« Powerful Talks from TED2008 | Main | The Law of Gravity »
Tip 113 Slash Your Marketing Budget
As CMO at Deloitte and then Starwood, I hated it when other marketers measured themselves by the size of their budgets. When you're running a business, take your marketing budget and push that money back where it belongs – in operations, into the hands of anyone who can make a difference to the customer...
To get future tips of the week by e-mail, click here to subscribe.
Also, feel free to join the conversation around this tip by posting a comment below.
Posted by Keith Ferrazzi on March 25, 2008 | Permalink
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/t/trackback/317848/27450988
Listed below are links to weblogs that reference Tip 113 Slash Your Marketing Budget:
Comments
Keith,
Love the tips and of course the book. But, when you get beyond the shock value of Tip 113 "Slash Your Marketing Budget" I would caution taking this advice at face value. (For full disclosure, we are a public relations & marketing firm).
There are countless ways to make personal contact with your customers and prospects. Before just cutting budgets, consider a review of where the money is being spent. Also consider that most of your competitors may be taking the knee-jerk reaction of cutting their marketing budgets in a down economy; now would be a perfect time to capture market share. Yes, the marketing and public relations efforts need to be personal, emotional and real. Evaluate all communications, not just print advertising, but your blog, your speaking engagements, etc. In a nutshell, every point of contact. Yes, good advertising kills a bad product; if you cannot deliver on the operations side, then you are right to refocus your spending internally. Just a bit more food for thought, Rob Felber, Felber & Felber Marketing.
Posted by: Rob Felber | Mar 26, 2008 8:35:44 AM
Keith,
While I agree in principle with your comment, I can't help but point out that marketing can be crucial in establishing a brand. I am a salesman for a large computer manufacturer and the particular product I sell is by far the best in the industry by every measure. But most of my customers don't even know it! Ultimately that's my job to educate them, but a good marketing campaign can certainly help grease the skids and open their minds a bit. One of my colleagues finished a presentation to a CIO of a major corporation talking about this product and the CIO didn't believe him because he had never heard of the product! And we have Billions of dollars in sales each year of this specific product!
The correct marketing campaign could go a long way to making me more efficient in my efforts, thereby bring even more money to my company.
Posted by: mark | Mar 26, 2008 9:02:20 AM
I agree. My best marketing tool is and always will be word of mouth. A happy client will boast of your services to others, giving you free marketing.
Posted by: William McNair | Mar 26, 2008 9:19:46 AM
Keith,
While i agree with your strategy, i disagree with your tactics. Customer satisfaction is the most powerful competitive differentiator, but it must be implemented by the corporation as a strategic product and measured (and rewarded) as a profit center. Marketing is line. Ops is staff. Ops is seen by most companies as a cost center, with continual downward pressure on cost.
Scott
Posted by: Scott Hornstein | Mar 26, 2008 9:43:10 AM
Keith,
This is the first of your recommendations I've read where I think you are either off base or perhaps haven't fully explained your position. While I do agree with your comments on value and intimacy, you must still get the market aware of your widget and start a conversation about your widget before you can explain (and hopefully demonstrate) the widget's value and begin to develop intimacy in the relationship. It is in developing that awareness and supporting that intimacy that marketing can be of immense value.
The recent success (as judged by the continued expenditures in advertising) of what I refer to as "generic" marketing campaigns have, I believe, clearly demonstrated this point. As a good example, look at BASF. Their marketing message doesn't even tell you about a specific product they manufacture or what specific value it will provide to you, only a non-specific message that says, in a nutshell, "we make everything better". Budweiser long ago stopped telling you they had a superior beer, now they want you to know that their Clydesdales need to be in top condition and beat out tough competition to pull the Bud carriage. In my mind these campaigns clearly demonstrate their is value in simply getting your company name in front of people with some type of positive association.
I think a major problem, however, is that a wide variety of companies see these campaigns and take this same approach to marketing - get our name out there and good things will happen. They think the following equation is true: more $$ on marketing = more market exposure = better sales (or profit, market share, etc.) Unfortunately, this formula is true for only a select few companies in certain markets (beer being an excellent example). In the majority of cases this formula is applied, a large amount of money is spent, and the desired results are not obtained. In the ultimate end it is never too long before a top executive figures out that the formula doesn't work and cuts the marketing budget. (Nothing personal here, I've just seen it happen over and over again!)
The real answer to successful marketing for most organizations is simple to write and very difficult to execute. It is: 1) Define your market. 2) Define your message. 3) Determine the most effective ways to communicate this message to your market. 4) Tell the sales force your message and how it will be communicated to the market. 5) Tell the sales force again (they never believe you the first time around). 6) Align sales and marketing to deliver the message to the market and sell it to the market.
Well spent marketing dollars, when aligned in an overall effort and coordinated with sales, can often provide some of the highest ROI a company will see in a fiscal year. I agree, it isn't the size of the budget that should be measured, but the return realized from the expenditure. The fact that the size of the budget has become a barometer of a marketer's success only proves the point that too many companies believe in "the formula". Marketing expenditures can provide a tremendous value, but, just as any other company expenditure, it is imperative to make certain the money is spent wisely by measuring the results obtained. If a company can market effectively and measure results accurately, the top executives will be pouring more and more resources into the marketing budget every year!
Posted by: John | Mar 26, 2008 11:03:17 AM
I must agree with the comments related to the tip.
Before cutting a marketing budget, appropriate evaluation of previous efforts must occur. Honing in on your largest customer base (whatever method you use) makes the best sense when money is tight. You still need to market but how you do it might need to adjust based on the health of your business and the economy.
Savor life's best,
Aimee
Posted by: Aimee Wilson | Mar 26, 2008 12:17:30 PM
Great insight from all.
Having dealt with BASF recently, and having had a bad customer experience, I feel that their marketing money could have been better spent on their personnel.
Good customer service can overcome a lack of marketing, but great marketing will never compensate for lack of customer service.
Dean
Posted by: Dean | Mar 26, 2008 2:20:01 PM
Keith,
Your tip is dead on for a few reasons. My firm has been in business 8 years- a big chunk of my marketing budget is the investment made on developing client relationships. I co-invest the early stages of the project to put some skin in the game, I have always counted that as marketing dollars. It's effort I could charge for, but dont. The result, I am working with the same companies in some cases for 7 years, and a huge percentage of my new business is from referrals. Running the numbers, it pays off more than many of the traditional marketing efforts I have done.
Posted by: Mari Anne Vanella-Hicks | Mar 27, 2008 9:40:36 AM
Keith,
Coming from a company that doesn't have a solid product but still uses all of its financial resources towards its marketing, for me, is a bit of a stalemate. While the marketing may attract clients, our product of service and operations will not in any means keep them loyal in the long haul. I agree that without an established portfolio of pleasing our customers, and without the willingness to keep a grounded customer base interested in returning, the marketing aspect is in turn just a short term con. I know that if my hotel focused on putting their marketing budget into some key captial expenses that can make first time guests happier with their stay, the word of mouth aspect can be just as effective by what goes on the internet. It will effectively get people to come back over several years rather than a one week stay.
Posted by: Mark Kaufman | Mar 27, 2008 1:08:33 PM
Keith,
Very interesting and outide-of-the-box thinking in this week's tip. After Reading the book "Meatball Sundae" I can definitely see where you are coming from. The trick is convincing the rest of the executive board that you are not insane for making this decision. I believe that it is even mentioned in the book that the higher-ups may not understand this tactic because spending big money in marketing is what they have always done. If you can find a surefire way of getting over that hurdle, without the obvious, trying to convince the higher-ups to read the book, I'm all ears.
Cale
Posted by: Cale D. Hawley | Mar 27, 2008 3:59:23 PM
This is a highly debatable topic. Advertising dollars could very well be a waste of budget if operations and customer service are not top notch. Why spend money acquiring customers to loose them or not have them repeat business? I agree with this suggestion and my company is a media buying agency. I belong to i-advertising discussion group and a few of us are discussing Zappos this week. This is an interesting topic as well. Amazon and Zappos both spend more internally on being the best company they can be and very little on marketing. You need customers to start out with and most businesses must advertise to get them. Yet this is very sound advice to putting first things first.
Interesting read on a notes take from the CEO speaking at SXSW http://www.theemailwars.com/archives/2008/03/sxsw_top_10_lessons_learned_in_ecommerce.php
Posted by: Shea Park | Mar 28, 2008 12:10:35 PM
Great tips! Marketing shouldn't own you or your budget. There are great ways to turn your wold be marketing expenses into expenses that pay you! I have included a link http://tinyurl.com/39w5a4 you can view to get additional tips. Marketing really can be exciting! Let's embrace it!
Posted by: Tyffani | Apr 1, 2008 3:33:02 PM
This issue is more complicated than 'cut here, spend here.' If your product or operations are in bad shape, by all means do not advertise. Why bring in customers and disappoint them? So hire a great Ops Director and fix that end of the business. But assuming the product is worth talking about, a spot-on ad campaign is the most efficient sales tool in business. The right creative (which 90% of all campaigns do not have, btw, but that's another issue), can fix many problems. It can unite a company with one vocabulary. (Just Do It.) Create real or perceived differences from the competition. (Volvo = safe.) Create loyalty. (Mac vs PC.) Even get Wall St talking. (Absolut just sold for a nice profit.) Advertising doesn't have to be 3 print ads and one TV spot. That's the magic. A campaign may be no ads at all and 100% focused on enhancing customer experience, building loyalty, any number of goals. It depends on what problem needs to be solved, and it depends on the creative team, the media buy, the product, the budget, and the advertiser's belief in the process.
Posted by: Brian | Apr 2, 2008 3:06:32 AM
WOW Keith, Short, Sweet and To The Point!
No Doubt, it is Great advice for those who have been in business for a while and we will keep this in mind.
As somewhat new to this venue, we are always looking for informative tips on marketing. We have a ways to go to measure ourselves by the size of our budget.
Nevertheless, we understand how important the Marketing Budget is!
What is amazing is how that short post generated so many comments with some awesome information relating to The Marketing Budget!
NO Marketing Budget made it so hard to get our ‘Brick & Mortar’ Business going! “I MEAN SLOW!” Therefore, Diversifying and endeavoring to generate additional streams of revenue has brought us to the Internet and we appreciate the goodness of people like you, who are here to help. We will make the effort to peruse your Site to glean all the gems!
Not having any budget (When We Started!) We began our search on finding something with, which to build one.
One thing that caught my eye was a question I stumbled on searching for marketing budgets,
“What Is Better Than Free?”
Nevertheless, we found the answer to be,
“Getting Paid For Doing It”
And this was right down our alley!
And now, we will soon be Cautiously Growing Our Budget!
Thanks again for the Jewel, D. P. Gatten. http://tinyurl.com/2d88ck for more.
Posted by: D. P. Gatten | Apr 5, 2008 9:39:04 PM
