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Making Your Marketing Dollars Work Harder

October 07, 2013 by Robert Tevelson, Petros Paranikas, and Harish Hemmige
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In This Article
  • As marketing budgets tighten, CMOs can improve efficiency and effectiveness by rethinking three essential aspects of their activities.
  • Consolidation and improved management of agency rosters can save money and improve the consistency of brand messaging.
  • Marketers can boost the value they get from their agencies by making agency compensation practices more transparent through the more effective use of staff lists and statements of work.
  • Internal practices need to be regularly rethought to sharpen brand strategies, rationalize the costs of content creation, and improve collaboration with agencies through detailed statements of work and clear discussions of strategy.
 

In the face of relentless competition for the attention of existing and potential customers, companies are engaged in an ever more expensive advertising and marketing arms race. Marketing budgets rose from 8 percent of revenues in early 2012 to 11 percent in late 2012. Yet since the 2008 financial crisis, chief marketing officers (CMOs) have been under acute pressure to demonstrate the value of every marketing dollar they spend. A recent survey revealed that 84 percent of marketers have been asked to control costs, an increase of 7 percentage points over the previous year. As a result, marketing and procurement executives are seeking new ways to achieve big improvements in the efficiency and effectiveness of their marketing efforts.

New digital marketing technologies will surely help in this effort and will likely have enormous implications in the coming years. But for now, digital remains a relatively small portion of most companies’ overall marketing budgets—less than 25 percent or so. So making a real dent in marketing costs, and boosting the return on all your marketing investments, still require going back to basics—optimizing the number of outside agencies you work with, maximizing the value of your spending on marketing, and rethinking your internal marketing strategies and processes. (See Exhibit 1.) By addressing these issues holistically, executives can take bold steps to obtain better value for their marketing dollar.

exhibit
Marketing Spend on the Rise—Three Trends Worth Watching,” The CMO Survey, October 19, 2012.