“Feeling good about your bottom line”

02 Aug 2005|Added Value

Companies are insisting that they see a return on investment for their advertising spend – so how actually is that measured?

As markets become more competitive, marketers engage in even tougher battles for increased market share through increased marketing spend. 

Imagine being able to understand exactly how effective your entire marketing spend had been – in isolation and in its totality – in terms of driving brand equity and sales.

Picture this: You spend R20 Million on advertising each year. Your last pack redesign cost you R5 Million, you sponsor a quiz show with another R5 Million. In addition, your sales activity cost you R10 Million and you are planning some guerilla activities amongst a specific target group for a further R10 Million.  In summary, you are looking to spend a fairly hefty R50 Million – what if, let’s say,  40% of that had no impact at all? You have just effectively wasted R20 Million! Is this acceptable in an era where marketing has had to become more accountable for driving the growth and profitability of the business?

At Added Value, we believe that a brand is only as strong or successful as its ability to generate demand-led growth for a business now and in the future.  Every marketing activity therefore has to be assessed against whether it is resulting in a genuine business benefit rather than whether it is winning awards for the marketing department and their agencies. 

In addition, we need to take a more holistic approach. We certainly all use multiple marketing instruments and increasingly diverse ways to create ever-lasting and emotionally involving relationships with our consumers. However, the way we understand how effective these activities are – is rarely so broad or comprehensive. At best, many clients try and understand the effectiveness of their advertising. Many of these measures focus only on awareness and reach, rather than sales, and even where they do, the fact that the advertising’s effectiveness is being assessed in isolation from all the other marketing activities means that even this measure cannot reliably be linked to sales. 

If the truth be told, the measurement of ad spend is one thing. A more powerful measurement would surely be across every single touch-point a brand has with its consumers, across all forms of communication and not just your typical above-the-line advertising.

It is therefore time to challenge the way marketing activities have always been assessed.  In developing our tools for Mix and Performance Optimisation, we strongly believe in the following:

  • Measuring all marketing activities that the brand invests in and understanding their individual and combined effectiveness
  • Understanding the effect of each of the activities in the context of a competitive market
  • Monitoring the equity and value of the brand and how this has been affected by the various activities 
  • Understanding which element of the mix and which iconography has the greatest impact on how consumers believe the brand will make them feel, which is what will ultimately determine whether consumers will reach for your brand before any of the competitors

Measurement tools such as these, not only provide reliable, quantified information that helps you decide how best to allocate your budget so as to optimize your brands’ impact, but enables your brand to truly drive growth for your business. Now that will make you feel really good – not just about your brand but also about your bottom line!

By Wendy Davies, Added Value South Africa

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