News Analysis: Make Every Penny Count

Marketing, August 27, 2008 | Go to article overview

News Analysis: Make Every Penny Count


Experts offer 10 tips to maximise the efficiency of marketing spend in a downturn.

Marketing budgets - often among the early casualties of a recession - are declining faster than at any time since 11 September 2001, according to the IPA's most recent Bellwether Report.

Yet, as Hugh Davidson, author of Offensive Marketing, points out: 'Studies show that brands that maintain or increase marketing spend in a recession tend to do better than their rivals in the long run.'

He cites Reckitt Benckiser's results as an example. Due to strong NPD and heavy marketing support, the company's sales rose 20% between 30 March and 30 June.

However, to escape hatchet-wielding finance directors, marketers must take steps to make their spend more efficient in ways that don't harm demand. Marketing asked a panel of experts for their tips.

1. Streamline your processes

'Our research shows that most companies can make 10%-20% efficiency gains or more, without harming demand, by overhauling inefficient systems and processes,' says Robert Shaw, professor of marketing metrics at Cass Business School. 'For example, you can cut up to 50% from production costs by eliminating costly reworking, additional print-runs, and bureaucracy that involves one piece of collateral being reviewed by 100 people.'

2. Manage agencies more tightly

Clients should push media agencies to justify their choice of media in financial terms, says Shaw. 'It's amazing how many brands still target difficult-to-reach markets through ad spots in Coronation Street, for example,' he says.

Tim Ambler, senior fellow in marketing at London Business School, cites market research as one area to cut back on. 'A lot of this is done in a ritualistic attempt to 'keep in the touch with the customer', but doesn't affect what the company does,' he says.

3. Do the maths

'Most companies have a portfolio of brands, and if they know how big they are, their profit margins and so on, they can quickly get a rough idea of which ones are worth supporting and which aren't,' says Les Binet, European director of DDB Matrix and author of Marketing in the Era of Accountability. 'If more marketers did those sums, they would realise how much of what they do is uneconomic.'

4. Optimise your price/promotional balance

Karl Weaver, a director at Data2Decisions, a marketing consultancy that uses statistical techniques to help clients manage their budgets, advises companies to wean themselves off price promotions. 'Advertising can help reduce responsiveness to price,' he says. 'So advertising and price promotions can cancel each other out, particularly if the advertising is run after a promotion. …

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