Looking to Cut Marketing Costs?

  |  July 9, 2012   |  Comments

Putting the squeeze on creative is not the answer.

Now more than ever organizations need to know exactly how marketing is contributing to the bottom line. This trend toward accountability and efficiency has led to an almost relentless crusade to cut costs in marketing, and the latest target is creative content production - sometimes referred to as "non-working media spending."

A term from "Mad Men" days, so-called non-working media spending traditionally refers to money spent on agency content creation fees. "Working media" is the money spent to run that content. I recently read an article on the subject that gave me pause. If you're in marketing in any capacity, perusing this article is worth your time. The article outlines how procurement staffs are advising that non-working outlays should be limited to 10 percent to 15 percent of marketing budgets. "Really?"

If the goal for marketers in a digital world is overall success and return on investment (ROI), then the strategy of choking the life out of creative content production is marketing suicide. Marketers need to create content that's head-turning - meaningful, useful, and fun - so that people want to engage in "random acts of marketing" by passing the campaign along, riffing, and amplifying. (Note to procurement specialists: this comes at no extra charge.)

It's true that agencies need to morph and re-bundle their creative services. They must focus more on fast-growing channels like social and mobile. And, they must devise flexible creative strategies that can be personalized to speak to individual consumers based on location, gender, and interests - wherever they are across channels. Faced with this mountain of requirements, should the industry really be considering clipping the wings of creative content production? "No!"

The good news: there are significant cost savings to be had. The first step should be to eliminate the waste in working media spend that emanates from unnecessary and often numerous intermediaries involved in media buying. In a recent survey from the World Federation of Advertisers, the majority of respondents (70 percent) report that their agencies add layers of costs when it comes to media buying. Programmatic buying tools and comprehensive analytics have proven to dramatically lower the cost of executing a media plan by 47 percent on average, while at the same time increasing effectiveness through real-time intelligence and targeting. Marketers can use the payoff to create the next great campaign, tailored to each individual audience - the one the world can't stop talking about.

Another key to reducing media waste is data management and advanced analytics. Indeed, I've spoken to marketers who report that better understanding audience behavior and creative impact across a media plan can result in an average 20 percent savings in the media budget. The tools to do this are available today and they are inexpensive, thanks to the cloud. Many foresee such tools changing how advertisers manage media investments.

In fact, a recent report from Forrester Research noted that "media buying is no longer the sole purview of media agencies, and clients have many more choices when selecting partners for optimized digital media management." The report states that 90 percent of agencies believe analytics (e.g., media mix modeling, customer lifetime value) will be a core service offering in five years. However, on average, they currently dedicate just 9 percent of staff to analytics/customer intelligence.

Demand-side tools, rigorous data analysis, and emerging areas like multi-touch attribution can dramatically reduce media waste. So, as an industry, let's stop harping on the cost of content creation and start talking about how to use tools and analytics to reallocate expenses in a digital, social world. Digital marketers need to adopt strategic technologies that allow them to capture and analyze their available data so they can communicate creatively, in a genuine voice, to their target audiences.

Want to be the most interesting brand in the world? Then create the most interesting content in the world. And fund your efforts through the savings realized by the new media management tools.



Mike Baker

Mike Baker is president and CEO of DataXu. He has been pioneering digital media platforms for 20 years and is a widely recognized thought leader in interactive advertising. Before cofounding DataXu, he was vice president at Nokia, where he created and ran Nokia Interactive. Baker came to Nokia through its acquisition of mobile advertising leader Enpocket in 2007, where he was the founding investor and CEO. Baker was previously a partner at venture capital firm GrandBanks Capital. He has also been executive vice president at CMGI and Engage Technologies, an innovator in online advertising and behavioral targeting. Baker holds degrees in law and telecommunications management.

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