CMOs: How to Spend the Minimal Effective Amount on Media

1 West Street New York NY 10004 | 646-545-3891 | [email protected] | networkedinsights.com

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How to Spend the Minimal Effective Amount on Media

TEENWOLF

1 West Street New York NY 10004 | 646-545-3900 | [email protected] | networkedinsights.com

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Marketing executives face growing scrutiny for brand-related spending, especially advertising. No wonder, since marketing is a major corporate budget item that traditionally has been the hardest to understand and measure from a performance standpoint. Quarterly and annual reviews provide some idea of how the money is being spent, and frequency, reach, target rating points, media impressions and press clip counts are among the long-standing measures of marketing effectiveness. But these are be-coming less and less informative as the world moves at Internet speed..

Another unsettling reality marketing executives are all too aware of: Your organization is probably overspending by 30 to 80 percent for the value you’re getting. As U.S. department store magnate John Wanamaker said: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Knowing this, CFOs often go to their marketing depart-ments for spending reductions when quarterly earnings per share (EPS) targets are not going to be met. Marketing dollars effectively serve as a rainy day fund that can be tapped for those extra cents per share needed to meet Wall Street’s expectations.

It doesn’t need to be this way anymore. Through social media and other channels, consumers are increasingly vocal about their brand advocacy (or detraction), intent to act and discussion of past actions. Marketing can leverage these “conversations” to become far more efficient – especially with its spending on advertising. The key is not just to monitor the conver-sation, however—almost any company can do that now with today’s social media monitoring engines

Instead, marketing—and by extension, media planning and buying—needs techniques and analytical capabilities that cut through the conversational clutter to identify trends and perform predictive modeling that not only captures the pulse of the marketplace now but offers valuable insights as


Overspending

30-80%Your organization is probably overspending on marketing for the value you’re getting from your media by 30 to 80 percent.

Businesses today have access to rich data and reliable metrics for managing business performance in real or near-real time. Inventory turns. Cycle times. Days sales outstanding. In fact, business intel-ligence capabilities give today’s executives a good grasp of virtually every aspect of operations. With the help of technology, marketing executives also have been able to better understand the perfor-mance of many aspects of marketing. However, social media represents a new frontier in terms of how people communicate their perceptions, opinions and preferences about virtually any topic, including a company’s brand, products and services. In this paper, we explore a new generation of analytics capabilities that offer marketing and media executives practical ways to mine the rich social media data that’s available today and use it to measure and improve marketing performance.

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to where the market is moving or where new markets are likely to ap-pear. Armed with this information, marketing executives can identify the minimal effective amount of spending needed to drive the greatest market awareness.

This new form of “marketing intelligence” can dramatically reduce wasted spending. As a result, such a shift in spending effectiveness can contribute directly to earnings per share improvement. Marketing can finally – and with far greater accuracy – prove its accretive value to the enterprise and shareholders.

Right message, right place, right timeFor decades marketers have considered television advertising to be the major driver of awareness. But today highly engaged, potentially massive audiences also can be found in many other places, so television advertising isn’t the only option. More than half a billion people, a 12th of the world’s population, are connected on Facebook. Twitter has 200 million users.

Numbers like these demand that marketing executives think about using their resources differently. It’s not just about appending social media to traditional ad buys, or even integrating the two. Instead, marketing execu-tives can start using their customers to help sense and inform what aware-ness and promotional activities should be done in marketing and which of those will be most effective in reaching their exact audience.

Media buying can be made hyper-efficient by abandoning the traditional “spray and pray” approach and instead finding out exactly when and where to use it – the times and places that targeted consumers will not simply hear marketing’s messages but be highly receptive to them.

Executives can then identify the most valuable components of the market-ing arsenal – the right messages – and sequence them in ways that both resonate with target audiences; optimize paid, owned and earned media; and deliver measurable, substantial improvement in marketing ROI.

The two largest portions of the marketing budget typically are develop-ing content and purchasing media. Being efficient and effective in both of these processes boils down to delivering the right message in the right place at the right time.

Optimizing marketing plans with audience intelligence A major network wanted to use social media to “organically” grow an audi-ence before the premier of a new television series. The network engaged Networked Insights and quickly discovered that its measurement tools and perception of community management in social media extended only to its owned web properties. This self-focused point of view is not uncom-mon because it’s shaped by the technology an organization can access and control. However, this limitation has to be overcome to truly understand an audience across the social web.

More than a 12th of the world’s population is connected via Facebook.

Twitter now has 140 million active

users and 340 million Tweets a day.

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As the show premiered and entered its first few weeks, our project to maximize the network’s social media audience quickly became a real-time feedback loop that informed many decisions. Two significant examples – one related to content creation and the other to marketing – demon-strate the power of a network in sync with its audience. First, the insights gathered from social data allowed show producers to instantly understand the reactions of viewers and alter postproduction techniques to eliminate dissonant moments that were impeding the audience’s suspension of disbelief. Second, social data took the guesswork out of show marketing by revealing the characters and plotlines that were resonating with viewers.

An NCAA slam dunkOne consumer services company tried to capitalize on March Madness by buying exclusive advertising rights to TV broadcasts of games, at a cost of about $42 million. The objective, of course, was to dominate its category during the three-week NCAA basketball tournament that included a $10 million media buy. A locked out competitor asked Networked Insights to search for another way to get in front of tournament fans.

We used social media data analysis to build a strategy for reaching this target audience at a fraction of the price. We showed the company how marrying well-placed digital advertisements with highly desirable online video, aligned to the topics that drove online conversation, could create more impressions than the $10 million media buy. By modeling the overall ripple effect and social reach of that “sequenced approach,” we proved that a $2 million paid media investment would generate the same amount of reach and brand awareness as the $10 million spent on traditional ad-vertising produced. Viewed another way, that’s about $8 million that could have been spent on other priorities, or taken to the bottom line to boost EPS. A slam dunk indeed.

Reaching NFL fans without an NFL media budget Today’s fragmented media landscape means advertisers can no longer select the TV shows with the most reach and call it a day. A brand’s target audience is now scattered across broadcast, cable and online media properties. And, that audiences is consuming digital content while viewing traditional programming. These trends are making the media buyer’s job exponentially harder.

National Football League broadcasts deliver a premium audience and provide an opportunity to reach many people at one time. But a downside for advertisers is the cost associated with adhering to mass-marketing techniques. As media has evolved, so too have the behaviors of the audi-ence. How can brands and agencies keep up with target consumers who appear to have better technology than the marketers trying to connect with them?

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#12 Cornellover

#5 Temple

#12 Cornell over

#4 Wisconsin

3.31.10

Cornell

Social loves an upset.

3.13.10 3.19.10 3.25.10 3.31.10

Northern Iowa

#9 Northern Iowa over

#8 UNLV

#9 Northern Iowa over

#1 Kansas

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TV analysts from Networked Insights examined shows that NFL fans discuss across the social web to identify more economical alternatives for reaching the big game’s audience. Shows like “Fringe,” “The Office,” “Community,” “The Simpsons” and “Family Guy” were among the most mentioned. For brands and media buyers, this discovery supports more informed decision making. The result is a more efficient media plan that maximizes the ef-fectiveness of your spend.

How to make it happenWhat can you as a marketing executive do to set your company on the path to hyper-efficient spending on marketing? A good place to start is by identifying the minimal effective amount your company needs to spend on marketing to reach the awareness goals it seeks. This is a critical new concept for marketing executives to understand.

The methodologies and technology that enable the analysis that can give marketing executives this insight have only matured within the past few years. In light of this, a valuable next step is to conduct a pilot program to begin identifying inefficiencies and realigning resources to the rap-idly changing, social media-infused marketplace. Typically, we find that companies which undertake such pilot programs can, in a very short time, improve the efficiency their marketing spend by 10 percent or more.

Begin to tap the true value of marketingCFOs are sometimes grateful that marketing provides a piggybank their company can draw from to shore up earnings. But they also know that the flab in the marketing budget is stark evidence of costly, continuing inef-ficiency.

Consumer analytics can help marketing executives communicate with their CFOs and other non-marketing executives in a language those other execu-tives understand. In this way, for the first time, marketing executives can articulate the minimal effective amount needed to spend on their market-ing initiatives. Placing the right message in the right place at the right time based on quantifiable real-time “marketing intelligence,” companies can economically reach audiences that are tuned in and responsive to targeted messages. Spend less, sell more—now there’s a concept.

Investment summaryExample Worksheet

Total savings on advertising

40,000,000

Number of shares outstanding

534,000,000

Impact on EPS 8 cents per share

Questions about this report? Want a free consultation on how real-time data can improve your media planning and other marketing? Contact us

“ For brands and media buyers, this discovery supports more informed decision making. The result is a more efficient media plan that maximizes the effectiveness of your spend.”

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