Targeted Marketing Dollars

Stephen DeAngelis

February 14, 2013

A year ago Lisa Arthur reported, “Marketing is now a fundamental driver of IT purchasing, and that trend shows no signs of stopping – or even slowing down – any time soon.” [“Five Years From Now, CMOs Will Spend More on IT Than CIOs Do,” Forbes, 8 February 2012] Arthur provided three good reasons why marketing is becoming an IT driver. She wrote:

“1) As we all know, marketing is becoming increasingly technology-based, 2) Harnessing and mastering Big Data is now key to achieving competitive advantage, and 3) Many marketing budgets already are larger –and faster growing –than IT budgets.”

She reported that a Gartner study predicted “that by 2017, CMOs will spend more on IT than their counterpart CIOs.” She concluded, “It’s time for CMOs and CIOs to start forging true, strategic partnerships, so both marketing and IT can begin sharing ownership of both goals and outcomes. After all, the business landscape has shifted, and it’s no longer marketing that drives business growth – it’s digital marketing that drives business growth.” Jump forward a year and Kate Maddox reports, “Despite continued uncertainty about the economy, nearly half of b2b marketers plan to increase their marketing budgets this year, according to BtoB’s ‘2013 Outlook: Marketing Priorities and Plans’ special report.” [“Almost half of marketers to boost budgets this year.” BtoB, 11 January 2013] According to Maddox, increases are primarily related to digital marketing. She reports:

“According to the Outlook survey, 67.2% of marketers plan to increase their spending on digital marketing this year. Within digital marketing, the top spending areas will be website development (with 70.1% of marketers planning increases this year), email marketing (61.9%), social media (56.0%), online video (55.8%) and search (52.5%).”

In a more recent article, Arthur discusses “five criteria” that Chief Marketing Officers should keep in mind as they contemplate how to allocate their funds. [“Five Essential Factors To Consider Before You Allocate Marketing Spend,” Forbes, 30 January 2013] The first criterion deals with company internal objectives. She writes:

1. Internal objectives. Ask yourself: What do you aspire to achieve? But remember, these days, your plan needs to do more than just align objectives to a budget handed down from management. You’re also expected to bring viable, creative (yet affordable) opportunities to the table and show senior management you have strategies to achieve them.”

The most obvious objective, of course, is to bring in more revenue as a result of marketing than you spend. The best way to do that is through targeted marketing rather than a shot gun approach. Arthur continues:

“Fortunately, today’s data-driven, integrated marketing technologies makes listening to the marketplace and measuring progress far easier. Now, you can track your way toward revenue goals, have instant visibility into spending and campaign ROI, know where you stand on customer satisfaction measures or market share growth (or virtually any metric you need) and adjust your plans accordingly. I firmly believe that once you have decided on smart, attainable goals, today’s technologies can help you reach them faster. Beyond operational and campaign spending, variables such as geographical structures, workforce development and the basic departmental dependencies at work in your company will also play a role in how your marketing plans should be designed and implemented.”

The data-driven, integrated marketing technologies to which Arthur refers are primarily aimed at mining big data sets for actionable insights. By tailoring marketing campaigns so that the right customer is exposed to the right product at the right time, ROI can be greatly increased. Alex Wasserman, VP of Product & Marketing at Rapleaf, states emphatically, “Fluff Marketing is dead, and we know who shot Roger Rabbit – it was Big Data. … Its insanely obvious that consumers are craving more personalized experiences.” [“RIP: Fluff Marketing (send our regards to Don Draper), Rapleaf, 13 December 2012] The next criterion that Arthur insists CMOs need to consider is world events. She writes:

2. World events. Keep a close eye on international news and forecasts. Are certain areas too risky for investment? Do you already have investments in countries or regions that are likely to be impacted by political instability, civil unrest, rule of law, climate change, etc. this year? On the flip side of that calculus, where are there valuable opportunities for expansion? How can you best leverage the growth forecasts for emerging economies?”

Keeping track of world events has a lot more to do with supply chain and risk management than with marketing. I believe that Arthur’s point is that marketing can no longer operate as an isolated business silo. It must be part of an integrated team that works together to achieve organizational goals. She continues:

“Maintaining a world view also means constant tracking of your company’s international results and performance. Then, you need to use that data – and the insights generated from that data – to direct future allocations and growth.”

As I’ve noted in previous posts, the world is becoming ever more urbanized and the companies that will succeed in the decades ahead are those that learn to how to crack the urban marketing nut. Cities are not homogeneous locales. They consist of nuanced enclaves of consumers whose tastes and lifestyles differ. That is why targeted marketing is so critical. The next criterion that Arthur says must be taken into consideration is compliance to regulations. She writes:

3. Regs and legs. How will evolving regulations and legislation affect your marketing plans? Case in point: Even though there was plenty of time to prepare, new EU e-privacy directives appeared to catch many marketers by surprise last May. Because this sweeping legislation requires all marketers and website owners operating in any EU country to obtain consent from European users before implementing cookies or other technologies to capture online visitor information, many companies were left scrambling to maintain compliance.”

Neolane has reported that a staggering 81% of marketers are “either somewhat or not very prepared to handle the new rules and regulations of marketing data governance.” [See my post entitled The Benefits of Big Data.] The fourth criterion that Arthur indicates must be considered involves financial reports. She writes:

4. Industry and financial analyst reports. Industry analysts can be valuable sources of insights – as long as you remember to view their reports in a context that’s meaningful for your company. For instance, I’ve often found that industry analysts are great at providing information on what customers want, but not-so-great at providing information on what real customers – those actually buying and using marketing solutions – actually need, which is a reliable, proven long-term partner to help them navigate change. In my book, if credible industry analysts acknowledge a vendor as a visionary leader in their market, I have no doubt that vendor can help its customers execute toward leadership in theirs.”

Arthur believes, “You need to stay tuned into today’s macro-economic and micro-industry trends so you can gauge how the economy may affect your plans down the road.” The final criterion discussed by Arthur involves the bottom line. She writes:

5. Results. I can’t stress this enough: Marketers need to start investing in results. It’s time to throw out those reams of old spreadsheets and update your processes to include marketing spend software. There’s really no other way to get the visibility you need across today’s multi-channel campaigns; there’s really no other way to efficiently see when you need to step in and stop the bleed on programs that aren’t working and/or throttle up those that are performing well. The point is, successful marketing is well-planned marketing, and successful marketing delivers demonstrable ROI.”

The best way to achieve results is one customer at a time. Tanzina Vega reports that what matters in today’s digital advertising is the targeting of “individual consumers rather than the aggregate audience.” [“The New Algorithm of Web Marketing,” New York Times, 15 November 2012] She claims, “That shift is punishing traditional online publishers, like newspaper, broadcast and magazine sites, who are receiving a much lower percentage of ad dollars as marketers use programmatic buying across a much broader canvas.” Arthur concludes:

“Most marketers I know are reveling in the spending responsibilities now in their hands. But, we all must remember that we’ll only be able to keep management’s continued trust if we can show and explain a positive return on marketing investment (ROMI). Before you spend a dime, make sure your objectives are clear, and be certain you’ve factored in the internal and external factors that can help or hinder your success.”

Targeted marketing is the best way to increase ROMI. Vega concludes, “Publishers and broadcasters have long tried to offer advertisers the right audience for their products.” According to Vega, the traditional view is that context matters (i.e., “Want to sell pick-ups to people who like sports? Buy ads at halftime during a football game. Selling luggage or airline tickets? Buy ads in the travel section of a newspaper or Web site.”). Today, she writes, “In the world of ‘programmatic buying’ technologies, context matters less than tracking those consumers wherever they go.” By getting to know the individual better, the more likely you are to understand what they want and when they want it.