Squeeze More Savings or Make More Money?

By Thought Leaders Archives
Cover image for  article: Squeeze More Savings or Make More Money?

When you Google “What clients want from their agency,” knowledge of their business and development of a successful strategy consistently appear in the top five criteria, regardless of source.  Media strategy out-polls media buying and even creativity.  This opinion has evolved over the past several decades.  In the 1970s it was continuance of creative dominance; in the 1980s the answer was a decade of mergers and media buying clout; in the 1990s it was emergence of optimizers and auditing buys; in the 2000s it was modeling and programmatic buying, and most recently in the 2010s it was and continues to be digital preeminence and big data.

The proliferation of useful data expedited by digital systems has convinced marketers to place at least as much value on strategic planning as on buying.  When you think about it, that makes sense.  If you have $100 in sales, chances are (depending upon the category) you are spending somewhere around $2.50 on advertising and fees for a typical brand.  Logically speaking there is more to be gained from a strategy that increases the $100 than from squeezing the $2.50 with efficient buying and negotiating fees.

As my old business partner Mike Drexler used to say, “You can’t save your way into prosperity.”

And as ARF Lifetime Achievement Award-winner Erwin Ephron once said, “The biggest cost of advertising is paying for ineffective campaigns. My estimate is that's 35% of media dollars is wasted due to mis-targeted, mis-scheduled advertising.”

Put another way, if you have the wrong strategy, it doesn’t matter how efficiently you buy media.  It will simply be misdirected.  Yet we audit media buying -- but not media planning!  It’s time to change that and audit strategies for their return on investment.

Here is just one example of how we can be lulled into doing the same less effective thing over and over again.

As a rule, advertisers generally aim their messages at a very discreet target -- users.  This is understandable and very seductive.  However, that might not be the most productive strategy.

Several years ago Catalina Marketing, Pointer Media Networks and the CMO Council issued their Core Consumer Study, which received some favorable press at the time and then faded.  We think their findings are still very useful.

After studying 1364 CPG brands, in 23,000 stores and 54 million homes, they found that for the average brand 80% of its volume is consumed by just 2½% of consumers.  I like to call it the 80:2 Rule.  Sure, there were variations by brand, but generally speaking one out of every 40 consumers bought most of a brand’s inventory.

If that is the case and many marketers keep targeting those who will buy anyway, that seems to be the wrong strategy for growth.  At some point we become oversaturated.  However, it does help explain why we are bombarded with the same commercials over and over again, especially on cable where clients can more easily try to micro-target with television.

Shouldn’t a more effective growth strategy reach beyond the core consumer into at least the next circle of influence?  A strategic planning audit would determine the most effective strategy.

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