Maximizing Marketing Investments: Strategies to Boost the Value of Every Dollar
Marketing unquestionably stands as one of the pivotal departments in any business. From conducting market research to crafting precisely targeted advertisements, marketers play an indispensable role in helping businesses achieve their revenue goals. Naturally, generating revenue entails spending money, and according to the most recent CMO spending survey by Gartner, marketing expenses typically account for an average of 10.5% of a company’s revenue.
While marketing budgets have remained relatively steady in recent years, they also represent one of the most adaptable areas where businesses can choose to increase or decrease their investments. What began as a promising year for marketers took an unexpected turn with the onset of the COVID-19 pandemic. As a response to an uncertain future, nearly 70% of brands are poised to reduce ad spend, as reported by Influencer Marketing Hub.
In these challenging times, it has become more critical than ever for marketing teams to optimize their resources, ensuring that their messages effectively reach the right consumers at the right moment and compel them to choose their product over alternatives. This is where prescriptive analytics steps in, empowering marketers to transform a haphazard advertising campaign into a well-thought-out strategy aimed at capturing the most profitable audience.
The challenge with justifying marketing spend
During periods of uncertainty, businesses often reduce their marketing expenditures, primarily because of the sentiment expressed in the age-old adage: ‘I know that half of my advertising budget is wasted, but I’m not sure which half.’ While this saying may be a bit of an exaggeration, it does carry some truth: Justifying marketing spending can be a challenging task.
Many companies struggle to quantify the value they receive from their marketing investments. This lack of certainty makes executives cautious about allocating more funds to unproven strategies. Web Strategies outlined several methods that businesses typically use to track marketing return on investment (ROI). However, these formulas and metrics often fall short in accounting for the complex influence of human behavior on sales. Even attribution models like marketing mix modeling, which can provide insights into media investments, may not be robust or fast enough to address the multifaceted marketing questions that businesses must answer when time is of the essence.
In uncertain times, businesses need more than just an understanding of media spend and consumer responses to justify their marketing efforts. They must simultaneously align with multiple objectives that are shaped by human behavior. Optimizing marketing expenditures under such conditions requires a departure from past performance and ROI metrics. Instead, it involves forecasting how the current market will respond to a new media strategy.
By implementing a process that yields easily understandable results and offers strategic recommendations, senior leaders can recognize the value in their marketing plans. Embracing this vision enables businesses to initiate and guide changes that make every marketing dollar more effective. However, achieving these goals is not an overnight endeavor; organizations need prescriptive guidance and support to navigate this transformation.
Prescriptive analytics for strategic media planning
Prescriptive analytics holds the key to quantifying marketing initiatives, a critical aspect for marketers in their quest to enhance the customer experience. Here are several additional ways in which prescriptive analytics empowers effective marketing expenditure:
- Measure Return on Investment (ROI): This methodology enables senior leaders to discern the role of marketing within the broader business strategy and spot fresh avenues for expansion.
- Fine-Tune Budget Allocation: Prescriptive analytics offers guidance on the optimal distribution of budgets across various channels, marketing and sales funnels, product lines, and even audience segments. This granular level of insight aids marketers in understanding when and how customers engage with their brand, enabling the formulation of comprehensive customer lifecycles and the identification of crucial touchpoints.
- Pinpoint Influential Factors: In the realm of touchpoints, prescriptive analytics excels at quantifying the incremental impact of individual marketing elements, including campaigns, offers, messaging, calls to action, and other performance metrics. Identifying which factors wield the greatest influence in the customer journey allows marketers to enhance them strategically.
- Adapt to External Forces: This advanced analysis equips businesses with the ability to anticipate the responses of external factors, such as competitors, ensuring they stay one step ahead in the marketplace.
In essence, prescriptive analytics empowers marketers to formulate swiftly actionable plans. Rather than necessitating ongoing technical maintenance, this solution allows non-analytics experts among business users to focus on interpreting results and guiding their actions. This results in an automated, accessible solution that aids marketers in optimizing their expenditures effectively.
Guidelines for Achieving Your Revenue Goal
Marketing departments across diverse industries can harness the power of prescriptive analytics, which not only forecasts future events but also provides a clear roadmap for achieving revenue targets. This analytical approach, driven by simulation, enables media teams and their agency partners to adjust their investment strategies while campaigns are still in progress. The ability to swiftly adapt and allocate marketing spend to high-performing areas has demonstrated the potential to quadruple returns for certain businesses.
While optimizing marketing ROI is undoubtedly a primary objective of prescriptive analytics, it offers more than just financial gains. Businesses employing simulation also benefit from the following:
- A Consistent Framework: A semi-automated process establishes a consistent framework within the models, allowing users to input weekly competitive, environmental, and consumer insights and track them against internal sales data. These models are meticulously calibrated to accurately replicate real-world dynamics and are regularly updated, sometimes on a monthly basis, to align with evolving business needs.
- Comprehensive Consumer Insights: Gaining a comprehensive understanding of the consumer’s mindset and their path to purchase, coupled with insights into competitors’ actions, enables marketers to assess media performance at a granular level. This analysis helps determine how variables like pricing and messaging have influenced the effectiveness of their strategy.
- Sales Forecasting: Through simulation-driven scenario analysis, managers can identify the most optimal return on media investment, the most effective channel mix, potential outcomes based on different media conditions, and the impact of competitive actions on business performance. All of this contributes to accurate sales forecasts.
With an in-house prescriptive analytics tool, business users can access solutions for their intricate marketing inquiries. By continuously refining their models and comparing predicted sales to market outcomes, organizations achieve increasingly precise and confident sales predictions.
Scios consolidates all marketing metrics onto a unified platform, serving as the definitive source of truth for marketers and analysts alike. This end-to-end measurement system accurately tracks marketing expenditures, impressions, sales, and revenue generated by each investment, empowering business leaders to gauge the value of their media spending and optimize their budgets.
Contact us today to explore how Scios.ai can enhance your marketing strategies.