Efforts to get better value for the marketing dollars that companies spend tend to be externally focused, since it is often easier to gain benefits that way. But companies looking to achieve material savings also need to take a hard look at their internal operations. How efficiently a company operates will inevitably affect its agencies’ costs as well; inefficient marketing processes are ultimately reflected in the rates that companies pay their agencies. Internal cost-cutting opportunities, however, can be particularly challenging to reap, as they involve changing not just existing company processes but employee behavior and mindsets as well. Yet the savings can be significant.
The 1997 merger of beverage giants Guinness and Grand Metropolitan saddled the new company, Diageo, with two very different sets of marketing structures and processes. But Diageo took this as an opportunity to redefine how it could best build and maintain its current and future brands. From two businesses essentially led by the finance function, the new company transformed itself through the “Diageo Way of Brand Building.” Thanks to strong support from senior leaders, Diageo defined a common approach to marketing, ranging from consumer-driven strategy formation all the way to media execution, and made sure all its marketing people were trained in and carried out the new approach.
The need to constantly examine and redefine marketing practices and processes is just as critical for companies that haven’t undergone such a radical transformation. A formal approach to brand building not only builds better marketing leaders who speak the same language; it also enables more effective business operations. Unclear and inconsistent processes are expensive, costing money that could be better deployed toward more effective consumer-facing activities. Common sources of inefficiency include unclear brand strategies, vague and poorly developed decision rights regarding content creation, unstructured agency-engagement processes, and poor briefing practices. (See Exhibit 2.)
Strategy. Many companies do not articulate their brand strategies in a clear, standardized manner, which results in conflicting messages to agencies and inconsistent content. Creating powerful brand strategies demands that marketers articulate a clear business objective for each brand—expanding the consumer base by increasing trials, for example. Based on those objectives, they develop the deep insights needed to identify the consumer behavior they want to change. Finally, they form specific execution plans to bring about the desired change.
The highest-performing companies make sure that every brand and message reinforces an overall brand strategy and does so in a regular, consistent manner, using a formal process that allows senior leaders to evaluate all the company’s brands holistically. Once the strategies have been reviewed, senior executives should establish a process for explicitly evaluating each brand and location in terms of potential value and then prioritizing them to better allocate marketing resources.
Content Creation. One of the biggest and most common sources of inefficiency is a lack of clear decision rights regarding the creation of new content, especially for TV, which is typically the most expensive. Part of the problem comes from the marketing culture at many companies, where brand managers who create content are seen as heroes. This tendency can encourage managers of small brands or markets to create their own new content, rather than adapting or adopting global copy to meet their needs. In such cases, the size of the media buy is unlikely to justify the cost of producing the ads. By establishing specific guidelines and decision rights about who can create content and when, companies can more effectively prioritize their marketing resources and manage their spending more efficiently.
Agency Engagement. Before brand managers start on an external project, they should insist on working out a signed and approved SOW with the chosen agency. Countless CMOs have been shocked to receive huge agency bills because the brand manager never negotiated an SOW. A clear, agreed-on SOW eliminates any misunderstandings with the agency regarding the project budget and ensures that the company gets real value for its money. The most effective companies typically coordinate the annual SOW process for their major agencies with their budget cycles.
Agency Briefing. When an agency is expected to create new content, it is critical for brand managers to put together a clear and effective brief. Poor briefings typically result in the agency’s having to rework content, driving up costs and fees.
To ensure consistency in brand messaging, the cornerstone of every brief should be a clear statement of the company’s overall brand strategy. This should be augmented by a clear description of the target consumer, the behavior that the brand manager is trying to trigger or change, and clear guidelines regarding the metrics that will be used to measure the ad’s effectiveness. Once the brief has been finalized internally, the brand manager and other key decisionmakers should discuss it with the agency’s creative team. Providing input to the agency on which channels might be the most appropriate for connecting with the desired consumers and reaching the ad’s goals can further increase the campaign’s return on investment.
Making your marketing dollars work harder involves disciplined management of both external agency partners and internal marketing practices. It is critical that companies view the effort holistically—the internal and the external are tightly interconnected and must be worked out in concert. Companies that succeed at rationalizing their agency rosters, understanding what they’re spending with agencies and why, and clarifying their internal marketing processes can reap greater returns on their marketing spending and put the money they save toward consumer-facing activities.
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