Home  › Marketing › Strategies

What Madison Avenue Can Learn From Wall Street

  |  September 23, 2010   |  Comments

The demand for increasing financial advertising accountability is forcing marketing departments to develop and learn new tricks of the trade.

If you overheard a conversation between two CMOs you would likely hear terms like bid, performance, and optimization. In fact, according to the February 2010 Fuqua/AMA CMO study, "ROI concerns dominated…" the topics CMOs wanted to discuss among themselves. This emphasis on marketing return on investment may seem more appropriate on Wall Street than Madison Avenue, but this new focus on accountability is a good thing. Since CMOs are spending billions annually building marketing portfolios and "investing" in different marketing campaigns across multiple media types, applying some of Wall Street's portfolio optimization wisdom will help them drive the highest ROI (define) from their advertising efforts. Below are some marketing portfolio optimization tips that would make a marketer from the house of Goldman or Morgan proud.

  • Set the goal - ROI. Common across all advertising efforts should be the desire to drive the most sales or new customers for a given level of advertising spend. While creative can win awards, the acid test for great marketing is whether or not it earns the advertiser a positive return on monies invested. The implication here is that the right metric to compare elements of a marketing portfolio is each component's ROI. When deciding where to invest advertising or marketing dollars, yielding the highest return should be the goal.
  • Measure results. With increasing the return of the marketing portfolio as the goal, it is essential to measure and track, as closely as possible, the actual profit of each element of your marketing program. This is easier for direct marketers than it is for brand marketers; however, for both, it requires having the best possible measurement capabilities on hand. It is difficult to imagine anyone investing in a mutual fund that could not describe its returns. In today's marketing environment, none of us should invest in advertising programs that are not measured.
  • Account for risk. Returns are just part of the portfolio optimization equation. Proper media mix planning must account for the different likelihood of success (risk) surrounding a particular marketing effort. For example, the results of search campaigns are highly quantifiable and predictable. Conversely, laying big bets on a Super Bowl ad amounts to a marketing Hail Mary. They may generate a ton of buzz and sales, or fall flat. Allocate marketing funds first to tried and true programs that generate consistent positive returns, then take on increasing levels of uncertainty (risk).
  • Be disciplined; don't fall in love with a media investment. Advertising and marketing are creative endeavors. We all have our favorite commercial, tag line, display advertisement, etc. But personal preferences should yield to the cold, hard financial facts. If a marketing campaign, creative, or program is generating sufficient sales, invest more. If it isn't, as a good trader would say, "dump it."
  • Don't put all your eggs in one basket. There is no magic stock that can optimize a portfolio. Similarly, there is no silver bullet media that can optimize a marketing campaign. Great marketers must build an integrated marketing plan by testing and combining traditional media (TV, print, radio) and emerging media (search, e-mail, social, display) to create an optimal portfolio.
  • Don't overpay. Similar to well-liked stocks, some popular media is overpriced. Getting prominent placement in key media like search increasingly demands outbidding the competition. But while being at the top of a search results page has emotional appeal, if the ROI is negative, let the competition hurt their profitability by overbidding.

The demand for increasing financial advertising accountability is forcing marketing departments to develop and learn new tricks of the trade. By borrowing some of the hard-learned lessons of Wall Street, the Madison Avenue creative community can accelerate this evolution and drive better results for their marketing investments.


ClickZ Live Chicago Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, Oct 3 to take advantage of Early Bird Rates!


Jonathan Shapiro

Jonathan was CEO at MediaWhiz until July 2011. He was responsible for guiding strategy and operational execution, including overseeing the integration of the company's suite of marketing services, leading the development of new and unique capabilities, and ensuring the organization delivered better results for its performance marketing clients.

Before joining MediaWhiz, Jonathan was president of Lillian Vernon Corp., where he was responsible for the management of the company and its subsidiaries. Lillian Vernon was sold to a group of investors in July 2006.

Previously, Jonathan was the chief strategy officer of DoubleClick, where he was in charge of setting strategy and overseeing M&A. He began his tenure at DoubleClick as vice president responsible for the company's Internet Advertising Network before being appointed senior vice president of the company's Abacus online division, where he created DoubleClick's data strategy and oversaw development of new online targeting products and services.

Additionally, Jonathan was the executive responsible for developing United Media's original Web businesses (The Dilbert Zone, Snoopy.com, and Comics.com), and was a senior consultant with McKinsey & Co.

COMMENTSCommenting policy

comments powered by Disqus

Get the ClickZ Marketing newsletter delivered to you. Subscribe today!



Featured White Papers

IBM: Social Analytics - The Science Behind Social Media Marketing

IBM Social Analytics: The Science Behind Social Media Marketing
80% of internet users say they prefer to connect with brands via Facebook. 65% of social media users say they use it to learn more about brands, products and services. Learn about how to find more about customers' attitudes, preferences and buying habits from what they say on social media channels.

An Introduction to Marketing Attribution: Selecting the Right Model for Search, Display & Social Advertising

An Introduction to Marketing Attribution: Selecting the Right Model for Search, Display & Social Advertising
If you're considering implementing a marketing attribution model to measure and optimize your programs, this paper is a great introduction. It also includes real-life tips from marketers who have successfully implemented attribution in their organizations.


    • Tier 1 Support Specialist
      Tier 1 Support Specialist (Agora Inc.) - BaltimoreThis position requires a highly motivated and multifaceted individual to contribute to and be...
    • Recent Grads: Customer Service Representative
      Recent Grads: Customer Service Representative (Agora Financial) - BaltimoreAgora Financial, one of the nation's largest independent publishers...
    • Managing Editor
      Managing Editor (Common Sense Publishing) - BaltimoreWE’RE HIRING: WE NEED AN AMAZING EDITOR TO POLISH WORLD-CLASS CONTENT   The Palm...