In the last post in this series, Amy O'Brien-Bird and Bill Stotzer of Alvarez & Marsal discussed how companies can optimize their marketing spend through market segmentation and data management/measurement. This week, they continue.
Diversify Buys: Digital technology has also spawned many alternatives by which to purchase media, including real-time media exchanges and other vertical markets allowing for media buys on the "spot" market. Even though the process for placing an ad through an agency has not changed dramatically from past practices, alternatives eliminate the need to involve an agency. For example, online services like Google's Adwords and Craigslist can be purchased for a fraction of the cost of traditional media outlets, and without an agency. Fact-based decision making will allow marketers to leverage evaluation of these alternative products to pinpoint markets and media channels for maximum effectiveness of marketing resources. In addition, rapid feedback and real-time adjustments in delivery can be made using predictive analytics.
In response to companies' increased focus on marketing ROI, many agencies will place fees at risk to align with advertiser objectives, making marketing services and production costs (advertising agency creative fees, media commissions, market research services) opportunities for cost reduction. In today's fragmented media environment, the capabilities and expertise of a company's advertising agency need to be competitively matched with its target audience. Closer alignment and linkage with procurement professionals are also enabling marketers to bring greater structure and discipline to the agency consideration, evaluation and selection process.
Engage Directly with Consumers. Social media further broadens the opportunities for consumers to be exposed to brands. This happens in two ways: consumers can share brands with each other, and companies can interact directly with their current consumers and consumer targets. For example, in the past, targeting consumers who were looking for gluten-free products would have been quite difficult and potentially unproductive using traditional media outlets like television or newspapers. Today, companies can be very efficient in targeting people with celiac disease by proactively driving education on gluten-free interest boards, user groups, and other specific media. Consumers increasingly consult the internet (whether from laptop, tablet, or phone) to inform their buying decisions, and marketing spend allocation should shift to appropriately address that new norm. Consumers have also become increasingly skeptical of advertising messages and are seeking authenticity and relevance from the brands they align with. Peer reviews and opinion leaders influence brand perceptions and purchases before consumers may see or hear a message directly from the advertiser. Companies must actively manage their online brand and consumer experience, or others will manage it for you, and you may not like the results.
Save Trees--And Your Cash. Consumer migration to the internet as a source of information, marketers' ability to send them to an exact site directly via QSR code, and the desire and capability to constantly update information have combined to make the need for printed materials nearly obsolete in many industries. For those companies and industries who do still require printed materials, end-to-end management of printed content--format, quantities, warehousing and shipping--is key to managing the cost of obsolescence and impact on cash flow.
Marketing remains "part art and part science," but with digital tools and resulting data increasingly available, marketers are able to take a more fact-based, scientific approach. Embracing new technologies, and optimizing media across the entire budget and mix of available vehicles is the most effective approach to increase the return on ad spend. Understanding your target consumer, and then employing the best tools to reach them is foundational to this strategy. Companies that are able to develop this deep understanding of their customers and who most effectively employ the channels that not only reach them, but convert them, will create sustainable advantage over their competition.