“How can you elevate the perception of the value of marketing to the bottom line in the boardroom?”
This is the question we’ve been asked to tackle this week and, for most of you, both in-house and agency side, this issue represents an ongoing boardroom battle.
You can address this issue both quantitatively and qualitatively depending on the nature and make up of your board. Today more and more organizations are elevating the marketing department to board level so the level of understanding around its importance is already there. However, if your board is dominated by finance and operations members then you need to have the numbers to hand to prove your point.
As a benchmark, 3-7% of a companys revenue is spent on marketing communications. This number can fluctuate depending on the size of the company, the state of organizational maturity, if a new product or service is being launched or in times of crisis. That spend will cover a number of marketing practices from marketing collateral and content development, to optimizing the website and demand generation – the majority of below the line activities. Advertising tends to have its own separate budget.
This benchmark spend doesn’t tell your board what value they are going to get back. That’s why we would advocate a different approach where you shift the focus of your argument away from the ‘Value of Marketing’ and focus it on the ‘Power of Reputation’.
Consider the following facts:
- 22% of corporations appearing on two of the three most credible reputation rankings had shareholder returns 13% higher than competitors, 11% ahead of S&P 500
- Companies with good reputations outperformed companies with poor reputations on every financial measure over the last 5 years
- Fortune’s 10 Most Admired Companies showed an 8% edge in annual shareholder returns vs. the S&P 500 over the last 5 years
- Fortune’s 10 Least Reputable Companies ranked 31% below the S&P 500 in annualized returns during the last 5 years
- A 10% improvement in reputation is worth between 1% and 5% of a company’s market value
- 91% of customers would prefer to buy products/ services from a reputable company
- 77% of customers would actively boycott the products/services of a disreputable company
- 60+% of customers would “definitely purchase a product or service” from companies ranked as having strong reputations
- Only 5% of customers are likely to purchase and/or recommend a product or service from companies in the bottom 5% of list
These facts should resonate with those board members looking for the quantitative facts as well as those open to a more qualitative argument. By using this approach the board should stop asking what the value of marketing is to their company and start questioning if they can afford not to invest in is reputation?
To optimize the power of your organizations’ reputation contact Louise Frosell at LFX Marketing on email@example.com.
SOURCES: Prophet Consultancy 2010; Reputation Institute 2004; Best Practices in Corporate Communications 2003; CRO Magazine; Harris Interactive; “Generally Accepted Practices in PR” Study Annenberg School of Communications, University of Southern California
Let’s start with the obvious… It’s made up of many layers. I mean two things here. Firstly, the different layers of practice both above and below the line – advertising, PR, demand gen, events, email, digital, social. Secondly, the requirement to layer, or integrate, these different practices in order to create multi-touch campaigns that will give optimal results.
It can be seen as flaky… on first appeareances an onion appears flaky. So can marketing. How many times have you hear it refered to as ‘fluffy’ (just another word for flaky in my opinion). This couldn’t be further from the truth. An integrated marketing campaign with clear objectives, a well-defined message and focused tactics that resonate with the target audience will deliver strong ROI. The industry average for marketing communication spend is between 3-7% of revenue. This wouldn’t be the case if, like an onion, marketing didn’t have many depths of layers lying beneath its apparently flaky surface.
It can bring tears to your eyes… I put this one in here for all practising marketers out there who will, at some point in their careers, have been brought to tears of either joy, or hopefully not so frequently, frustration by the outcome of their campaigns.
It adds flavor… without marketing brands wouldn’t exist. Marketing defines the ‘flavor’ of a brand and translates that ‘flavor’ to a target audience.
It can differ in size and variety… there are many different types of marketing campaigns. The key is to find the one that fits your organization and will resonate with your target audience. And, there is a campaign to fit every budget – you just need to set clear and realistic objectives.
To add layers and flavor to your marketing, contact Louise Frosell at LFX Marketing on firstname.lastname@example.org
How can Marketers can become Chief Ideas Officers?
An influx of information, a plethora of new technologies, and an increasingly savvy consumer is forcing marketers to redefine their roles and become more innovative in their thinking.
Coming up with new ideas that not only help organizations and brands keep up, but gain the competitive edge isn’t always easy. Marketers need to step up and become Chief Ideas Officers, but what does that entail?
Innovate, innovate, innovate
There is not enough stress that can be put on the need to innovate when it comes to creating a successful marketing strategy. Don’t get stuck in a rut and assume that what you’ve been doing will continue to work. As the CMO of Dunkin Donuts recently proved, an innovative approach to their marketing returned the company to profitability last year, and growth accelerated to 7.4% in the 4th Quarter of 2011.
Learn from your peers
Whilst easy to get caught up in day-to-day business tasks, it’s critical for marketing professionals to take time out to network with their peers and learn from the best practice that other organizations are implementing. There are plenty of forums and networking groups that are accessible to all levels of marketing professionals from the established CMO Council to the new Chief Ideas Officer network. Both offer a series of events for face-to-face networking and resource materials to help marketers excel in their jobs.
Think outside your industry
Finding new ideas isn’t as simple as looking to your closest competitor and copying their strategy. The most successful organizations and brands are constantly looking to other industries to see what they’re up to and how those ideas can translate into their own businesses. Take retail for example. The adoption of self-checkout is on the rise but airlines have been using the technology successfully for years. Marketers need to look at their consumers and where their behaviors are mirrored in other industries.
The age of the Chief Ideas Officer is now. Marketers have the opportunity to take control and raise the bar. We’ll be discussing these topics and others at Chief Ideas Officer’s launch event on May 17, 2012 at Miami Beach’s exclusive Soho Beach House. To join us and become a Chief Ideas Officer contact Louise Frosell on email@example.com.