bottom line, Chief Marketing Officer, Lifetime value of the cutsomer, LTV, Markeing ROI, Marketing Effectivemess, marketing performance, Net Present Value, ROI Marketing, segmentation

How Long Does a CMO Live?

The Book, What Sticks, Why most of the Advertising Fails and How to Guarantee Yours succeeds by Rex Briggs and Greg Stuart, says that a CMO tenure is getting shorter every year. His career, not due to stress from business, as a Chief Marketing Officer, is an average of 2 years.

Not a good thought for aspiring marketing professionals.

Increasingly, CFO and CEO are professionals with Finance background, and therefore the approach towards marketing has changed. Marketing needs to be more accountable (read predictable) and linked to balance sheet to forecast figures to the shareholders. Marketing effectiveness or Marketing ROI is the buzzword, each dollar spends needs to be accountable and marketing more scientific and metrics driven.

Hmm so there is an important question does a good Marketing ROI bring Marketing Effectiveness? Does linking Marketing to finance create the robust marketing environment, on which CMOs can jump to be CEO and be business drivers? The answer doesn’t lie so much in semantics and formula equation. It requires the understanding of what does what.

I was reading an article- “Marketing Effectiveness. It’s more than ROI” by Gordon Wyner, EVP Milward Brown. Great article which helps to define Marketing effectiveness. He states the following as the limitations of ROI…

1. ROI has two important components “R”, and “I”, Investments. Both should have proper definition and we know that the reality is otherwise. And even when “R” & “I” can be pinned down precisely, there would still be some decision that will have to be made, such as strategic decisions, macro environment impact.

2. Segmentations is one of the three pillar of marketing. The segmentation decision is extremely important and should be financially driven. However, measures of current use, purchase, revenue, and profit can always predict the Lifetime Value (LTV) of a customer.

3. It is very difficult to predict the consumer behavior change, new trends and extract the financial implication.

4. Product Designs can defy ROI calculations for several reasons. And as such only manufacturing cost can be determined.

Even if we best approximate the ROI, one won’t be able to deduce the whys was the ROI bad. An ROI analysis that focuses only on the end result would report a financial failure, but will not shed light on why it happened.

The concept of ROI is straight forward. Whether expresses as a percentage of investment or as NPV (Net Present Value) of cash flows overtime, ROI is an important component of the overall process of linking marketing to Finance. But it is not a substitute for a great understanding of how marketing works to achieve business objectives.

Financial Results is not what you see on the Balance sheet/Powerpoint presentation but in the field and it is that moment of truth that decides the result.

Maybe more CMOs need to go out in the war zone, where the real battle of share is and not just appreciate a good presentation in his swank cabin. Maybe this moment of truth will help them fight the battle harder!

Cheers!

Digital Marketing, digital marketing agency, how should one decide about a new digital agency, new media agency, traditional vs digital agency

Where the suckers moon!

Fortune lies not in the deep

But in the shallows

Where the suckers moon.
These are opening lines from Randall Rothenberg’s epic on traditional advertising agency. The great book is aptly titled- The life and death of an advertising campaign.

While you ponder over the opening lines of the book (WTSM is about Wieden & Kennady’s account- Subaru), let me bring you to the moot point- how will does one evaluate a digital marketing agency.?

Traditional marketing agency’s performance could be linked to market share, volume growth, top of mind recall; the point is it can be tracked to the business performance matrix. How does one link digital marketing agency to business? Why would you one digital marketing agency the other?

Lets take a traditional agency for example. A typical pitch will provide following range of services…
1. Brand Planning or Account Planning: high level strategy to connect macro environment to consumers and business reality.
2. Communication development/Campaign creation: Theme based TV Films, Press ads, Outdoor etc
3. Competitive and consumer information (Hmm, too much to ask for the retainer?)
4. Media Planning and Buying
5. Below the line expertise
The agency is marketing extension to translate the strategy into effective communication and get the message across the consumer. Traditional agency is the brand custodian, creates cutting edge brands. Hence the performance of such agencies in very good FMCG companies will be linked to market share, volume growth and consumer related recall. There can be a science to choose a traditional advertising agency.

What about a digital agency. What I quickly did a random poll on linked to find out how should one measure the performance. I received many answers, but only to confirm my suspicion that there is no formula to evaluate a digital agency. But here are some salient pointers from the poll (there are only execution led)

1. The digital agency must have both capabilities- marketing and technology

2. Should be good with numbers (read analytical). If there is a proprietary tool, it is great as it will help to align and measure objectives.

3. The agency should be able to deliver some good-looking work.

4. Passion for digital.: there is other school of thought as well. I have seen a number of guys coming into this field due to the tendency to try “something new”.

5. Media Buying

These are few good pointers to start with for a digital agency, and this is it. Believe me there won’t be other parameter. Maybe CTRs, media value ads etc.

However, since there are no great case studies on effectiveness of digital marketing campaigns and lasting impact of creatives, digital looks likely to remain at the bottom of the priority chain. What digital agencies lack is the planning approach like the traditional agencies. This would mean integrating consumers, measuring impact of the communication and coming up with traditional media and digital media synergies.

What could make a bigger impact is the utilisation of research (such as dynamiclogics, which I spoke about in my earlier post), real consumer trend mapping (such as twitter) and measuring the buzz. Go beyond the CTRs and ROIs, and measure consumer opinion (social media marketing).

Maybe, we would also need clients who can support and appreciate the digital marketing efforts. I guess a wishful thinking!

Till then we will only keep things simple- where the suckers moon !

Cheers!

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India Internet Industry Projections, India Online Population, internet usage in china, internet usage in US, world internet population, world internet users

One Billion Users Now!

An encouraging trend, which I noted on eMarketer article; these are the actual quotes from the article (Lisa E. Phillips, eMarketer senior analyst)

“China has taken the lead in the number of Internet users worldwide, and today only about 20% of its residents are online. While China will continue to lead the world in Internet users, look for India to eventually overtake the US, Japan and Germany.”

The second billion will come from India 🙂

Cheers!

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