John Wanamaker was famous for saying, “I know 50 percent of my advertising is wasted. I just don’t know which 50 percent.” This statement was made over 30 years ago and sadly, the problem continues to be one of the biggest issues plaguing businesses today.
The estimated marketing wastage rate (MWR) averages 45 percent for B2B marketers. It’s smaller than business to consumer markets because budgets are smaller, strategies are more niche, and campaigns are running via fewer media channels. The estimated MWR rises to 65 percent for B2C marketers because budgets are often larger and teams have to take more innovative, riskier, and creative media approaches to find new ways to differentiate their brands.
To improve the effectiveness of marketing you need to not only improve the measurability of your marketing programs, but also make sure you are measuring the right things. Don’t look at simply how much is spent, but how much you invest to achieve the overarching goals for your business. The key is to figure out how to value a customer and how much to invest in acquiring and maintaining that customer. Ask questions such as:
- How much is a customer worth now and what is the income flow from that customer today?
- What are the opportunities in the future for specific customer segments and individual customers?
- What share of market do you presently serve?
- What must be done to maintain and serve to keep that customer?
While it’s important to break out each media and evaluate it on an individual basis, this is not the most important or accurate measure of marketing effectiveness. Be careful that you don’t fall into a campaign mentality by measuring marketing and communication with a customer as a campaign that runs for 7 or 13 weeks. Look beyond the specifics of direct mail vs. online advertising to the entire marketing and brand communication program. Marketers tend to want to get finite before they have an understanding of whether or not the combined efforts are working. It’s also important to think beyond department function (advertising, promotion, PR, etc.) and consider the holistic effect of all marketing, PR and sales activities, including other areas in the organization, work together to achieve a greater synergistic outcome.