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Evaluating Your Marketing Mix: An Exercise

  |  November 19, 2010   |  Comments

Before allocating your marketing budget, consider this approach to assessing your options.

On top of being massively successful, entrepreneurs like Geek Squad founder Robert Stephens are often blissfully free of academic distinctions. Call it marketing. Call it unmarketing. Call it "doing what works."

Stephens is widely quoted as saying: "Advertising is the tax you pay for being unremarkable." His views were formed from not having any money when he started Geek Squad. What a great story. What a memorable brand. Stephens learned from necessity, but provides an important lesson: advertising investments come in all shapes and sizes, and they don't all look like "advertising."

By and large, marketers must still find customers using an assortment of media channels. But it does raise the fair point that even "non-marketing" budgets can be about marketing. Still, some corporate bean counters misinterpret success stories like Geek Squad's as proof you should cut all marketing expenses to the bone.

Speaking about the ROI of remarkable customer service, Zappos Community Architect Thomas Knoll recently said: "You wouldn't ask: what's the ROI on my marriage!"

You can't pinpoint the ROI on everything. And all potential advertising and marketing tactics cannot be boiled down to a single, fungible good, and measured with the same yardstick.

While weighing these issues, I started with these nagging questions: Why do some companies allocate such a small portion of their marketing budgets on PPC, SEO, and other online marketing initiatives? And why do some companies allocate so much of their budgets on other things like class A office space or Flash microsites without analytics?

How to Evaluate Your Marketing Mix

Marketing budgets can be invested in dozens of different ways and places.

Instead of pointing fingers at managers and company owners for making "mistakes" with their money, we should be more open minded and view potential marketing investments on the basis of several key dimensions:

What is the reach?

  • What is the typical ROI?
  • How reliable is attribution?
  • What is the risk from any fallout?
  • What is the "signaling bonus"?
  • What is the "strategic burden"?

To add some detail to the above, "signaling bonus" is my term for a form of marketing serendipity where a tactic has unexpected additional benefits. A unique work culture leads not only to greater productivity, but admiration in the press. An expensive-looking billboard campaign or golf tournament sponsorship not only reaches customers, but positions your company so that potential partners and investors take you seriously.

As for "strategic burden," companies often underestimate the time, budget, and complexity of implementing tactics that require an integrated strategy. What appears to be a simple tactic turns out to be a much bigger challenge. This strategic burden often comes to light in the midst of projects like website redesigns, for example, and it seems to explain why more "modular" tactics are implemented when other types of projects founder.

Let's undertake an exercise in strategy planning, using these marketing tactics as examples.

Marketing Allocation Playbook: Evaluating Options
 ReachROIAttributionStrategicOutsourceRiskSignaling
PPC ↑↑ Normal Lite/
Tactical
Normal Low Medium
SEO ↑↑ Long cycle Strategic/
Lite
Medium Med Medium
Display advertising ↑↑ Uncertain Strategic/
Lite
Normal Med Med-high
Social media presence ↑↑ Infra Uncertain Stratetgic In-house High High
Website ↑↑ Infra Uncertain Strategic Medium Med High
Conversion improvement Varies ↑↑ Normal Lite Medium Low Low
Work/
corporate culture
Varies Infra Uncertain Strategic In-house Med-high High
Trade show exhibits/
sponsorships
Varies Normal/
Uncertain/
Long
Lite Medium Med High
Note: ↑ = good; ↑↑ = excellent; ↓=low; Infra=infrastructure
Source: Andrew Goodman

In assessing whether a tactic offers a high ROI based on observed experience, you can plug in case studies or your own results. In this table, one or two up or down arrows would denote either good or low ROI.

But ROI isn't always the issue. Building airports, for instance, is a prerequisite to having air travel in a nation. Or buying diapers is part of parenthood. In each case, the investment pays for basic infrastructure.

So, costs to operate your company website may fall into the infrastructure category. Measuring the ROI on having a proper website then would be like measuring the ROI for having sufficient oxygen in the air you breathe.

Zappos, and other clever "unmarketers," are actually a bit disingenuous when they say they don't evaluate customer service costs based on ROI. Anecdotes about their longest ever customer service phone call (7.5 hours) are an approach to creating positive word of mouth and signaling effects. Amplifying their company culture by talking about it is a secondary side effect that only adds to the loyalty effect achieved with the customer service practices themselves.

Looking at seven potential attributes of marketing tactics, it's now possible to go down the list of, say, seven core digital marketing competencies, and add in five other interesting and useful tactics to arrive at a dozen potential investments to be compared along those seven dimensions. Now, instead of a dismissive comment like "I didn't see the ROI there," you'd be willing to concede that many businesses have made use of the tactic appropriately, based on their (usually tacit) assessment of reach, ROI, facility of attribution, strategy orientation, ease of outsourcing, risk calculation, and signaling bonus.

Next time, let's more closely review approaches to evaluating tactics.

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ABOUT THE AUTHOR

Andrew Goodman

Goodman is founder and President of Toronto-based Page Zero Media, a full-service marketing agency founded in 2000. Page Zero focuses on paid search campaigns as well as a variety of custom digital marketing programs. Clients include Direct Energy, Canon, MIT, BLR, and a host of others. He is also co-founder of Traffick.com, an award-winning industry commentary site; author of Winning Results with Google AdWords (McGraw-Hill, 2nd ed., 2008); and frequently quoted in the business press. In recent years he has acted as program chair for the SES Toronto conference and all told, has spoken or moderated at countless SES events since 2002. His spare time eccentricities include rollerblading without kneepads and naming his Japanese maples. Also in his spare time, he co-founded HomeStars, a consumer review site with aspirations to become "the TripAdvisor for home improvement." He lives in Toronto with his wife Carolyn.

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