The 7 M’s of Marketing. The Sixth “M”, Media Strategy

Sixth “M”

Money: How Much Money Should You Spend On Marketing, And Can You Track the Return On Investment?

Piggy Bank with CoinsIndustry writers suggest spending an average of 5-10% on your marketing efforts. This includes advertising—TV, radio, social media ads, etc. —but isn’t limited to that. Other types marketing include networking, customer service, publicity, market research, video for your website, etc. It comes down to the details, for example, how the phone is answered, and can be as broad as an overall campaign that covers a year or more of marketing strategy.1

Another option to calculate how much to spend on advertising (the print, online ads that you do along with commercials) is to take 10% and 12% of your annual gross sales and multiply each calculation by the markup made on your average transaction. To calculate markup, divide gross profits by hard costs. Deduct your annual rent (or mortgage) from the 10% and 12% numbers, and that will give you the range to spend on your ads.2

Here are some questions to ask yourself while making a decision about how much to spend:

  • How much do we want to make this year?
  • How much improvement does our bottom line need over last year?
  • Will we lose money, customers, clients if we don’t do anything? If so, how much will that cost us?
  • Are there areas of our marketing that are working?
  • Are there areas that need a boost?
  • What areas don’t we do at all?

John Wanamaker once said “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”3 This can be disconcerting, especially when asked to spend 5-10% of revenues on marketing. However, remember:

  1. Advertising—print, social media, outdoor, commercials, etc.— is only one part of marketing. Others include:
    • NetworkingColorful financial graphs and sales charts
    • Customer service
    • Market research
    • Sales
    • Public relations
    • Pricing
    • Packaging
    • Distribution
    • Relationship building
    • … and more of course
  2. There are a variety of ways to measure the return on advertising:
    • Set up a unique phone number to call in a print ad, or create a unique URL for an online landing page. Then you’ll know which media is being seen and used to contact your company.
    • In addition, make sure that everyone who has contact with clients and customers asks them how they heard about your company. A simple form, printed or digital, can be used to track this information.

As you track the sales generated by your marketing campaign, you can use the numbers to do a revenue to cost ratio, which is incremental revenue driven by a marketing campaign divided by the cost.4 For example, if it costs $1200 to run a pay-per-click ad campaign, and the campaign reaches 45,000 people, and 5 of those people become customers, spending an average of $1500 each on what your business offers, the revenue to cost ratio is 6.25x. 5x is considered a good return, 10x is excellent.

When considering the marketing for your company, and how much to spend, it’s important to have a plan. I often hear things like: “We spent $XX on newspaper ads and didn’t get any business from it”. Remember that it takes repeated messages to see results. With a plan, you can decide which media to use and how much to spend in each area.

Writing your own plan can be an option if you’re a small business on a tight budget and have some industry know-how, or you can hire someone to write it for you and work through the details. Having someone who’s experienced and knowledgeable to guide you can make all the difference in your efforts.

Marketing SuccessOnce the plan is put together, the budget committed, and the marketing started, the fun begins. And that’s learning about what’s working, what isn’t and why. And, experiencing the rewards through what IS working. That’s exciting!

1https://www.sba.gov/blogs/how-set-marketing-budget-fits-your-business-goals-and-provides-high-return-investment

2http://www.entrepreneur.com/article/54436

3https://en.wikipedia.org/wiki/John_Wanamaker

4http://www.inc.com/victor-ho/one-simple-metric-you-need-to-determine-marketing-roi.html

Other sources for the 7 Ms of Marketing:

https://marketing.wharton.upenn.edu/profile/200/

https://marketing.wharton.upenn.edu/profile/227/

 

 

The 7 M’s of Marketing. The Fifth “M”, Media Strategy

Fifth “M”

Media Strategy: What Tools Will We Use?

Today’s media strategy is more complex and changes more quickly than that of the not-so-distant past. Traditionally, marketers worked with:
Television Signal Satellite

  • Television
  • Outdoor
  • Radio
  • Print

Today, we need to consider these channels along with online marketing, which includes (among others):

  • Social media
  • Websites
  • Blogs
  • Pay-per-click
  • Search engine optimization
  • Tablets
  • Mobile marketing

And of course, there are a myriad of miscellaneous areas that can be considered. For example, closed-circuit TV at health clubs, word-of-mouth, events and seminars, bus wraps, Power point presentations, demonstrations, etc.

So you’re probably wondering, “how do I choose?”  Consider your target market, and what types of media they may be using.  Consider your budget—how much do you have allocated to spend on marketing? Be realistic. To make something happen, it takes time and/or money.

Social media is considered “free” or low-cost, but does take time to keep up-to-date. Some companies have an employee or group of employees who can dedicate a block of time on a daily or weekly basis to updating social media sites, blogs, and other digital media. This can indirectly save money, but needs to be weighed against actual availability of these employees.

Pay-per-click ads can be priced according to your budget—creating and placing the ads and measuring the success will cost more in time or dollars to make this part of the strategy a success.

Traditional media can seem expensive, if compared to the seemingly “free” aspect of online, yet when adding up all the costs of time and expense, you may find that it’s quite comparable. And, research shows that consumers still use traditional media1 and trust traditional media more than online ads2.

Perhaps surprising, direct mail is still an effective way to communicate, with a response rate that is competitive with, and can out-perform, digital media.3

In most cases, it’s important to combine traditional and social media, to communicate with target markets on several levels. People respond to each type of media differently, remember them differently, engaging with them differently. As Tom Doctoroff says in his article Why Traditional Media Isn’t Dying, and 4 Other Myths of the Digital Era Dispelled: “Top-down shapes preference. Bottom-up deepens engagement—or time spent with an idea—that leads to loyalty.”

Woman using tablet onlineThe ability to engage interactively with digital media makes it an essential tool in your media strategy. And digital is not just for the young. There’s a high percentage of 45+ year-olds who are active on social media sites like Facebook. Yet the numbers who see and trust media like television and newspaper over online show how important it is to retain traditional forms of advertising. The adage “it takes seven ‘touches’ to make a sale” may not hold up in today’s fast-paced environment, but repeated connection with a customer, using a consistent and identifiable brand strategy, is important in building trust and creating a relationship with each customer.

When deciding on a media strategy, research will help to guide the way. Hiring a company that specializes in audience research, through a marketing company or stand-alone, will help tremendously. You can also use the internet to handle preliminary research, and/or the research to guide a small marketing plan. Whatever route you take, it will be an interesting and exciting experience as you discover how your target audience responds.

1http://www.americanpressinstitute.org/publications/reports/survey-research/personal-news-cycle/

2 http://www.statista.com/chart/1473/consumer-trust-in-advertising/

3 http://www.iwco.com/blog/2015/04/14/dma-response-rate-report-and-direct-mail/

Other sources for the 7 Ms of Marketing:

https://marketing.wharton.upenn.edu/profile/200/

https://marketing.wharton.upenn.edu/profile/227/