Author Archive

Cut the Fat – Not the Budget

July 6, 2009

In a continuation of last week’s “guest post” – we’d like to feature another post by one of our leading cost-cutting consultants, Adam Tabas.  Adam specializes in working with our clients to find potential areas for cost savings where there are seemingly none.

“Cut the Fat – Not the Budget” – Adam Tabas, Senior Savings Consultant

In a marketing world filled with constant innovation, information flow, instant satisfaction, and measurable results, there are inconsistencies and inefficiencies when it comes to advertising for the local level.  Let’s think about what happens during a typical production & approval cycle for localized marketing, and the subsequent adverse effects that are inevitably absorbed by your company.

For our example, lets assume an ad campaign being versioned for 3 separate retail locations of a certain brand, and includes the following media channels: 2 different newspapers (quarter-page & half-page), 1 magazine (full page), and an online banner.

1. Creative Director arranges the creative elements and strategy that will act as the foundation of the ads’ theme.
($200/hr. x 3hrs = $600)

2. Production studio interprets these creative ideas in the form of layout arrangement and configuration—and this process must be repeated over and over again, for EACH ad, EACH location (since local information varies), and EACH outlet (since each outlet requires a different format).

Retail Outlet 1 Customized Ad
Newspaper Quarter-Page Configuration ($150/hr x 1hr. = $150)
Newspaper Half-Page Configuration ($150/hr x 1hr = $150)
Magazine Full-Page Configuration ($150/hr x 1hr = $150)
Banner Ad Configuration ($150/hr x 1hr = $150)

Retail Outlet 2 Customized Ad
Newspaper Quarter-Page Configuration ($150/hr x 1hr. = $150)
Newspaper Half-Page Configuration ($150/hr x 1hr = $150)
Magazine Full-Page Configuration ($150/hr x 1hr = $150)
Banner Ad Configuration ($150/hr x 1hr = $150)

Retail Outlet 3 Customized Ad
Newspaper Quarter-Page Configuration ($150/hr x 1hr. = $150)
Newspaper Half-Page Configuration ($150/hr x 1hr = $150)
Magazine Full-Page Configuration ($150/hr x 1hr = $150)

Banner Ad Configuration ($150/hr x 1hr = $150)
($600 per outlet x 3 outlets = $1800)

3. The “rough draft” version of each ad is channeled up the corporate ladder to Brand-level managers and lawyers, who manually check each one for legal compliances, brand consistencies, and other corporate standards.  And, again, since these managers and lawyers have respective MBA and JD degrees attached to their names, the resulting hours and fees add up—big time.  Let’s assume that for each round of approvals, 1 lawyer and 1 brand manager must each proof the ads:

Lawyer
($200/hr x 1 hr = $200)

Brand Manager
($50/hr x 1 hr = $50)
($1st Approval Round = $250)

4. Once the edits are made, the newly adjusted proofs are sent BACK to the production studios:

Retail Outlet 1 Revisions
($150/hr. x 1hr = $150)
Retail Outlet 2 Revisions
($150/hr. x 1hr = $150)
Retail Outlet 3 Revisions
($150/hr. x 1hr = $150)
($150 per outlet x 3 outlets = $450)

5. Back up the ladder they go to the managers & lawyers for another round of approvals:

Lawyer
($200/hr x ½ hr = $100)
Brand Manager
($50/hr x ½ hr = $25)
(2nd approval round = $125)

6. Not perfect yet, still need some minor “tweaks”:
Retail Outlet 1 Tweaks
($150/hr. x ½ hr = $75)
Retail Outlet 2 Tweaks
($150/hr. x ½ hr = $75)
Retail Outlet 3 Tweaks
($150/hr. x ½ hr = $75)
($75 per outlet x 3 outlets = $225)

7. One final approval:

Lawyer
($200/hr x ¼ hr = $50)
Brand Manager
($50/hr x ½ hr = $25)
(3rd approval round = $75)

TOTAL: $600 + $1800 + $250 + $450 + $125 + $225 + $75 = $3525
(*Note- this total is BEFORE media buying)

I know this is a lot of math, but for a world in which computers are integrated into nearly every business process, the advertising process remains nearly untouched from the years of David Ogilvy – and the math adds up quickly!  Advertisers are saddled with huge fees that nobody seems to be able to get a handle on because they do not know where the fat is hiding.  With a thorough investigation of what time and money is spent on your advertising, huge savings can be realized with a few small steps to integrate technology into this cumbersome and expensive process.

Adam can be reached at atabas@LiveTechnology.com

Advertisements

Mobile Marketing

July 2, 2009

At LiveTechnology we have a number of talented individuals focused on working with our clients to advise them on the latest technologies available across all media forms.  One of these individuals is Chris Dabroski, one of our senior leads on helping our clients understand mobile media and how mobile can provide big results to advertisers.

Look for more “Guest Posts” from Chris in the coming weeks:

Mobile advertising is increasing exponentially throughout the United States.  Over 270 million Americans (90% of the population) are easily and directly accessible via cellular communications.  Reaching your target consumer by means of cell phone will be your primary vehicle to close a sale.

As an advertiser you want to provide brand information, drive consumer traffic into your stores, and incentivize brand loyalty.  How can a cell phone accomplish these three goals?  Quick Response Codes (QR code for short) will revolutionize how you provide consumers information. QR codes are two dimensional bar codes; they are black and white blocky images anyone can generate and use to distribute information to cell phones.  The image is read by software in conjunction with your camera function on any phone and provides a text message or a URL.

So how can I use QR Codes to drive consumers to my stores or incentivize brand loyalty?

First you need to create the message you want to be received and generate the code.  Next, your code needs to be distributed on every advertisement the message is targeted for. Providing brand information is effortless.

Attach the specific information you want to attach to the code.  If you manipulate what information you’re attaching you can open up new avenues to reach your consumer.  Attach a QR code with a link to the “find your local store” section of the website and you have a vehicle to drive consumers into your store. It’s as simple as seeing a clever advertisement and generating curiosity in your consumers head.

Next they receive the message and in a few steps they know exactly where to buy the product.  The same manipulation can be used to provide exclusive deals, coupons, and promotions.

These are a few quick uses for QR Codes and as with all new technologies there are some drawbacks.  This media  only works if you have the pre existing software on your phone and recognizes the QR Code.  However, like a tsunami miles off the coast, advertisers will have no idea of the power of this new medium until after it has landed ashore.

Chris Dabroski can be reached at cdabroski@LiveTechnology.com

Technology: Keeping Cash Flowing

June 23, 2009

As every business has come to realize over the last few years, cash flow is the heart and soul of any enterprise.  CEOs and CFOs face difficult decisions when tightening the belt to protect their continuing functions.  Routinely, one of the first expenses to look at cutting is the seemingly “discretionary” expense of advertising and marketing; after all, the relatively fixed costs of human resources and production are reluctant expenditures to put on the chopping block unless necessary.

What does this mean for marketers?

Recessionary times put immense pressure on marketers to justify budgets and prove how they contribute to the enterprise’s bottom line.  At the strategic level, many executives view marketing from the GAAP point of view – as an expense, rather than an investment.  CMOs and marketing leaders are generally quick to point out that business professors like Roger Graham at Oregon State University have demonstrated that in the five recessionary periods since 1971, advertising spending contributed to increased earnings for up to three years.

Consider Hyundai Motor America – this company launched a new campaign to promote its “Hyundai Assurance” program which has seen Hyundai increase market share when the automotive industry has declined 38%.  John Quelch, a professor at Harvard Business School, points out that brands that increase advertising while their competitors cutback improve market share and ROI.

What to do when money is tight?

While Hyundai has taken a risk that has seemingly paid off, executives must also recognize that for every Hyundai, there are five other companies that have failed.  Regardless of strategy, the number one goal of every enterprise should be to look to cut wasteful spending.  Although at a high level waste may be hidden behind a murky veil of seemingly innocent contractor fees, the truth is that for all organizations, technology is the number one solution to cut costs while maintaining or growing advertising efforts.

If you advertise, you have an expensive team of people assembling the final “production ready” materials that your customers see and respond to (hopefully!).  Today, you probably accept this as an unchanging fact of doing business – but why?  You would never think of hiring a team of typists to put together a memo for you, yet you, or your creative agency, have a team of production associates who put together all aspects of your advertising – from newspaper to television to digital.  Your word processing software on your computer and your email on your phone has replaced the typists – but why is the large team not relegated to history?

Ultimately, the answer is that organizations either cut budgets or assume they have the most efficiency available.

DO NOT BE DELUDED!

Unless you have full automation of your marketing implementation process, you can spend the same amount of money and get 7x to 12x more output or realize savings of 13% to 17% of your advertising costs.  Think of this sample advertising budget of $100 million split up as follows:

$80 million = media purchasing
$20 million = production of materials/creative

Technology can reduce the latter to $5 million comfortably saving $15 million for this organization.

Make your CFO happy in a challenging time – look into what technology can do for you and your organization!

Media Buying and Selling

June 30, 2008

According to Adage, Discover Financial is putting its $85 million media buying account into review.  This is a great opportunity to touch on a huge difference between brands and their local entities.  Brands buy media through a media buying company while local businesses are sold media by local media outlets.

Why does this make a difference?

Because when a brand wants to change media buyers, it “launches a review” of its media buying account.  Local businesses do not have the luxury of a media buyer, they deal with dozens of salespeople from local radio, television, newspaper, printshops and more.  Moreover, they don’t “launch a review” they know these salespeople and have relationships with them; they are members of the Chamber of Commerce and do business with each other regularly.

Understanding this relationship is critical when helping brands to understand how their local businesses interact in their local communities and why, in many cases, programs aimed at helping local businesses end up failing.  A huge stumbling block brands and agencies fail to realize are that these relationships cannot be easily changed.  In many cases, local initiatives have strict rules requiring utilization of specific media types or fulfillment partners.  These rules ignore the long-lasting relationships that local businesses have.

Understanding the relationships that local businesses have are critical when evaluating local marketing strategies.  A local marketing strategy that understands this concept and supports it will ultimately be  successful rather than a solution that is tied to specific media partners or restircts media partners.

Advertising is Local

June 30, 2008

DirecTV CMO, Paul Guyardo was quoted in Adage as saying:

“Three years ago, the marketing strategy was pretty much to have this one national marketing strategy. The reality of it is that the competition is local. The competition is not national competition. The competition is Comcast. It’s Time Warner. It’s Cox. It’s Charter. It’s Fios. And you’ve got to be able to really understand what’s going on and understand where things are heating up geographically, where they’re dialing off, and read and react and adjust your plans accordingly.”

This isn’t just try for satellite vs. cable, it’s every business!  85% of all sales are still made in stores within 15 miles of the customer’s home.  Every business needs a local strategy because the battle for a customer’s sale is ultimately waged near to the site of purchase.  This means using multiple forms of media and versioning ads to effectively reach local markets.

As Greg Sterling noted in his blog post about Yahoo and Publicis serving mobile ads the holy grail is “one to one marketing.”  Why shouldn’t this same standard apply to all marketing?  What marketer wouldn’t want to have a personalized ad in any medium for any customer?

The production technology is already here!  LiveAdMaker can produce unlimited versions of the same pieces, customized down to every detail, the only limitation is on the delivery medium.  Read the Adage and Greg Sterling articles at:

http://adage.com/cmostrategy/article?article_id=127842

http://gesterling.wordpress.com/2008/06/30/local-and-the-future-of-ad-serving/

Cross-Medium Ads Drive Sales

June 13, 2008

In a recent survey by Clark, Martire & Bartolomeo, one of the conclusions reached is “Seeing products and services advertised in multiple channels increased both consumer turst in them and likelihood to buy.”  Half of respondents said they were more likely to buy a product featured in a newspaper advertisement after seeing it online.

This is encouraging news for newspaper advertisers, and reinforces the idea that multiple medium advertising drives sales.  After viewing a newspaper advertisement, 31% who search online, go to a search engine.  Surprisingly, of the adults who use search engines, 70% purchased at a store or dealer following additional research online.

What does this mean for marketers?  First, marketers need to ensure they have a unified message across all forms of media.  Because most purchases are made in local stores, this means having consistent messaged from the local dealer or store is critical.

Second, markters need to USE multiple forms of media.  With increasing media fragmentation, using multiple forms of media is critical to effectively reach customers and drive them into the sales process.

Third, it’s essential that the web presence of a brand at the corporate and local level reflect the approved messages of the brand.  Customers who use a search engine and go to a local store or dealer website should have the same brand experience as if they were at the brand’s website.

It’s clear that all business is local – most sales still happen in a store, but the process of getting to the final transaction is dramatically changing.  Marketers must stay ahead of these changes to build brand equity while driving sales.

View the report at Marketing Charts.

The New ROI: Brand Networking

June 10, 2008

With advertisers struggling with ways to deal with Web 2.0, many marketers question the return on investment of Web 2.0 strategies.  After all, while companies like Facebook and MySpace are themselves worth millions, the number of advertisers that have seen success from using these platforms as advertising tools is small (perhaps nonexistent).  While apps that create “viral buzz” for brands may be the rage of Web 2.0 right now, advertisements that are untargeted and rely on the user to give feedback(read more here) are ignored by users, or may even drive high-profile users from a service.

What’s the solution to this problem? Marketers need to change the way they understand online advertising to look for “Return on Involvement”.  Involvement is the time that customers spend with the brand during their time online.  For usual display or search advertising, the involvement is very low.  Involvement is the greatest when a brand can interact seamlessly with a user while refraining from intrusion.

The optimal solution for this is Brand Networking.  Brand Networking is simply a brand controlled social network that is built around the core relationship between the brand and the customer.  The “core relationship” is the interaction where a customer and brand meet and conduct business.  For example, a social network for parents might be sponsored by a brand that is associated with baby products, or a social network for IT specialists might be sponsored by an infrastructure vendor.  What’s the difference between the brand network and placing an ad at Parents.com (online home of American Baby, Parents and Family Circle)?  Placing an ad has no involvement with the user – branding a social network builds a relationship with the user.

Brand Networks are effective at building long-lasting relationships with users, locking customers in to the brand, becuase they provide value to the community they serve and are relevant to the actions of the user.  Because of the core relationship, users have a high percentage of finding the message and branding to be relevant.  Presently, relevance is the top criticism users have about the advertisements on social networks.

Additionally, brand networks offer brands the opportunity to reward positive actions users take.  Imagine a social network around youth soccer that was owned by a sports drink manufacturer.  Now, what would happen if the social network rewarded users with points to spend (on prizes and rewards) when they bought the sports drink?  Clearly, the sports drink would become top of mind for the parents and players of the youth soccer network.  Would you purchse the sports drink if it could help your child’s team get rewards or tickets to professional sporting events?

In addition to involvement, it’s clear how the scenario above would provide measurable results – a model that builds brand loyalty and provides clear measurements of ROI! Today’s increasing media fragmentation makes getting messages across to customers difficult; now imagine reaching customers without distraction and building a relationship with them – what other form of media offers this?

Tomorrow’s high-income consumers are spending an average of 20 hours each month online and 74% of them are using social networks – brand networking targets not only these younger, internet savvy customers, but older customers who using social networks at increasing rates (presently 53% of adults use the internet for social networks).

Brand Networking guru, AJ “Brand Geek” Loiacono (visit his blog here) has recently started a blog about the topic; stay tuned to it as he and his company are on the cutting edge of this emerging market.

Local Marketing ROI 4x Higher over National Marketing

May 27, 2008

In 2007, auto retailers spent $7.3 billion on direct marketing campaigns driving $248.1 billion in sales, yielding an ROI of $33.81.  During the same period, auto manufacturers spent $8 bilion on direct marketing, driving $77.8 billion in sales, an ROI of $9.68.  Source: Direct Marketing Association

When examining the automotive retailers direct mail, one must ask, “Do the local pieces build brand equity or do they only increase the brand awareness of the retailer?” In most cases, unless there is marketing assistance from a dealer association or the brand, the local retailer is branding all communication for the dealership, irregardless of brand.  While this is not a problem for retailers it does not build any brand equity for the brand and could even dilute the brand.

What does this mean for CMOs and marketers?  CMOs need to take the initiative to invest in local strategies that help retailers to “ring the cash register” while building brand equity.  They can do this by implementing solutions that maintain brand standards and use standardized brand-approved themes while being flexible to be used by local retailers.  This ensures brand-building while retaining the ROI of the local campaigns.

Moreover, CMOs should implement these strategies to build brand equity across all forms of media.  Messages that are unified across all forms of media at the local level are the best for overcoming the media fragmentation that exists.

The ROI is clear – local marketing strategies yield the best results.

Local Marketing Rings the Cash Register

May 23, 2008

Peter Sachse, CMO of Macy’s, was interviewed in the Wall Street Journal on Wednesday regarding how the “My Macy’s” localization initiative will hopefully improve slumping sales at Macy’s. While there has been media focus on Macy’s switch from a “national” focus to a “local” focus, not much attention has been paid to identifying why local strategies work.

First, local strategies build brand equity. As we can learn from Macy’s, customers had a relationship with the “brands” that Macy’s converted to “Macy’s”. With the conversion, the loyalty was dissolved and only now is Macy’s trying to work to build up its local brand equity.

Second, local strategies overcome media fragmentation. Because mass media is losing its sway over the advertising industry, no longer can any advertiser simply look to television or national newspapers for their promotions. National television campaigns featuring celebrities have helped Macy’s not because of the celebrity, but because they see a product advertised and can go to their local store and purchase it. Moreover, the products being advertised are products any person might need regardless of location. These are essentially promotions and NOT brand building. Its these same types of ads that work at local levels to get traffic in the store.

Third, local strategies help retailers avoid cutting prices. In its most recent quarterly reporting, profits and sales were up at the specialty retailer Abercrombie and Fitch because they changed strategies from cutting prices on clothing to keeping prices steady and increasing store traffic through a controlled number of in-store specials. Imagine if store managers had the tools to pick one or two items of merchandise that they could mark down dramatically to get customers into the store and then see a bump in their full price merchandise. This isn’t imaginary, it’s what Sam Walton did when he first started his Wal-Mart chain. He would find a few items of merchandise he could mark down dramatically to get customers in the store where they would invariably purchase other merchandise at the regular price. Because each store’s inventory and market is different, store managers should be able to make these decisions and execute them to drive store traffic and ring the register.

Marketers need to reevaluate what it means to “go local” and no longer view it as trying to personalize an experience for millions of different customers. Going local needs to be about getting the most relevant message in front of a person in the form of media they will respond to. This means local strategies must cross all forms of media, be in coordination with all messages to build brand equity and still retain the local content necessary to be effective.

Learn more about local marketing and why automation tools solve these problems at www.LiveTechnology.com

Agencies Still Don’t Get It

May 23, 2008

In yesterday’s Wall Street Journal, the company avVenta was hailed as “reaping the rewards” of advertising agencies shipping work to overseas contractors to meet the demands of large scale production for online ads. As the article notes, “campaigns are labor-intensive to produce.” Why do agencies continue to rely on manual labor when technology can produce the same results for a fraction of the cost of even the cheapest outsourced labor?

With agencies executing campaigns that have display ads, websites, emails, search ads, videos and game with thousands of variations on each, who would rely on manual labor to create hundreds of thousands of versions when computers can create these in hours?

Imagine no longer having to send work halfway around the world and wait for it to be created and shipped back when an agency can keep all their production in house and execute it in hours.

No one would consider handwriting thousands of copies of documents when they can be created on a computer and sent to a high-capacity printer and created in minutes. Why would anyone consider creating hundreds of thousands of versions of any advertising materials by hand when a computer can do it in less time and for less money than even the cheapest manual labor?