Direct Marketing Results :: Delivering Exceptional Results


Evaluating Marketing
Going beyond 'creative flair'

Is it true that 90% of marketing dollars are being wasted? For many in radio, more time is devoted to creating a new logo, a new contest or a new billboard design than is spent setting objectives and subsequently evaluating the effectiveness of the sizeable investment in marketing. Still, that's not unique to radio.

In a Wall Street Journal article entitled "Ambidextrous Marketing", Harvard Business School Marketing Professor John Quelch notes that "Today's boards want chief marketing officers who can talk the language of productivity and return on investment and are willing to be held accountable." The article quotes James Stengel, who was, at the time, P&G's chief marketing officer.	Today's marketers need to go beyond "creative flair" to provide a strong financial and analytical discipline to show return on investment. - John Quelch Harvard Business School
Stengel said: "Marketing is a $450 billion industry, and we are making decisions with less data and discipline than we apply to $100,000 decisions in other aspects of our business." Since listeners are the source of all cash flow in radio, programming and marketing excellence are critical.

Quelch notes, "many marketers are failing... They are often creative right-brain thinkers who can dream up campaigns to drive top-line sales, but they show little interest in the balance sheet impact of their marketing communications plans." "Such marketers lack the quantitative, analytical skills necessary to drive marketing productivity; and they resist being held accountable for marketing performance, claiming that variables beyond their control, such as competitive activity, impede their ability to monitor the impact of marketing expenditures on results." The article suggests 4 key things marketers must do to succeed in a world where information rules (right).
		Start with gathering and analyzing basic data
		Supplement and refine this big picture approach by analyzing the profitability of each customer.
		Even when you know which customers to target, today's media fragmentation has increased the complexity of achieving an optimal allocation of marketing expenditures.
		Measure what's important.


We've elaborated on them for the radio industry: Start with gathering and analyzing basic data. Too often, marketing evaluation involves a simple analysis of share or cume changes in a single phase. Ironically, the margin of error of the phase can be more than the changes being evaluated. It's rare to see a thorough analysis of P1 Cume, time periods, the database created, or an analysis of the shelf-life of a marketing campaign. In many cases, stations are overspending in some marketing areas and under - spending in others. Supplement and refine this big picture approach by analyzing the profitability of each customer. Not all listeners are created equal. In fact, those who fit the diary-friendly profile are the only ones that create profit because they are the only ones who will be counted. Moreover, marketing is best when focused on the sub-segment of those listeners who are heavy radio users and have a high proclivity to the format. They are the "most profitable" and provide the largest return on investment. Even when you know which customers to target, today's media fragmentation has increased the complexity of achieving an optimal allocation of marketing expenditures. An incredible amount of money is wasted using mass media to reach listeners who will never matter because they will never agree to keep a diary and/or they will never be significant listeners to the format. Measure what's important. The vast majority of the AQH rating and share of a station come from the P1 listeners. The value of a new P1 listener is 17 times more than a P2+ listener. As such, the job of marketing is to partner with programming to create, convert and sustain more P1s for the station. Bringing in cume for cume's sake without regard for the quality (P1 likelihood) of that cume can be detrimental because it decreases TSL and zaps resources. Also, if the brand image of your station is critical, why not measure it? P&G measures return on brand-equity each year to evaluate the strategic brand-equity improvement of their marketing expenditures. Radio should too.
Like many other industries, radio faces marketing expenditures that account for a larger percentage of corporate cost structure than ever before. According to Quelch, "today's marketers need to go beyond the 'creative flair' to provide a strong financial and analytical discipline to show return on investment."

For more information, email Tripp Eldredge or call (859) 655-9200, ext. 103. dmr regularly updates our site with important new ideas and applications for marketing. Be sure to check back each month to get our latest insights and how they apply to the broadcast industry.