Budget Watch: Experts Share Where Marketers Should Put Their Dollars in 2012

Posted on by Patricia Odell

Where should marketers allot their budget dollars in 2012? Chief Marketer recently talked to several marketing professionals to get their opinions in several key areas of spending:

Jim Wheaton, cofounder/principal, Wheaton Group/B2BMarketing.com
Grant Johnson, president/CMO, Johnson Direct
Barry Kirk, solution vice president, consumer loyalty, Maritz Loyalty & Motivation
Michael Kahn, senior vice president, client services, Performics
Ian Wolfman, CMO, imc2
Jill LeMaire, senior director, Aspen Marketing Services, a division of Epsilon
Alex Campbell, co-founder and CEO, Vibes Media

SOCIAL

WOLFMAN: For marketers working with social media, 2012 will be the first year that “always-on” social media will scale. By the end of 2011, Nielsen predicts over half of the U.S. population will have smart phones. Social media is an experience best consumed through mobile because of the convenient, anytime-anywhere access it offers to consumers looking to engage. The role that social media plays in how people communicate, build relationships and make purchasing decisions will change its level of penetration and critical mass, as well as how consumers and marketers leverage it.

For 2012, marketing will explore how social media can be proactively managed. Understanding how marketing dollars will shift from one-way advertising to building and developing relationships is one of the keys to a successful social media marketing investment. Elements such as geo-targeted social media conversations, physical world integration through mobile devices with technologies like QR codes and social feedback loops will allow marketers to go beyond simply curating and distributing content and delve into the areas of psychology and behavioral modification.

DIRECT MAIL

WHEATON: Many database marketing professionals think direct mail is an obsolete communication channel. But we have seen direct marketing companies that were significantly damaged—and in one case, destroyed—by a sudden and dramatic shift of dollars from print to electronic media. Often, we find that such unfortunate decisions are driven by a failure to properly measure campaign effectiveness in today’s complex world of overlapping promotional channels.

It is important to be channel-agnostic. Properly analyze the data, and let your findings help guide you to the best ways to invest your promotional dollars across the various channels. We have seen examples in which rigorous analysis indicated that the investment in print should not be shifted to e-commerce. With one company, the data showed that increased expenditures were warranted in both print and e-commerce. With another company, which began as in Internet pure-play, investment in e-commerce turned out to be close to ideal. However, the data indicated that significant incremental investment in print would be cost-effective.

JOHNSON: Mail continues to be the best way for marketers to identify and reach out to prospects. As mail volume is down, the chances of being noticed are even better. Mail will be used by smart marketers to build their customer base; it will also be used after a contact by a prospect was made. It works wonders in taking the engagement started by social media to a marriage by closing the sale, and the amount of personalization that can done based upon that data at hand is remarkable. It’s also more cost effective to uber-personalize than ever before, which makes mail a wise spend. Don’t forget to test mail on the back-end, especially for two-step programs where a prospect has requested additional information. You should also test a letter and other direct mail components in an initial order that has shipped. Test different messaging and offers here, as that’s a trend you will see more and more of in the coming months.

LOYALTY

KIRK: 2012 will be all about recapturing consumer attention and engagement in loyalty space. Game science or “gameification” is an emerging technique of integrating game dynamics and mechanics (like randomness, mastery, leaderboards, and virtual rewards) to business applications, game science is rapidly moving from a new idea to becoming its own industry. Loyalty programs are a no-brainer for these techniques and program owners need to take a serious look at applying game science to deepen consumer and employee engagement beyond the traditional “earn and burn.”

With the increased influence of Gen Y, “deal of the day” offerings popularized by Groupon, and greater adoption of smart phones, consumers want to access loyalty programs the same way they now bank or redeem discounts—wherever and whenever they want. It’s an “on demand” world, and loyalty program owners need to respond to this by investing in cutting the tether to standard websites and moving quickly into the mobile space and restructuring the reward mix to offer more immediate, short-term wins.

SEARCH

KAHN: Despite a decade plus of digital growth, marketers still under invest in the channel (13% of all budgets) versus the time people actually spend in it (28% of all media use). When allocating dollars across digital for 2012, reward performance by increasing spend in the channels that produce. With this proper digital foundation in place, other important areas to address include search and devices beyond the desktop. In its most robust state, search strategy must include paid, owned and earned media to dominate the search engine results page. That’s because search now includes SEM, SEO, social, mobile and local search, requiring marketers to have a comprehensive strategy leveraging ads, website assets and key audience generated input/content.

Within the next five years, more people will access the Web via mobile devices than PCs, and tablets will outsell desktops. The portion of paid search impressions coming from mobile devices crossed the 10% threshold in 2011 and won’t slow down any time soon. Plus, mobile paid search still delivers results similar to desktop paid search for about half the cost. For 2012, mobile and tablet investment in the form of apps, content, media and promotions should be a growing portion of your digital and overall marketing spend.

MOBILE

CAMPBELL: Email will lead the race for CRM and analytics, but mobile will add a new dimension to direct messaging with an end user. Push notifications will become a very popular way to message your customers. Unfortunately, I think it’s going to start with a lot of mistakes. About three to six months after the new iPhone operating system is released, marketers are going to realize they can send SMS-like notifications to their customers, for free. And they’re going to start to do it a lot. In fact, they’re going to do too much of it, and there’s going to be a recall back to strategically thinking about sending direct messages to customers via the mobile phone.

EMAIL

LEMAIRE: Consumer preference should play a huge role in how you allocate your email marketing budget. Marketers should ask themselves questions like whether their customer are now mainly engaging with email on a mobile device, or whether they regularly watch for deals in the social arena.

A significant portion of your email marketing budget should be designated to analytics and multichannel efforts. Make sure every dollar spent is yielding results and supporting your marketing—and ultimately your business—goals. Engage with analytics to determine if your email, social or mobile programs drive in-store or online shopping. While a direct click may not be immediately ascertainable, is there behavior to show increased awareness with these sends that drive “soft” foot traffic?

DATABASE

WHEATON: We use two ratios to determine if company is likely to achieve a cost-effective database marketing program. The first ratio focuses on the one-time build of the marketing database. We take the amount to be spent on the “data content” piece, and divide it by the overall cost of the project. By “data content,” I mean the “stuff” that populates the database. When the ratio is low, the project is not very likely to be a success. It is important to sound an alarm if a company is looking to throw huge sums at technology and small sums at ensuring that the data content is of the highest quality. It is much more widespread than you might think, especially in B-to-B.

The second ratio focuses on the ongoing database marketing program. Take the amount to be spent on the analytical team, and divide it by the overall cost of maintaining the database and performing the associated data processing (campaign selects, etc.). When the ratio is low, the project is not very likely to be a success.

JOHNSON: What stories is your data telling you? Invest in understanding your customer, prospect and lapsed customers, by each channel you use. It’s the surest way for you to market smarter and pick- up on trends within your own customer files. It also leads to more intelligent prospecting.

 

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