CMOs: How to Spend the Minimal Effective Amount on Media


Published on

Learn how this new form of “marketing intelligence” can dramatically reduce wasted spending and contribute even more effectively to earnings per share.

Published in: Business, News & Politics
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

CMOs: How to Spend the Minimal Effective Amount on Media

  1. 1. White PaperHow to Spend the MinimalEffective Amount on Media 1 West Street New York NY 10004 | 646-545-3891 | | 646-545-3900
  2. 2. White Paper Networked InsightsHow to Spend theMinimal EffectiveAmount on MediaBusinesses today have access to rich data and reliable metrics for managing business performancein real or near-real time. Inventory turns. Cycle times. Days sales outstanding. In fact, business intel-ligence capabilities give today’s executives a good grasp of virtually every aspect of operations. Withthe help of technology, marketing executives also have been able to better understand the perfor-mance of many aspects of marketing. However, social media represents a new frontier in terms ofhow people communicate their perceptions, opinions and preferences about virtually any topic,including a company’s brand, products and services. In this paper, we explore a new generation ofanalytics capabilities that offer marketing and media executives practical ways to mine the rich socialmedia data that’s available today and use it to measure and improve marketing performance.Marketing executives face growing scrutiny for brand-related spending,especially advertising. No wonder, since marketing is a major corporatebudget item that traditionally has been the hardest to understand andmeasure from a performance standpoint. Quarterly and annual reviewsprovide some idea of how the money is being spent, and frequency, reach,target rating points, media impressions and press clip counts are amongthe long-standing measures of marketing effectiveness. But these are be-coming less and less informative as the world moves at Internet speed..Another unsettling reality marketing executives are all too aware of: Yourorganization is probably overspending by 30 to 80 percent for the valueyou’re getting. As U.S. department store magnate John Wanamaker said: Overspending 30-80%“Half the money I spend on advertising is wasted; the trouble is I don’tknow which half.” Knowing this, CFOs often go to their marketing depart-ments for spending reductions when quarterly earnings per share (EPS)targets are not going to be met. Marketing dollars effectively serve as arainy day fund that can be tapped for those extra cents per share neededto meet Wall Street’s expectations. Your organization is probablyIt doesn’t need to be this way anymore. Through social media and otherchannels, consumers are increasingly vocal about their brand advocacy overspending on marketing for(or detraction), intent to act and discussion of past actions. Marketing can the value you’re getting fromleverage these “conversations” to become far more efficient – especially your media by 30 to 80 percent.with its spending on advertising. The key is not just to monitor the conver-sation, however—almost any company can do that now with today’s socialmedia monitoring enginesInstead, marketing—and by extension, media planning and buying—needstechniques and analytical capabilities that cut through the conversationalclutter to identify trends and perform predictive modeling that not onlycaptures the pulse of the marketplace now but offers valuable insights as2
  3. 3. White Paper Networked InsightsHow to Spend the MinimalEffective Amount on Mediato where the market is moving or where new markets are likely to ap-pear. Armed with this information, marketing executives can identify theminimal effective amount of spending needed to drive the greatest marketawareness.This new form of “marketing intelligence” can dramatically reduce wastedspending. As a result, such a shift in spending effectiveness can contributedirectly to earnings per share improvement. Marketing can finally – andwith far greater accuracy – prove its accretive value to the enterprise andshareholders.Right message, right place, right timeFor decades marketers have considered television advertising to be themajor driver of awareness. But today highly engaged, potentially massiveaudiences also can be found in many other places, so television advertisingisn’t the only option. More than half a billion people, a 12th of the world’spopulation, are connected on Facebook. Twitter has 200 million users.Numbers like these demand that marketing executives think about usingtheir resources differently. It’s not just about appending social media totraditional ad buys, or even integrating the two. Instead, marketing execu- More than a 12th of the world’stives can start using their customers to help sense and inform what aware- population is connected via Facebook.ness and promotional activities should be done in marketing and which ofthose will be most effective in reaching their exact audience.Media buying can be made hyper-efficient by abandoning the traditional“spray and pray” approach and instead finding out exactly when andwhere to use it – the times and places that targeted consumers will notsimply hear marketing’s messages but be highly receptive to them. Twitter now has 140 million activeExecutives can then identify the most valuable components of the market- users and 340 million Tweets a arsenal – the right messages – and sequence them in ways that bothresonate with target audiences; optimize paid, owned and earned media;and deliver measurable, substantial improvement in marketing ROI.The two largest portions of the marketing budget typically are develop-ing content and purchasing media. Being efficient and effective in bothof these processes boils down to delivering the right message in the rightplace at the right time.Optimizing marketing plans with audience intelligenceA major network wanted to use social media to “organically” grow an audi-ence before the premier of a new television series. The network engagedNetworked Insights and quickly discovered that its measurement tools andperception of community management in social media extended only toits owned web properties. This self-focused point of view is not uncom-mon because it’s shaped by the technology an organization can access andcontrol. However, this limitation has to be overcome to truly understandan audience across the social web.3
  4. 4. White Paper Networked InsightsHow to Spend the MinimalEffective Amount on MediaAs the show premiered and entered its first few weeks, our project tomaximize the network’s social media audience quickly became a real-timefeedback loop that informed many decisions. Two significant examples– one related to content creation and the other to marketing – demon-strate the power of a network in sync with its audience. First, the insights Social loves an upset.gathered from social data allowed show producers to instantly understandthe reactions of viewers and alter postproduction techniques to eliminatedissonant moments that were impeding the audience’s suspension ofdisbelief. Second, social data took the guesswork out of show marketing by #9 Northern Iowarevealing the characters and plotlines that were resonating with viewers. over #1 KansasAn NCAA slam dunkOne consumer services company tried to capitalize on March Madness bybuying exclusive advertising rights to TV broadcasts of games, at a cost ofabout $42 million. The objective, of course, was to dominate its categoryduring the three-week NCAA basketball tournament that included a $10million media buy. A locked out competitor asked Networked Insights tosearch for another way to get in front of tournament fans.We used social media data analysis to build a strategy for reaching this #9 Northern Iowa overtarget audience at a fraction of the price. We showed the company how #8 UNLVmarrying well-placed digital advertisements with highly desirable onlinevideo, aligned to the topics that drove online conversation, could createmore impressions than the $10 million media buy. By modeling the overallripple effect and social reach of that “sequenced approach,” we provedthat a $2 million paid media investment would generate the same amountof reach and brand awareness as the $10 million spent on traditional ad- Northern Iowavertising produced. Viewed another way, that’s about $8 million that couldhave been spent on other priorities, or taken to the bottom line to boost 3.13.10 3.19.10 3.25.10 3.31.10EPS. A slam dunk indeed. #12 CornellReaching NFL fans without an NFL media budget overToday’s fragmented media landscape means advertisers can no longer #4 Wisconsinselect the TV shows with the most reach and call it a day. A brand’s targetaudience is now scattered across broadcast, cable and online media #12 Cornellproperties. And, that audiences is consuming digital content while viewing overtraditional programming. These trends are making the media buyer’s job #5 Templeexponentially harder.National Football League broadcasts deliver a premium audience andprovide an opportunity to reach many people at one time. But a downsidefor advertisers is the cost associated with adhering to mass-marketingtechniques. As media has evolved, so too have the behaviors of the audi-ence. How can brands and agencies keep up with target consumers whoappear to have better technology than the marketers trying to connectwith them? Cornell 3.13.10 3.19.10 3.25.10 3.31.104
  5. 5. White Paper Networked InsightsHow to Spend the MinimalEffective Amount on MediaTV analysts from Networked Insights examined shows that NFL fans discussacross the social web to identify more economical alternatives for reachingthe big game’s audience. Shows like “Fringe,” “The Office,” “Community,”“The Simpsons” and “Family Guy” were among the most mentioned. Forbrands and media buyers, this discovery supports more informed decisionmaking. The result is a more efficient media plan that maximizes the ef-fectiveness of your spend.How to make it happenWhat can you as a marketing executive do to set your company on thepath to hyper-efficient spending on marketing? A good place to start is by “ For brands and media buyers,identifying the minimal effective amount your company needs to spendon marketing to reach the awareness goals it seeks. This is a critical new this discovery supports moreconcept for marketing executives to understand. informed decision making. TheThe methodologies and technology that enable the analysis that can give result is a more efficient mediamarketing executives this insight have only matured within the past few plan that maximizes theyears. In light of this, a valuable next step is to conduct a pilot programto begin identifying inefficiencies and realigning resources to the rap- effectiveness of your spend.”idly changing, social media-infused marketplace. Typically, we find thatcompanies which undertake such pilot programs can, in a very short time,improve the efficiency their marketing spend by 10 percent or more.Begin to tap the true value of marketingCFOs are sometimes grateful that marketing provides a piggybank theircompany can draw from to shore up earnings. But they also know that theflab in the marketing budget is stark evidence of costly, continuing inef-ficiency.Consumer analytics can help marketing executives communicate with theirCFOs and other non-marketing executives in a language those other execu-tives understand. In this way, for the first time, marketing executives canarticulate the minimal effective amount needed to spend on their market-ing initiatives. Placing the right message in the right place at the right timebased on quantifiable real-time “marketing intelligence,” companies caneconomically reach audiences that are tuned in and responsive to targetedmessages. Spend less, sell more—now there’s a concept.Investment summary Example Worksheet Total savings on 40,000,000 advertising Number of shares 534,000,000 outstanding Impact on EPS 8 cents per shareQuestions about this report? Want a free consultation on how real-time 646-545-3900data can improve your media planning and other marketing? Contact us networkedinsights.com5