Marketing ROI: The Least Advised (but Most Obvious) Factor

Marketing RoI GraphHere is a challenge. Search Google for articles giving advice on how to improve return on investment (ROI) for your marketing programs–use Google Instant of course! Not surprisingly, hundreds of articles can be readily found. Now list out the core recommendations of the first 20 articles you find. Or, just take my word for it. I get the following basic themes:

  1. Target better–quite obviously, if you get the most relevant message to the most relevant seeker, you will get better results.
  2. Track better–-also obvious, if you understand what does well and what does not, stop what doesn’t work in favor of what does, you will do better.
  3. Provide relevant messages and promote better–-self-explanatory.
  4. Plan better–-touted by many consultant types who love to insist your marketing is really doomed from the start by faulty planning.
  5. Build a relationship–-easy to understand and hard to execute, but certainly having a relationship with a prospect gets you further down the road than having to re-introduce yourself every time you need a sale.
  6. Price your products better–-again fairly 101 advice, but valuable nevertheless.
  7. Make sure your marketing, post-marketing, fulfillment and customer service align to maximize sales efforts–-pretty valuable advice, which is often poorly executed by most companies.

Like the claim that Shakespeare has written all the world’s stories, most of the advice you find seem to be variations on the above themes. Re-targeting, buying via demand-side platforms, location-based marketing all fall under “target better” and probably also under “provide relevant messages” and maybe “build a relationship.” Promotions, segmentation, social marketing, customer relationship management, one-to-one marketing, 360 marketing–they are all ways to improve one or more of the above factors.

It almost seems as if the world has forgotten about one fundamental factor of ROI.

Cost.

As in reducing your marketing cost. Not just by targeting better, tracking better, planning better and developing relationships, but by arriving at a lower cost structure altogether. This leads to increased strategic flexibility and operational efficiency. And today, the best opportunity to do so lies in understanding and leveraging the global economy.

McKinsey & Company, in their report What Happens Next?, predict that the next decade will see emerging economies growing at five times the rate of established ones. In order to realize 30-40% savings in operations, “C” executives  need to figure out the global economy. Today, you can get a wide array of marketing, media, SEM, creative and production services abroad.

Admittedly, this is easier said than done. These solutions come with a bewildering mix of cultural, process and knowledge profiles. The marketplace is cluttered with dozens of companies, many of whom seem to regularly misunderstand the levels of quality needed. The vast majority are boutique companies without the ability to truly create a solid operation shielded from global economic forces needed to ensure business continuity. The marketplace of offshore providers is today what the offshore information technology market was in its infancy.

However, large, established, enterprise solutions will emerge. As much as we accept Accenture, IBM, Satyam, Unisys and HCL for their ability to bring technology services from offshore, similar companies will emerge in the marketing and advertising services realm. In five years, no one will question if marketing and advertising production services can reliably come from India, the Philippines and other parts of the world.

Today, the best ones provide a white label solution, multiple shifts (to overcome time zone challenges), a highly stable workflow, technology and infrastructure solution, and a concerted focus toward quality. They require no cash upfront and advise you on how to properly offshore and manage resources.  They often provide teams that have worked in the west for decades and come with all the insurance, contract terms and policies that are expected of reputable companies in developed countries.

Offshoring an entire production process is not easy, and it does require a strategic commitment. Ideally your “C” level executives need to commit to the practice and be involved. But it can work well. You can reduce your marketing costs by 30% or more.

Re-forecast your marketing activity. Do some sensitivity analysis. Recalculate the numbers assuming lower costs, at similar productivity, cost per acquisition and margin assumptions.

Would your business be transformed?

About David Kang
David is executive vice president and chief digital officer at Affinity Express. He was formerly a Senior Partner at WPP’s Group M and Vice President of Client Services at GSI Commerce.

2 Responses to Marketing ROI: The Least Advised (but Most Obvious) Factor

  1. Pingback: Tweets that mention Marketing ROI: The Least Advised (but Most Obvious) Factor « Affinity Express Blog -- Topsy.com

  2. roclafamilia says:

    Helpful blog, bookmarked the website with hopes to read more!

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