How to invest in better marketing - Part one
Editor’s note: This is the first in a seven-part series on managing your marketing portfolio. Part two will publish next Friday.
There are lots of similarities between a marketing portfolio and an investment portfolio. In this series, we’ll examine how marketers -- from small businesses to Fortune 500 companies -- can rethink their investments in social media, SEO, SEM, web marketing and traditional advertising channels such as TV, radio, print, out-of-home and public relations. That includes:
how a fund manager’s “style shift” is as dangerous to a portfolio as “messaging drift” is to a company’s brand equity.
how a marketing manager must diversify his/her portfolio in much the same way as a financial adviser.
how a marketing strategy, like an investment strategy, must have a 360-degree approach, balancing the right asset classes (media channels) for optimum results -- while keeping in mind your client’s risk profile.
how “single voice” integration builds brand interest like a Certificate of Deposit grows with compounded interest.
how new investment ideas like a “bucket strategy” and traditional ideas like “rebalancing” are important tools for the chief marketing officer of a company.
how a “laddering strategy” in bonds is similar to a “media mix” and why “tactical investing” should be a small component of every marketing plan.
how you should research your social media followers like you do your fund managers, and how a change in marketing management can shake up your brand equity like a change in fund managers can affect your investment portfolio.
how marketing executives today have as much access to big data as Wall Street has always had, and what kinds of returns make sense.
Let’s get started!
Like an investment manager, a marketing manager needs to diversify his/her portfolio of assets.
Let's face it: No professional financial adviser would recommend that you invest your entire portfolio in just one asset class. That’s because there is no way of knowing if one asset class can perform best in all situations, and at all times. Will bonds outperform equities? Will small caps outperform growth or mid-caps? Will domestic investments outperform foreign investments?
It's no different in marketing. If you invest your marketing dollars in just one asset class (one media channel), you are betting the farm that it will produce the greatest yields. Just as diversification is key to any solid investment portfolio because it spreads your dollars across multiple asset classes -- adding greater stability while reducing risk -- the same is true for your marketing portfolio. Diversifying your marketing dollars across many media channels (assets) as possible -- including paid, earned and owned -- gives your brand a greater chance of success, so long as the economics make sense for your business.
Before a marketing adviser begins a client engagement, he/she needs to ask questions in much the same way as a financial adviser:
What is your risk tolerance? At what point would you begin to get nervous, if your portfolio was down 10%, 25% or 50%? Are you investing with a particular long-term goal in mind? Your child’s college education or wedding? Retirement? Vacation home? What are your current expenses versus revenues? Debts? Short term and long term cash needs?
Similarly, your chief marketing officer or advertising agency should be asking why you’re investing in marketing. Is it to boost market share, profit margins, sales, introduce a new product, enter a new market, etc. Are your sales and marketing value driven (versus product/functionality driven) from a target customer's perspective. Have you integrated this in defining your brand? What are your key performance indicators?
Are you a skilled and knowledgeable investor? Do you know the difference between mutual funds, ETFs and index funds? Corporate bonds and municipal bonds? Do you understand the reasons for diversification? How much are you allocating for your 401K or IRA every year?
Similarly, the marketing adviser should be asking the client: What formula are you using to establish a marketing budget? Is it too little, too much? Have you segmented your target audiences thoroughly? Do you know what each channel is capable of doing?
Paid, earned and owned media? Do you have the analytical capabilities to align your marketing strategy with your most promising target segments (assets) or are you trying to be "all things to all people?"
Are you influenced by negative reports in the media? Are you prompted to sell your equities when you hear bad news about the economy, war, oil, governmental upheavals, market crashes in Europe? Can you turn off the noise?
Similarly, a marketer needs to do what is necessary to engage its audience in the right social channels, as well as traditional channels. Is your social media strategy well thought out? Is your social voice effective enough to "influence the influencers" and convert them into indirect channels for your brand? Can you turn up the noise?
Do you look at all the asset classes and deploy a diversified strategy based upon your risk tolerance and goals?
Similarly, do you have a solid media mix? Does your current marketing leadership believe in a 360-degree approach to leverage all your media assets and communicate your unique selling proposition in a “single voice” throughout all your customer touch points?
Is your financial adviser a recognized leader in the industry? Have you checked his/her credentials and spoken to some of their clients? Is your decision to hire your adviser based upon fees or expertise?
Has your marketing adviser demonstrated an ability to execute brilliantly, capable of showing client results for their efforts? Is your decision of whom to hire based upon fees or expertise? Would a more expensive ad agency deter you even if they have the credentials and client results to warrant higher fees?
Check back next Friday for more insights on this topic.
Stuart Dornfield is an award-winning freelance creative director and copywriter with 40 years experience in marketing, strategy, advertising and production. A former senior vice president and creative director of Zimmerman Advertising (Omnicom), the 13th largest agency in the U.S., and the co-founder of Gold Coast Advertising, the third largest agency in South Florida, Stuart now offers his creative services and marketing insights as a freelancer with offices in New York and Miami.