A presentation made at a CFO conference on how to get more ROI out of marketing... and what CFOs can do.

1. Marketing ROI
Real Or Imaginary
7 Ways to make it real

2. Background
Marketers CFOs
• 8/10 believe their • I have never found CFO
marketing budgets are that didn’t believe a lot of
under-funded marketing investments
are wasted
But 75% of the value of most companies
is the Brand… so maybe there is some
common ground

3. Measuring ROI
( (Acquisition (#) * Margin (€) ) + retention effect - Investment
ROI =
Investment (€)
Price Premium (€) x Market Share (#)
ROMI =
Marketing Investment (€)
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4. What is the biggest issue …
• People don’t know and are not measuring
Without measurement R or I
It doesn’t make sense to talk
▫ R = Return About techniques
▫ I = Investment
• Because it is difficult, does not mean it should not be
done… or you shouldn’t worry about it..
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5. Which is closest to your company’s current
definition of marketing ROI? description
Cus tom er lifetim e value 17
Financial value of brand equity 19
Media pos t buy analys is 21
Cos t per s ale 23
GRPs delivered 30
Reach/frequency 30
Cos t per lead 34
Ratio of ad cos t to revenue In 34
Num ber of leads 40
Market s hare 49
Attitudinal changes 51
Purchas e intent 55
Total s ales from m arketing 55
Changes in brand awarenes s 57
Increm ental s ales 66
Source: ANA – Forrester 2005
If a perfect world you would measure profits
you can also measure profit drivers …
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7. QUICK AND EASY WAYS TO BUILD
YOUR MARKETING ROI

8. Most marketing doesn’t
work
…you gotta get started measuring

9. According to nielsen research
• A study of 862 packaged
goods promotions.
▫ 50% no impact,
▫ less than 1 in 10, plus 10%
As long as you are not measuring what is working
You are burning money…
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10. Finance people can improve
marketing decisions
You might not want to get involved
but you should

11. Diversity trumps ability
• Imagine you have 2 groups
▫ 10 smartest people
▫ 10 random people
• The random groups almost
always outperforms
▫ A different toolset
▫ “Stupid” questions that
spark thinking
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12. Solving marketing problems…
• Research at KU Leuven over 2 years…
10 groups working on 10 marketing tasks
▫ All non-marketers
▫ All male marketers
▫ All female marketers Relative results
▫ Mixed marketers Absolute results
▫ Mixed marketers + non-marketers
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13. Most Advertising doesn’t
sell
Get Involved… keep your marketing team
focused on the basics

14. Half my advertising doesn’t work..
That would be a bit optimistic
Depending on the study…
80-90% of advertising
does not work…
Why ….
▫ Lack of a benefit
▫ No reason to believe
▫ No call to action If you’re confused…
▫ No clear message Consumers are also likely
to confused
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Quick test...What is it?

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Clarity
Confusion is not a good strategy for
success.

17. A golden rule of advertising
Let a customer say NO
because what you offer
doesn’t apply to them.
But NEVER let a customer say
NO because
they don’t understand
what you’re offering.
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18. Most products fail
learn to shoot the ugly puppies early

19. My shoot the puppy
checklist
• Is there a benefit (real or
perceived)
• People willing to pay (enough)
• Cost of cut-through acceptable
• People will see the benefit buy
again / recommend to others
• Will someone hate the product
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20. Target ROI’s for new products
Investment Investment Return ROI Cum_invest Cum_Return Cum ROI
1 100 2000 2000% 100 2000 2000%
2 100 150 150% 200 2150 1075%
3 100 100 100% 300 2250 750%
4 100 100 100% 400 2350 588%
5 100 50 50% 500 2400 480%
6 100 50 50% 600 2450 408%
7 100 25 25% 700 2475 354%
8 100 25 25% 800 2500 313%
9 100 10 10% 900 2510 279%
10 100 10 10% 1000 2520 252%
11 100 5 5% 1100 2525 230%
12 100 4 4% 1200 2529 211%
13 100 3 3% 1300 2532 195%
14 100 2 2% 1400 2534 181%
15 100 1 1% 1500 2535 169%
16 100 1 1% 1600 2536 159%
17 100 1 1% 1700 2537 149%
18 100 0 0% 1800 2537 141%
19 100 0 0% 1900 2537 134%
20 100 0 0% 2000 2537 127%
Totals 2000 2537 127%
Throw out 4 losers and your ROI increases 159%
Throw out the winner and your ROI falls to -72%
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21. We get bored long before
consumers
Stop changing…
Repeat what works, until you are sure it is no
longer working

22. White
Fresh Odours
Off the market Boring !
But market Leader
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1 * 1 * 1 * 1 = Beauty
1 * 1 * 1 * 0 = Failure

24. We often offer
too much choice
Cut, kill, eliminate extra choice

25. Less is more !
• Proctor & Gamble reduced the number of Head and
Shoulders SKUs to 15 from 26, eliminating the least
popular varieties, and saw an increase in sales of
10%
• The Golden Cat Corp. eliminated 10 of its worst-
selling kitty-litter SKUs, and saw sales rise 12% (while
cutting distribution costs in half) - resulting in an 87%
increase in profit
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26. Pricing is too often
forgotten
Work together… sell value
and talk about pricing

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28. A good starting point… explain break-
even analysis
Unit
Price - Cost = Profit * Volume = Profit
Today 10 - 9 = 1 * 100 = 100
Break-even 11 - 9 = 2 * 50 = 100
Expected 11 - 9 = 2 * 90 = 180
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29. Summary
• Make a commitment to start measuring
▫ No perfect solution is no reason not to start now
• Help build transparency (so you can repeat what works)
▫ Investments , Return
• Cut and kill: ugly puppies, new cute advertising, weak brand
extensions
• Get involved with marketing
▫ Keep them focused on the basics
▫ Get involved in the pricing game
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Contact
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+32-475-860-757

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Test Layout 10/2/2012