Marketing Under PressureBy: Tim Arnold
As recession begins to bite hard, 'spending' is the watchword of the moment. While the government introduces financial initiatives designed to encourage higher spending, people and businesses are looking for ways to cut their budgets. Despite the recent reduction in VAT and government appeals to banks to increase lending, businesses can't ignore the lower revenue figures as customers retreat in large numbers.
In times of financial uncertainty, a review of business operations will highlight those functions deemed non-essential or over-resourced. Historically marketing is usually among the first to be culled. It is not a well understood discipline and invariably its implementation is lacking. By and large, it is seen more as a cost centre than a revenue generator, working to bring new sales leads to the business. Properly conceived, planned and implemented marketing strategies can raise an organisation's profile in the marketplace, in turn strengthening brand awareness and loyalty, all of which eventually leads to more customers and ultimately more revenue.
That said, here are a few words of warning. Cutting your marketing budget without thought to the business impact can be devastating. Experienced marketers know this but are under pressure to reduce spending nevertheless, and never more so than now. Conversely, there are those organisations that hold marketing up as one of the tenets of business success in all weather. These are the companies that believe if you throw enough money at marketing, eventually more customers will come and the coffers will start to fill. But without a plan behind the intent, this approach is simply a waste of money and potentially fatal to the business. There is another way.
It is accepted wisdom that marketing is essential to a prosperous business. But is it possible to maintain marketing effectiveness on an ever-decreasing budget? To answer this question, we first need to understand three things: what exactly is marketing these days, why is it so important anyway and how is it changing?
Marketing's ever increasing importance
To the uninitiated, marketing is a synonym for a wide range of disciplines and activities that somehow fall into the same bucket: advertising, public relations, exhibitions, promotions. It's true that marketing covers all of these and many others, but what actually is it?
Marketing is essentially project management in disguise and has already been functioning well through outsourcing for a significant period of time. The proliferation of marketing activity, widening supplier resources and the increasingly short term view of the role of the marketing director have all combined to create the right environment for outsourcing marketing from the strategic through the bottom line operational level.
As recently as ten years ago, certain businesses did not need to market themselves as we understand it today. Businesses such as estate agents, housing developers and banks simply opened their doors and customers would come to them, ready to buy. These businesses saw marketing as a way to rise above the competition, but there was still essentially plenty of business for all of them. However, as markets have fractured and changed, the competition has become ever more fierce and new business models are continuously being developed. On top of that, in the current economic climate it is these traditional pillars of the economy that are suffering the most.
In light of these circumstances, marketing has taken on a new importance. It has become paramount not just to business success but also to business survival. Brand presence in itself is no longer enough. It is continuous brand strengthening and communication through robust marketing strategies that forms the foundation.
Ultimately though, marketing is about understanding your customers and your market. What have you got to sell, who are you trying to sell it to, and what is the best way reach them? In addressing these issues, the successful marketing programme will cover market research, define the most appropriate channels to market and the most effective media to reach the right audience, and articulate why the market should buy from them. This last point is the cornerstone to success marketing, otherwise known as the 'Unique Selling Proposition'
Having outlined what marketing is and why it's so important, surely it would be simple enough to work out a plan and execute it. Unfortunately for marketers everywhere, this is easier said than done. Why? Because marketing is undergoing radical change.
The changing face of marketing
Since the dawn of the Internet age, online marketing has unfolded at an alarming rate. At no time is this more true than today. With the advent of the so-called 'Web 2.0' over the last few years, social networking has seen a proliferation of new tools and online media have opened up new and diffuse channels to market. Marketing today is in many ways unrecognisable from the discipline it was, even ten short years ago.
This change has brought increasing complexity to strategic marketing and planning. Internal marketing departments are being spread more thinly, relying increasingly on a growing list of supporting agencies each dedicated to a particular marketing activity. It has also meant that marketing managers and executives have taken on more of project management role as they supervise and coordinate an abundance of outsourced activities. Similarly, the marketing director's role has become fundamentally project-based. Marketing directors are often tasked with a series of strategic restructures as the business continually morphs to adapt to its market. This has imbued the role with a short-term outlook, such that today it is unusual for a marketing director to stay with an organisation for more than two years before moving on.
In finding a solution to the challenge of achieving effective marketing on a strict budget, it is worth noting that the prevalent marketing agency landscape developed out of necessity, not through careful planning. Outsourcing on a piecemeal basis is not a cost effective formula. It has been technology driven, not marketing driven. And there are a few fundamental issues with this approach. Firstly marketing executives do not ordinarily make good project managers. They lack the advanced skills required to integrate and synchronise a myriad online and offline activities into a single, mutually supportive workflow.
Outsourcing marketing functions is not a new concept. In fact it is a tried and tested way to quickly reduce costs by moving core functions outside of the organisation. It was first widely applied to customer service through call centres. However sales and marketing departments quickly discovered that if you outsource on a purely tactical basis, it can backfire on your business. It is important to build in strategic processes and controls to maintain service quality. The challenge for marketing is how to achieve quality control across such a diverse and disparate range of activities. One answer could be to combine outsource partners with a project management team. Another approach is to integrate these functions and elevate the outsourcing relationship to a more strategic level. To identify the best approach, we need to understand 'marketing integration' and how this can create cost efficiencies.
Integrating offline and online marketing
While today every business considers having an online presence as a necessity, tomorrow it will be blogs, giveaway content in the form of pdf reports and email newsletters, online communities and social networking that will become essential to every marketing strategy, programme and campaign and not just the domain of the forward-thinkers.
These new ways of communicating with the market are moving seemingly further and further away from the real world. Aside from keeping up with developments, marketers are faced with the challenge of integrating online and offline channels so that they support and reinforce, rather than contradict each other.
On top of this, technology has levelled the playing field. Now anyone can try their hand at marketing.
Publishing a newspaper or magazine is possible with a software programme and a broadband connection. Achieving professional quality media is now accessible to the man on the street. Similarly online marketing is open to everyone. However, the ability to market does not guarantee marketing success. Despite ease of online communication, the availability of tools for fast analysis of market data and the speed of digital delivery, superior marketing implementation can only be ensured when it is backed by a consistent business strategy and coordinated marketing programme. More importantly, integrating traditional offline marketing with the many disparate forms of tactical online activities in a strategic way will be essential to success.
Cost effectiveness is marketing gold
As marketing agencies continue to proliferate and shift towards more and more specialised niches, it begins to make sense to consolidate the mainstream functions within an integrated framework. Logically, however, this would suggest higher internalised costs. To avoid these costs, without compromising effectiveness, suggests moving the mainstream function outside the organisation.
However, this makes little sense if executed at the tactical level. What is needed is a restructuring of the traditional outsourcing model so that the lines of communication are at board level. Strategic public relations and public affairs consultancies have worked this way for many years. The timing and conditions are now right for marketing to adopt this approach: to move from a tactical project management style to a higher-level strategic partnership with their outsourcers.
Put simply, modern outsourced marketing takes the accepted concept of interim management and retained agencies to a higher level. In an outsourced arrangement, highly skilled marketing consultants and managers liaise with specialist agencies to an agreed strategy and budget, in a well-constructed operating process to deliver on planned objectives and targets. By taking an holistic view from a brand perspective, outsourced marketing has the potential to lift the bar on performance and programme integration in a way that traditional marketing management finds hard to achieve within modern cost structures. Key to achieving this is integration of the internal marketing function at the strategic level of the business.
Outsourcing marketing execution is the traditional view taken by organisations when attempting to strip out costs, but within today's marketing landscape this can only come at the expense of marketing effectiveness. Modern outsourcing should aim for strategic consistency across internal marketing functions. This has the additional benefit of placing overall responsibility and planning at an organisational level rather than with ultimately one departmental representative, the marketing director.
As a contractual arrangement, strategic outsourcing establishes common operating practices and reportage, which work in accordance with KPI measurements and agreed ROI indices. From a marketing perspective the strategic outsource model has the organisational intelligence necessary to achieve a balance mix of online activity and offline in an integrated manner.
Choosing a strategic outsourced marketing partner
As a means of replacing high cost, high turnover internal function with a strategy partnership that communicates at board level, the outsourced marketing model has much offer. It is equally suited to growing companies that have yet to develop a marketing department as those that are downsizing. For those marketers working under the conditions accompanying a merger or acquisition situation, or companies and brands stripped of resource through administration, outsourced marketing also presents an attractive option.
If you decide that outsourced marketing is for you, you'll want to ensure that you engage an outsourcer that agrees to a planning process that involves clear ROI and KPI objectives. Ideally this will be presented in the form of a marketing dashboard to allow a continuous evaluation performance on the fly. You should also be careful to select an outsource partner that can offer a complementary mix of senior consultants with skills that span all media and marketing channels. Naturally it is also critical that this experience covers both online and offline environments. Finally, it is important to assess whether your outsourcing partner can offer flexibility in its fee structure. For example, can it package a tailored launch service for an all-on cost but also provide supplementary services on a 'top-up' basis as and when required?
Cost savings are readily achievable with a fully outsourced marketing function, provided consultation is observed at board level. Since services are rendered on a 'time block' basis, it is easy to adjust the marketing resources 'tap' to whatever level suits the budget. Provided the partnership is structured correctly, marketing results should not be adversely affected. In fact, the enhanced planning and creative development process that comes through an outsourced arrangement can lead to improved marketing effectiveness and sales performance that proves to be as valuable as lower marketing costs.
Marketing Outsources is the UK's first specialist organisation, which offers both in company management with external creative and production services to provide full executive resources and a planned programme of activity. Implemented at a substantially lower cost yet with an improved performance, making the most of technology and better planning and faster working.
With Marketing Outsources you get a topflight director just when you need the strategy and creative direction with board level input to overall company growth, backed with experienced marketing managers.
Marketing Outsources can deliver and implement your marketing strategy through a group of expert and experienced suppliers, embracing the benefits of new technology, whilst balancing online and offline spending to optimum effect. Marketing Outsources teams can be up and running in weeks working to a proven practiced process to deliver, with no recruitment costs, no standing costs, much lower office costs and importantly many savings on implementation yet improved branding and customer communication to lift sales.
© Copyright 2009, Tim Arnold.