Following is a sanitized version of an actual email from a CFO to a CMO at a global 1000 company:
TO: Susan James - Chief Marketing Officer
FROM: Amy Ivers - Chief
Financial Officer
RE: Congratulations on your recent recognition for marketing efficiency
Susan -
Congratulations on being ranked in Mediaweek's recent list of
top 10 "most efficient media buyers." It is a reflection of your ongoing commitment to getting the most out of every expense dollar, and well-earned recognition.
But I can't help but wonder,
what are we getting for all that efficiency?
Sure, we seem to be purchasing GRPs and click-throughs at a lower cost than most other companies, but what value is a GRP to us? How do we know
that GRPs have any value at all for us, separate from what others are willing to pay for them? How much more/less would we sell if we purchased several hundred more/less GRPs?
And why can't we connect GRPs to click-thrus? Don't get me wrong, I love the direct relationship we can see of how click-throughs translate into sales dollars. And I understand that when we
advertise broadly, our click-throughs increase. But what exactly is the relationship between these? Would our click-through rate double if we purchased twice as much advertising offline?
Also, I'm confused about online advertising and all the money we spend on both "online display" and "paid search." I realize that we are generally able to get exposure for less by spending online
versus offline, but I really don't understand how much more and what value we get for that piece either.
In short, I think we need to look beyond these efficiency metrics and find a way to
compare all these options on the basis of effectiveness. We need a way to reasonably relate our expenses to the actual impact they have on the business, not just on the reach
and frequency we create among prospective customers. Until we can do this, I'm not comfortable supporting further purchases of advertising exposure either online or offline.
It seems to me
that, if we put some of our best minds on the challenge, we could create a series of test markets using different levels of advertising exposure (including none) in different markets that might
actually give us some better sense of the payback on our marketing expenditures. Certainly I understand that just measuring the short-term impact may be a bit short-sighted, but it seems to me that we
should be able (at the very least) to determine where we get NO lift in sales in the short term, and safely conclude that we are unlikely to get the payback we seek in the longer term either.
Clearly I'm not an expert on this topic. But my experience tells me that we are not approaching our marketing programs with enough emphasis on learning how to increase the payback, and are at best
just getting better at spending less to achieve the same results. While this benefit is helpful, it isn't enough to propel us to our growth goals and, I believe, presents an increasing risk to our
continued profitability over time as markets get more competitive.
I'd be delighted to spend some time discussing this with you further, but we need a new way to look at this problem to find
solutions. It's time we stop spending money without a clear idea of what result we're getting. We owe it to each other as shareholders to make the best use of our available resources.
I'll
look forward to your reply.
Thank you.
So how would you respond? Comment below. I'll discuss the most creative/effective responses in two weeks.