Even the most hardnosed bean counter will agree that marketing and advertising are essential to business success.
Where the bean counters and the marketers split is in the degree to which dollars spent on marketing and advertising affect sales and profitability. And therein lies one of the greatest struggles of our capitalistic society.
The struggle has been especially tough lately. The economic downturn of the past two years has put marketers on the defensive. As budgets have been reduced and reduced again, marketers have stepped up efforts to find the Holy Grail of marketing--the formula, the software, even the general rule of thumb that enables marketers to measure the effectiveness of a marketing campaign.
A recent Forrester Research survey conducted among members of the Association of National Advertisers found that well over half the nation's largest advertisers are using marketing automation tools to help manage their campaigns and prove their effectiveness. More and more, marketers and advertisers are searching for technologies to help them find the link between advertising dollars spent and sales. Half the respondents in the Forrester study said they planned to spend a quarter-million dollars on marketing software this year.
What do they hope to get in return for these expenditures? They hope to get the bean counters off their backs by offering spreadsheets and PowerPoint shows that illustrate a direct correlation between ad money spent and sales.
That's not all that bad, you say; and I would agree--in theory.
The trouble comes when marketing strategy becomes driven solely by the need and ability to measure marketing effectiveness. Here's an illustration.
Recently, I received an email advertisement from The Gap. It was a one-screen ad showing a large image of someone matching The Gap demographic wearing a leather jacket. The headline was something to the effect that The Gap had tons of leather jackets and that they were all 15 percent off the regular price.
The generators of the ad hoped I'd click through to Gap.com to order one online. At the end of the day, they would be able to track how many people viewed the ad, how many clicked through and how many who clicked through ordered the jacket. I didn't have the time to click onward, so I closed the ad wondering if The Gap's financial performance had picked up any from its recent doldrums.
The next day, guess what arrived in my email box? A similar ad from Eddie Bauer. Same basic jacket. Same basic sale.
Therein lies the danger that the need for measurement creates.
Both stores were advertising product. Neither chose to tell me what was special about their jacket, discuss the fashion trend behind the leather push, or promote anything related to their respective stores. The chose to promote product only--and to do so at a markdown price.
So what's the big deal? Basically all The Gap and Eddie Bauer succeeded in doing was boosting the market for leather jackets and pushing down margins for all players in the market. Likely at the end of the holiday season, we'll see that leather jackets sold well and realized little return on inventory investment for the market players.
Marketers at each outlet, however, have their numbers. Those numbers likely say that each store spent X dollars on marketing the leather jacket and received an X return on those dollars based on sales during the week the promotion hit. Marketing by the numbers will look successful.
Leather jackets received a nice image boost in the deal. I'm not sure Eddie Bauer or The Gap came out ahead though.
I buy occasionally from Eddie Bauer. You know why? They'll hem pants, even jeans, to any length you want--something few catalog retailers will do. I believe if Eddie Bauer really wanted to boost sales and customer loyalty, they should have spent money to tell others about this benefit of shopping there. Trouble is such advertising doesn't carry a measurable benefit. I can't track with certainty how the dollars spent selling this fact translated into sales.
The result of the push to promote commodity products is that no money gets spent to promote the store. Consumers end up thinking one store is pretty much like the other. When that happens they end up buying on price--and the downward spiral begins.
Lands' End is one catalog merchant that's managed to buck the trend. They promote an everyday low price and spend a good deal of effort promoting the Lands' End difference. They tell you how much effort went into finding just the right fabric for a sweater, or how feeding the Balkan geese corn and whiskey makes their down fluffier and warmer. The result is that people buy from Lands' End because it is Lands' End…whereas people buy from The Gap because it has the commodity du jour on sale now.
To be effective marketers, sometimes marketers must resist the guilt feelings that come from spending money when they can't make a direct correlation between promotional money spent and goods sold. And, executives need to commit to differentiating their companies via advertising and not force marketers to deliver the Holy Grail in order to justify their existence.
So take my advice. Spend the money planned for measurement software next year on telling customers why you deserve to exist--or on hemming your pants to customer specs. Either way, you'll come out the winner.