Marketing investment as a percentage of sales varies significantly from brand to brand. Direct-to-consumer brands looking to gain immediate sales can find marketing costs represent more than 30% of their base, whereas more established brands may allocate between 5%-15% (P&G is famously at 11%). Increasingly, that cost is moving into areas such as ecommerce, customer experience, digital marketing and programmatic.
Much of the focus has been on how marketers can make that investment work better. There has been an abundance of re-pitches to negotiate fee structures in a more modern and transparent way. A series of brands have taken back some of the planning and execution of the budgets to an internal team. And most have restructured their internal and external resources. When we look at programmatic in Europe where 39% of advertisers have in-housed completely (although I believe this skews to DTC brands), 42% of which say it’s because of cost-efficiency.
However, what seems to be missing in most of these initiatives from brands is the ability to maximize capability. When you become incredibly price sensitive, everything appears to be a commodity. A clear example of this is how brands consider their external suppliers and the costs in which they garner. They’ll routinely benchmark salaries, overheads and profits against industry norms (often using consultants to support this), effectively treating talent and culture as one and the same. That can then lead them to make in-housing or supplier decisions that are fundamentally flawed.
From a practical programmatic perspective, the focus has been on transparency, ranging from logging into programmatic tools all the way through to supply chain auditing (in which there are often huge gaps). Transparency should not be a differentiator for a supplier or technology in 2019. If transparency is no longer a differentiator, then capability is. Brands need to start assessing their overall marketing capability beyond cost.
You can distill this down into three key elements: people, process and technology.
Every employee is different, and their relationship with their workplace is unique. Observing how they feel about their employer and how the culture allows that team/individual to perform is absolutely critical to successful capability. For example, programmatic is pretty exciting (I recognize I’m biased), but imagine if the person working on your account just comes in to do their job because the culture doesn’t reward success or encourage enjoyment. Brands won’t get the best employees since they’re potentially the cheapest line-items on a spreadsheet.
The way in which employees are remunerated is a factor that also ties to culture: frequency of pay review, performance-based incentives and value-adding company benefits. These are all things that enable a brand to get a great team that wants to challenge the norm and push the business further.
Selecting and implementing a technology partner that can deliver on an advertisers’ business objectives isn’t a simple ticking of the box, despite what large research companies will have you believe. It’s about working with technologies that allow you to customize around your specific challenges and providing a team of experts who are readily available to call upon.
Programmatic technology is not at the point of commoditization yet, so working with the right vendors to ensure they are innovating in the right areas is fundamental to a good programmatic capability. Too often, tech partners fall by the wayside as they don’t keep up with the pace of the industry or find ways to challenge Google.
This is arguably a bit dull topic, but very important. The number of points that need to align to get a campaign live is significant. Having a rock solid process in place pre-/during/post-activation is at the heart of good programmatic capability. For example, understanding the billing process from start to finish, implementation of brand safety approach, pacing and budgeting of campaigns versus a media plan and the derivation of relevant insights are all fundamental to lock down.
Process is the unsung hero of good capability. Without lean processes, automated ways of doing things and rigorous checks, campaigns can go wrong quickly with the combined effect of massively inefficient use of resources, frustrated team members and wasted cost.
There are many more questions that need to be asked to differentiate and find the right capability across the three areas, but fundamentally, if you double down on investing in the best capability structured in the right way, you will see bottom line business growth way beyond some primitive spreadsheet exercise. If you can bring these three areas together successfully and do them exceptionally well, you’ll have fantastic campaigns and customer experiences that drive growth.