) Limited. No part shall be used or reproduced or transmitted without the express written permission of the copyright holder. Integration is trademark and copy-right owner of all MCA products, tools and service marks. Copyright 2000 by Integration. All rights reserved."
About the author
Michael is currently the Managing Director of True Integrated Marketing - a CRM/ Marketing Consultancy based in Dubai. He possesses 15 years of consulting experience in marketing strategy, execution and measurement. He has worked with many FTSE 100 companies and international "blue chips" to consistently increase revenue and returns on marketing investment. Michael has been involved in CRM consulting since 1992. He has global experience in having worked/consulted in Europe, Middle East, Far East and United States. Prior to his consulting career, Michael has more than 14 years experience in senior marketing and management positions within financial institutions including Chase Manhattan Bank, Royal Bank of Canada.
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