10
PROMOTIONS: THE FOURTH ‘P’ OF TACTICAL MARKETING

Figure 10-1: Marketing Alignment Map

When managers say they are unsure about the returns they are receiving on marketing investments, they are often thinking specifically about their investments in promotions. Promotions include the wide range of activities associated with the more commonplace definition of marketing, such as websites, advertising, public relations and a host of other tactical efforts that I will discuss in more detail throughout this chapter.

There are four reasons non-marketing managers remain doubtful, and they are all related to how promotions are typically managed.

The first is that many managers are confused about the two functional roles of promotions. As a result, their expectations aren’t consistent with the outcomes that promotions produce. By gaining a better understanding of how promotions work, non-marketing managers will be better able to anticipate potential results.

The second is that promotions are often managed by a team within the company, and sometimes, outside the company, and managers often have limited insight into how decisions about promotions are made. It is not unusual for promotions to be delegated away from senior management. When marketing activities are selected without strategic input, this can result in a significant misalignment between promotional investments and the discipline of marketing. In the worst cases, the company can fall into ineffective ‘follow the leader’ behaviours.

The third is that many managers don’t understand the importance of the message and how it is delivered. Promotions are the most visible aspect of the company’s marketing efforts, often reaching the customer before the product or service does. Without careful attention to the message and how it is delivered, even the most effective potential promotional tactic can be rendered ineffective. Non-marketing managers should have a strong understanding of the visual and verbal impact their promotions are having and ensure that they are consistent with the image and brand reputation discussed in chapter 3, ‘Brand Management Fundamentals.’

Finally, many managers are relatively unfamiliar with the most common forms of marketing promotions. Although they might be more effective at spotting a poor fit with market needs in a discussion of pricing, product or distribution channels, many non-marketing managers are unsure how to evaluate a marketing tactic effectively. As a result, they approve a plan they do not thoroughly understand and remain unconfident of the potential outcomes. In the worst cases, a non-marketing manager adds to his or her marketing losses by actively advocating adoption of a particular promotional tactic that is a poor fit for the market and related strategies. To address this issue, the non-marketing manager must have a solid understanding of when a particular promotional tactic is likely to be effective and when it is not.

This chapter covers each of these promotional management issues in turn.

UNDERSTANDING THE TWO FUNCTIONAL PURPOSES OF PROMOTIONS

Promotions work most effectively in the context of a well-constructed, broad-based marketing strategy, with a strong product or service, appropriately priced and available in the places in which the customer would look to find it. Assuming those elements are in place, promotions serve two important functional, or operational, purposes.

The first purpose of promotions is to reduce the cost of the sales process. To do so, promotions are used to raise visibility, inform the market about the product or service’s benefits and persuade the market that the product or service is a better match to its needs. This reduces the time required to make the sale, improves the odds the sale will close successfully or increases the volume through increased demand.

To better understand why promotions provide leverage and reduce the cost of sales, consider the evolution of promotions. A few hundred years ago, if you wanted to purchase a bar of soap, rather than make it yourself, you purchased it from someone who you knew had a good reputation for quality products, perhaps even a personal friend. Regardless, you could talk to that person individually about the products he or she manufactured.

When soap began to be manufactured by companies, rather than individuals, and sold by multiple sales people, the connection with the value of that particular soap became more tenuous. After all, if you didn’t know the person selling it—or even making it—how would you know that it was the same quality or even the same product? The sales person trying to make the sale would spend time trying to reassure the purchaser that his or her product was genuine, costing the manufacturer money in the form of sales personnel, time and lost sales.

In response, manufacturers began to package their products using consistent labelling and brand logotypes, so that customers would feel reassured. By making the products look the same, the customer was more likely to feel confident that the product was the same, even if the sales person wasn’t the same one who sold it to him or her previously. This helped the sales person make the sale more quickly. Packaging, one of the first forms of promotions, effectively reduced the cost of the manufacturer’s investment in their sales, or distribution, approach.

When it became more common for soap to be distributed through retailers, the soap company was even farther away from the customer, with less opportunity to reassure or persuade. To help improve sales to the retailer, the manufacturer needed to further stimulate demand for its product. Advertising, sponsorships and other promotional activities emerged to address the need. The promotions provided leverage, doing some of the selling for the sales person—and even creating demand before the sales person arrived.

The second purpose of promotions is to help shape and manage a company’s reputation in order to achieve other business objectives. For example, a company might use promotions to reinforce or develop an organisation’s reputation as a great place to work. Several years ago, I worked with the CEO of a regional hospital system to address its greatest barrier to increased revenue: a shortage of qualified nurses. It had applicants, of course. It just didn’t have enough of the right applicants: nurses who cared about patients, shared hospital’s values and would thrive within its culture.

In order to bring in more nurses and address the labour shortage, the market needed to understand the value a job at that particular hospital could deliver. Because the hospital did not have a list of the candidates it wanted to attract and to whom its staff could speak on a one-on-one basis, it needed a broad-based, one-to-many promotional campaign that would shape perceptions of the hospital as one of the region’s premium employers.

Although this might seem to be more of a human resources initiative than a marketing initiative, the CEO of this hospital system, a leader among the region’s health care providers, saw this as a marketing concern. From his perspective, the nursing shortage affected the hospital’s ‘product:’ the services it delivered to patients. Without qualified nurses, the hospital’s product was compromised, and its revenue was diminished.

Another way companies leverage promotional concepts is by proactively developing reputations as strong corporate citizens in order to facilitate permitting processes and other expansion plans or reinforce relationships with key clients who share strong corporate citizenship as a value. Companies may also use promotions to create a positive image in the community that adds value to their product and enables them to charge a premium price. If a company’s market values corporate contributions to community health and welfare, the consumer will often pay a slightly higher price in order to support that organisation. Alternatively, or even additionally, such shared values can increase customer loyalty.

For example, many consumers pay a few cents more per bottle of water to purchase Athena, a product line now owned by DS Waters of America. Athena Waters was created in 2003 to sell bottled water and raise money for breast cancer awareness and research. Formed as a for-profit corporation, the company charged a premium on its product, promising to send the corporate proceeds to not-for-profits whose work focused on breast cancer prevention and research. In 2010, the company was acquired by DS Waters, a manufacturer of a number of bottled waters. DS Waters then further reinforced its community-based image through its other product lines. The company provides bottled water to communities during emergencies, such as floods, hurricanes and other natural disasters, generating appreciation and selection preference. Despite the change in ownership, consumers who are concerned about breast cancer remain loyal to the Athena label because they believe it shares their same core values.

Promotions can also be used to mitigate or repair potential damage to a brand reputation. In 2011, a social media specialist employed by the American Red Cross confused her own account with that of her employer and posted a tweet announcing plans to drink brewer Dogfish Head’s beer for the purpose of ‘gettngslizzerd’ (becoming intoxicated).

The tweet was on the Red Cross site for about an hour before it was deleted. However, rather than ignoring the tweet and hoping it would not be noticed, the Red Cross proactively tweeted ‘We’ve deleted the rogue tweet but rest assured the Red Cross is sober, and we’ve confiscated the keys.’

Dogfish Head Brewery, which was among the many followers who saw the tweet, successfully encouraged followers of its Twitter account to make donations of blood to the Red Cross and then to ‘refill’ with Dogfish Head beer. Both responses were a success. The Red Cross avoided any potential ill will or offense that might have been associated with the initial tweet, Dogfish Head experienced a surge in sales of its beers and individuals in the 30 states in which its beers are sold stepped up to make blood donations. The proactive promotional response allowed them to turn the mistake into money for both the non-profit and the brewery. It also resulted in significant media coverage, providing added visibility to both organisations.¹

Although promotions can be very effective at providing leverage to a sales or other distribution channel, they cannot compensate for a weak product, inappropriate pricing or poor sales efforts. Yet, that is often the role they are asked to play. When sales sag, companies turn to promotions when other aspects of the marketing mix are more likely to be the culprits. Companies whose management teams expect promotional efforts to compensate for problems in other areas of the marketing mix end up frustrated and disappointed in the outcomes.

Similarly, many companies believe that promotional efforts alone can build a brand’s reputation. Although promotions certainly can reinforce or help manage the brand reputation, the brand itself cannot be created by promotions. It must be lived within the company, a reflection of the management team’s understanding of the discipline of marketing. Otherwise, like a wolf in sheep’s clothing, it will soon be discovered to be something other than what it pretended to be.

DELEGATE, BUT DON’T ABDICATE

The second reason that non-marketing managers are sceptical about the value that promotions deliver is that this aspect of marketing is often delegated away from executive or senior management oversight. The marketing department, or even an external marketing team, is asked to prepare the plan, and the managers are asked to approve it after a relatively cursory review of major budget line items. In some cases, management team members who manage other aspects of the marketing mix, such as sales, product decision, pricing approaches or distribution channel selection, have a limited understanding of how promotions connect with the other elements of the marketing mix.

Because they are unfamiliar with promotions themselves, executives often delegate planning to a marketing team that is not included in the company’s strategic or business planning processes. As a result, the marketing team has only limited knowledge of the executives’ objectives, or in worst case scenarios, is left to guess what the desired outcomes might be. Similarly, the marketing team may have only a limited understanding of the company’s target audience, particularly if they are non-employees or if the company does a poor job of cultivating a market-focused culture.

In these cases, the marketing team is often left to emulate the activities of the market leaders or to create programmes based on assumptions they make about desired outcomes. Neither of these is optimal. Assumptions, as discussed in chapter 5, ‘Understanding What Influences Market Behaviour,’ can cause a company to invest in areas that will not deliver satisfactory returns. Unfortunately, one of the most common assumptions related to promotions, particularly within companies that do not effectively align promotions along with other aspects of the marketing mix, is that if a promotional approach is being used by a successful competitor, it must be effective.

WHY FOLLOWING THE LEADER IS RISKY

Copycat behaviour is risky for three reasons. First, it assumes the market leader has made a good choice in its promotional efforts. This isn’t necessarily the case. Because market leaders enjoy a financial advantage, they may invest in some marketing efforts for speculative reasons. Also, because most promotional initiatives take months, and even years, to deliver results, a promotions blunder may take several years to become apparent. Companies following the market leader’s behaviours may be following them off the edge of a cliff.

Even worse, some companies follow average performers, rather than market leaders. They look for companies of similar size and with similar revenues and structure and emulate their behaviour. Pacing your own behaviour with that of other average performers is a sure way to remain in the same position in the competitive race.

Second, the market leader and the copycat company may or may not have the same market. It would, for example, be rather foolish for the French watchmaker and jeweller Cartier to approach promotions in the same way that the discount retailer Wal-Mart has. Of course, that’s an obvious example. They clearly target different audiences with different value propositions. However, sometimes, the differences are more subtle. Sometimes, both organisations deliver the same product to similar populations, such as milk, haircuts or patent law, but the audiences to whom they appeal are significantly, or even subtly, different.

In 2011, Starbucks surpassed Burger King and Wendy’s to become the United States’ third largest restaurant chain. However, it didn’t do it by outspending, or even spending equally, on consumer-focused advertising. In fact, it was outspent two to eight times more, relative to its closest rivals. Had it paralleled its competitors’ spending, it might not have experienced the success it has. Why? Because Starbucks understands that its market is less likely to be influenced by advertising. Instead, it focused on other promotional, product and pricing approaches.

Starbucks steadily expanded its menu, focusing on healthy food choices that differentiated its offerings from other restaurant chain competitors and appealed to a different demographic. It sustained high prices by offering an experience, rather than just food. They also used other forms of promotions, including social media, sponsorships and other forms of public relations to build brand loyalty.²

Starbucks chose its promotional approach based on what would influence its market, which caused the company to stand out from the competition as a result. Non-marketing managers should carefully consider what market they serve and ask marketers how they know the promotional medium will be effective in reaching them before approving promotions-related budgets.

Finally, companies who copy the market leader stand little chance of differentiating themselves from the competitive fray. Market leaders typically have larger marketing budgets, and their size and market share will often make their voice the one customers recall. In fact, a competitor who too closely mimics a market leader’s look and message in the same promotional medium may unintentionally reinforce the market leader’s message. Although some of the promotional media may still be the same, particularly when the same market is targeted, marketing promotions should be carefully crafted to stand out from the crowd of alternatives.

The executive team, including non-marketing executives, should retain oversight of promotions just as it oversees other aspects of the marketing mix, evaluating whether the promotional tactics selected are well aligned with the strategies and influencing factors they are designed to influence and whether the expected financial outcomes are likely to be achieved. Companies whose executive teams are uninvolved in this evaluation process are, in my experience, much more likely to question the efficacy of their marketing promotions’ investments.

COMMUNICATE SO THE MARKET HEARS WHAT YOU SAY

To deliver a solid return, promotions must be based on a solid understanding of the market and synchronised with other aspects of the marketing mix. They must also communicate a message that is true, credible, relevant to the customer’s decision-making process and important enough to make an impact. This topic was discussed in great length in chapter 3, but it bears repeating because so many companies make this mistake in their promotional efforts.

Many companies, particularly smaller companies, have a tendency to describe their product or service, the attributes or features of what it is they offer, rather than the benefits it delivers. Imagine you are at a cocktail party, and you ask two people you have just met what they do for a living. The first says ‘I’m a marketing consultant.’ Your eyes glaze over. Your brain tunes this person out. You begin looking for the next person you can meet. This person has described what he or she does, and it may be true and credible, but it doesn’t seem relevant to you.

But what if the second person said ‘I help companies make more money’? Would that get your attention? Probably more than the job description the first person provided. Even if the line seemed so overused that it made you roll your eyes, you would probably still ask the person how. Now, he or she has an opportunity to explain how he or she does his or her job. You are now engaged. That’s because what the second person said was relevant. The person was describing the benefits he or she offers to you not just a description of what he or she sells.

If the message isn’t relevant to them, or doesn’t make a difference in their purchasing process, individuals who see the message are unlikely to connect the product or service with the differentiating benefits it is designed to deliver. Without that mental link, promotional efforts may reach potential clients or consumers, but the efforts are unlikely to make an impact.

However, carrying the right message alone isn’t enough. A company could print several true, credible, important and relevant messages, but if they sit hidden in a book’s worth of copy, they may never be noticed. After all, the average U.S. consumer is now exposed to as many as 5,000 advertising messages each day.³ To break through and be noticed, the messages a company tries to communicate in its promotions should be limited in number, concise and repeated frequently.

Finally, when a promotional tactic appears in visual form, as it does in advertising or direct mail, the words can be missed if the reader does not understand the relevance at first glance. Because of the number of visual messages we see every day, we are adept at filtering them out. An advertisement or other printed piece often has only a second or two to communicate relevance to the viewer. In order to do so, the advertising must be designed visually to capture attention. In many cases, the message communicated by the images within the piece is more powerful than the words that support it.

PICK THE RIGHT TOOL FOR THE PURPOSE

In chapter 6, ‘Aligning Marketing Tactics With Influencing Factors,’ I talked about how the selection of tactics is influenced by a variety of considerations related to the marketing strategy itself, including

• the size of the target market;

• market demographics, including where the customer turns for solutions to the specific needs a company addresses;

• whether the customers are businesses or consumers;

• the influencing factor(s) the company is trying to affect;

• the potential impact on a company’s brand;

• the competitive environment;

• the cost of the tactic relative to the potential benefit it could deliver and budget constraints;

• the time before such benefits are likely to be realised; and

• how the mix of tactics are likely to work together.

Although these considerations factored into the discussions of other ‘P’s, they are especially important in the selection of promotional tactics. However, like many other aspects of marketing, promotions has become increasingly specialised and technical. As a non-marketing executive, your role may not include the development of promotional campaigns. However, you will probably be asked to approve promotional investments, many of which can be quite costly. The next sections of this chapter are designed to give the non-marketing manager a basic introduction to the most common promotional tactics, including planning considerations, relative costs, common metrics and, when possible, potential returns.

A GUIDE TO COMMON PROMOTIONAL TACTICS

Literally hundreds of thousands of tactics can be used to promote an organisation. It would be virtually impossible to review all of them, and, most likely, it would be a waste of the non-marketing manager’s time even if I could. Instead, this section covers some of the most common categories of tactics, along with information that might be helpful to the non-marketing manager tasked with reviewing marketing plans.

Advertising

Advertising is a broad category of related tactics. In general, advertising is when a company pays to communicate a message in verbal and/or visual formats to an audience through a particular media. Advertising can be communicated through traditional mass media, such as newspapers, radio stations, television stations or billboard advertising or through digital media, including paid announcements on blogs or websites associated with mass media, organisations or individuals, banner advertising and display ads. Advertising can also be found in less traditional locations, such as the backs of toilet stall doors, video screens within department stores or shopping malls or towed from behind an airplane. Although advertising is generally paid, some media donate advertising to not-for-profit organisations. These are often called public service announcements, or PSAs.

Sidebar 10-1: Advertising Costs

Sources: Associated Press. ‘Super Bowl ads cost average of $3.5M,’ as reported on the ESPN website (www.espn.com), February 6, 2012. http://espn.go.com/nfl/playoffs/2011/story/_/id/7544243/super-bowl-2012-commercials-cost-average-35m

Crupi, Anthony. ‘In their Prime: Broadcast Spot Costs Soar,’ AdWeek, June 22, 2011. www.adweek.com/news/television/their-prime-broadcast-spot-costs-soar-132805

Sambidge, Andy. ‘Peak Arab TV ad costs average $3,299 - report,’ ArabianBusiness.com, June 8, 2012. http://www.arabianbusiness.com/peak-arab-tv-ad-costs-average-3-299-report-461400.html

Kokemuller, Neil. ‘The Average Cost of Advertising,’ eHow UK, www.ehow.co.uk/facts_5625807_average-cost-advertising-magazine_.html

Asahi Shimbun website, Display Advertising Rates: http://adv.asahi.com/english/index_image/ratebook2012.pdf

USA Today website, Advertising Rate Sheet: http://adv.asahi.com/english/index_image/ratebook2012.pdf

Peterson, Tim. ‘Mobile Ad Rates Inch Up, Slowly,’ AdWeek, December 11, 2012. www.adweek.com/news/technology/mobile-ad-rates-inch-slowly-145848

Macale, Sherilynn. ‘Bangladesh now has the most expensive Facebook CPC in the world,’ TheNextWeb.com, October 26, 2011. http://thenextweb.com/facebook/2011/10/26/bangladesh-now-has-the-most-expensive-facebook-cpc-in-the-world/

Who It Reaches: Almost every person sees and notices some advertising over the course of a day. However, to be successful, the advertisement must actually be seen by the target market, which means that it must be in a location that the target market uses as a source of information on a regular basis.

Factors Affecting Success: The most common reasons advertising fails are because the media isn’t a good fit for the market and message, the message isn’t well developed or the advertisement is poorly designed. These failures were all addressed earlier in this chapter. However, companies using advertising should also consider the following:

• Repetition. A single advertisement is rarely successful on its own. There are two reasons this is true. First, even if the advertisement is in a well-chosen location, purchasers in the target market may or may not notice it. They may not read that publication on that particular day, they may be on their phone when an advertisement airs on television or they might not spot the banner behind the airplane. Repeating the advertisement increases the chances people will see or hear it.

  Second, even if a person sees or hears an advertisement once, he or she may not remember it. Have you ever played the game when you are presented with ten items on a tray covered with a cloth? The cloth is removed, and you have two minutes to memorise what you see before the cover is returned to the tray. Depending on the type of items, how they are associated with you and whether you know what they are, you may remember some, or even most, items. However, remembering all of them is challenging.

  Advertising is very similar. Prospective purchasers see or hear an advertisement for a limited period of time, whether it is broadcast on television or printed somewhere. If it is relevant to their needs or they recognise the organisation, they may recall what it said more easily. However, if it is unfamiliar or doesn’t quickly strike them as relevant, they are much less likely to recall the contents. By giving the market multiple exposures, you increase its ability to recall both the company and its message.

  There is, of course, an optimum level of repetition. Although recall and recognition improve with an increased level of advertising, at some point, the investment no longer produces substantial benefit. To balance this, many experts recommend running advertising consistently for a period of time, then stopping and then repeating the behaviour. These are called flights.

  In order to broaden exposure, many companies blend different advertising media in order to expand visibility. For example, they may use banner advertising, print advertising and broadcast advertising together to improve the chances that any particular purchaser will see or hear the message. This type of advertising campaign, which should use consistent visual imaging and messaging across all media, may also include nonadvertising promotions, such as media relations or product demonstrations that reinforce the advertising messages.

• Simplicity. The saying ‘keep it simple’ applies well to advertising. To be effective, the number of messages and images included should be limited. Remember the memorisation game? Even after intense scrutiny for a period of several minutes, the participant wants to remember everything on the tray, but he or she is unlikely to be successful. Imagine how that translates to advertising recall.

  When a company tries to communicate many messages, the market may miss most, or all, of them. This is especially true when the company itself is unfamiliar. After all, the company’s name is one more item the person must recall. To be successful, advertising should be very simple with a limited number of messages to the target market, and the advertisements should be visually consistent and easy to read.

What It Costs: Advertising is generally costly. There are several components in which a company must invest. First, of course, the company must purchase the advertising space or time.

Advertising rates vary substantially. Television advertising can range from a few hundred dollars to a few million.^4,5 The costs vary according to the number of people who will see the ad, the medium and the length or size of the advertisement the company wishes to place.

In print and broadcast media, the rates are generally flat or vary with the size of the ad commitment. The cost of advertising in print media is measured on costs-per-thousand also called costs-per-mille (CPM) readers. Readers and circulation may not be the same because publications sometimes estimate the number of publications that will be read by multiple people.

In digital advertising, the price may be billed based on the number of people who actually receive the advertisement on their computer or phone. Digital media, including mobile media, is often quoted in costs-per-thousand-impressions (CPI) or CPM. In both print and digital advertising, advertisers pay based on the number of times the ad appears, regardless of whether it is actually noticed by the consumer.

The cost of the advertising is only one portion of the expense. An organisation using advertising should also budget for the professional team it will need to develop the advertising itself. In general, this includes both a creative design and production team with experience developing successful advertising campaigns, experienced advertising copywriters and a media buyer who can negotiate the best rates and placements on advertising purchases. Finally, the organisation should reserve budget for the purchase of images or music and other related costs.

Common Tactical Metrics: Several common tactical metrics are used when evaluating advertising campaigns to assess the effectiveness of advertising relative to other comparable programmes but fail to take into consideration whether the medium is appropriate, the message is on point or the creative design is effective.

Among the most common tactical metrics related to advertising are as follows:

• Impressions. This term refers to the number of times the advertisement is published or broadcast (frequency) times the number of viewers or readers who will see it (reach).

• Gross rating points. This is the number of impressions divided by the size of the target market for the product or service.

• CPM or CPI. This is the cost of the advertising buy (the media space only, not the cost of the creation of the advertisement), divided by the impressions, in thousands.

• Page views. The number of times a web page is served to a user.

• Click-through rate. The number of times a customer clicks on an advertisement to be taken to the company or channel’s website, divided by the number of impressions.

• Cost-per-click. The cost of the advertising buy divided by the number of times a customer clicks on the advertisement to be taken to the company or channel’s website.

• Cost-per-order. The cost of the advertising buy divided by the number of orders received as a result.

Potential Returns: There is considerable interest in measuring the returns companies generate on investments in advertising, particularly given the sizeable investment a company must often make. The most accurate numbers will be based on a company’s own understanding of its customers’ decision-making process, conversion rates, the size of the audience, the specific behaviours that are expected to change, how those changes will affect decision-making behaviour and past experience. In most cases, organisations will need to invest in market research or the incorporation of response codes or other tools to measure impact.⁶

Best Used When: Advertising is almost always a broad-based approach, designed to reach both existing customers and prospects. However, because of the nature of the tool, many of the messages will miss their targets. They will be seen by individuals who are not interested or won’t be seen by the people who are. For this reason, advertising is best used when the targeted market or markets are very large, and the company’s product or service could be used by most, or all, the individuals within that market.

Advertising is often used to build awareness, inform or interest prospective customers and differentiate a product or service relative to competitors. It can also be used to support other operational objectives, such as advocating on behalf of a particular policy or legislative issue. Advertising can be very effective in helping a company meet any of these objectives. However, advertising is also frequently used for the amorphous goal of generating brand awareness. If this is the primary barrier to increased sales, or at least the most lucrative obstacle to overcome, advertising might be an excellent choice. However, without focus, advertising burns dollars more quickly than any other promotional category.

Sidebar 10-2: Direct Mail Costs and Returns

Sources: Bruell, Alexandra. ‘DMA Survey Shows Snail Mail, Phone Beat Digital in Response Rates,’ Ad Age, June 13, 2012. http://adage.com/print/235364 Haskel, Debora. ‘2012 DMA Response Rate Report: Direct Mail Shows Well-Rounded Performance,’ IWCO Direct blog. Retrieved December 26, 2012. www.iwco.com/blog/2012/07/11/dma-response-rate-report/

‘Direct Mail Gets Most Responses; Email Highest ROI,’ Rochester Institute of Technology, Print in the Mix blog, June 14, 2012. http://printinthemix.com/fastfacts/show/575

‘Direct Mail Tops Email for Response Rates; Costs per Lead Similar,’ Marketing Charts blog,

June 15, 2012. www.marketingcharts.com/print/direct-mail-tops-email-for-response-rates-costs-per-lead-similar-22395/

For more information, look at the latest edition of the Direct Marketing Association’s Response Rate Trend Report. For example, see www.the-dma.org/cgi/dispannouncements?article=1451.

Direct Marketing

Also considered a form of advertising, direct marketing uses consumer data to reach out directly to past and potential customers. In the United States, direct marketing expenditures are roughly equal to expenditures on other forms of advertising.

The most common forms of direct marketing include direct mail (via the postal service), direct e-mail and telemarketing. Because the communication goes to an individual, rather than a mass market, it can be more tailored, leveraging information about past purchases, demographics or affinities with similar products or vendors to refine messages and narrow the focus.

Who It Reaches: Direct marketing is used for both business and consumer audiences. In general, it is more effective with purchasers who are already familiar with a company’s product or service, but it can be used to inform as well.

Factors Affecting Success: Successful direct marketing is affected by the following:

• Data quality and use. Direct mail can be used to reach both existing customers and prospective customers. When targeting non-customers from a purchased list, it is critical to ensure the list is high quality and matches the demographic profile of the target market. If the list is not high quality, mailed pieces may be returned or simply discarded by the postal service, which can significantly decrease the return on investment. Poor quality data in an e-mail list can result in large numbers of bounced e-mails and can sometimes result in a company’s domain becoming ‘black listed’ by major e-mail hosts.

  A poor demographic match can be even more challenging. For example, imagine a list purchased by a baby products retailer. If that list contains large percentages of childless individuals, the mailing sent to those individuals won’t be returned, but it probably will not be used. Instead, it is simply discarded as irrelevant. Unfortunately, unlike returned mail or bounced e-mail, when the retailer experiences poor conversion rates, their marketing team will have no way of knowing whether the appeal itself was unsuccessful or the list was inaccurate. All they will know is that the approach did not work.

  Companies using in-house lists of customers, prospects who have shown an interest in their store or website or past customers must also invest in managing their data. Because people change physical and e-mail addresses routinely, an internal list is only valuable to the extent it is routinely maintained. Any company that intends to use direct marketing to reach customers should be prepared to invest in data management to support those efforts.

  Also, any organisation approaching a customer or past customer should be prepared to leverage the data it has about purchasing behaviours to tailor the appeal. Customers expect direct marketing to reflect their history with the organisation. Failure to meet that expectation could damage the organisation’s relationship with its customers. For example, a well-crafted appeal letter from a not-for-profit organisation for an end-of-year contribution can be well received by donors. However, if the not-for-profit sends such a letter to a major donor without acknowledging a previous gift, the organisation risks damaging the relationship with the donor and potentially putting future gifts in jeopardy.

  Finally, companies that use direct mail to either customers or prospects should be cautious to follow their own country’s laws regarding unsolicited e-mail and e-mailed advertisements. Many laws, including those in the United States, apply to both e-mails to existing customers and to prospects. Links to spam laws for the United States, the UK, the European Union and Japan can be found in appendix A.

• Design and message. Like advertising, most direct marketing pieces have only a few seconds to capture the customer’s attention. But unlike advertising, direct marketing often offers the opportunity to provide additional information. Perhaps the most common mistake in direct mail is that companies launch directly into the detail before capturing the reader’s attention. Direct mail and e-mail communications with cluttered, text-heavy designs often fail to engage the reader and end up discarded. Professional expertise will significantly improve the returns generated on direct marketing investments.

• Frequency. Finally, successful direct marketing programmes carefully study and optimise the number of e-mails or other solicitations they send to a customer or prospective customer, along with the timing. Too many communications can cause customers to ignore communications or block them in spam filters, whereas infrequent programmes may leave sales on the table.

  Timing is also important. Retailers often send out direct marketing, especially catalogues, more frequently during the holiday season when people are purchasing gifts, and, to the extent their product lines change with the season, as people are considering their needs for each upcoming season. For office supply companies whose customers have a routine purchasing pattern, a reminder e-mail or a new catalogue timed to arrive just prior to their next order may remind them of their previous purchase and the vendor from whom they purchased their supplies.

What It Costs: Depending on the selected campaign method, the primary direct marketing costs may include programme design (concepting, copywriting and graphic design), mail house or postage costs, telemarketing vendor fees, the cost of purchased lists and the cost of database maintenance. In general, the costs are generally higher for business- to-business than they are for business- to- consumer campaigns. None of these costs include the labour or equipment costs related to data management in-house.

Common Tactical Metrics: Several common metrics that marketers use to measure success in direct mail campaigns are as follows:

• Response rate. The response rate measures the number of people who made a purchase (or contribution, in the case of non-profits) as a percentage of the total number of individuals to whom the campaign was directed.

• Open rate. This measures the number of recipients of a direct e-mail piece that opened the e-mail as a percentage of the number of targets to whom the e-mail was sent.

• Click-through rate. The number of times a customer clicks on an advertisement to be taken to the company or channel’s website, divided by the number of impressions.

• Bounce-back rate. The number of e-mails that bounced because of an incorrect e-mail address as a percentage of the total number to whom the e-mail was sent.

Sidebar 10-3: Worldwide Internet Usage

Sources: Research by Pew Internet & American Life Project, Pew Research Center, conducted in August and September, 2012: ‘Demographics of Internet Users’ http://pewinternet.org/Trend-Data-(Adults)/Whos-Online.aspx

Research by Pew Internet & American Life Project, Pew Research Center, conducted in June, 2012: ‘World Internet Usage and Population Statistics’ www.internetworldstats.com/stats.htm

• Unsubscribe rate. The percentage of the population to whom an e-mail was sent who requested to be taken off the distribution list.

• Conversion rate. The percentage of customers targeted by the campaign who opened the e-mail, clickedthrough and made a purchase.

• Cost-per-lead/order. The cost of the campaign divided by the number of leads or orders made.

• Cost-per-click. Total cost of the campaign divided by the number of click-throughs.

Potential Returns: Because direct mail often includes a call to action, there have been numerous studies relative to return rates associated with direct mail. Although these statistics are helpful, it is important to remember that they vary by industry. In other words, there must still be the appropriate medium to carry the message.^7,8

Best Used When: Direct marketing works particularly well with existing customer bases and with business-to-business sales.⁹ It can also be effective at generating trial behaviour among new customers, if the list used to promote the product or service is strong. Direct mail, of course, can also be used to build goodwill, advocate on behalf of an organisation or solicit new employment candidates. It is a particularly strong choice for companies whose customers are relatively easy to define by demographic or other readily accessible information and who represent a smaller segment of the market.

In terms of its ability to leverage sales, direct marketing can be used at any stage in the sales cycle, from generating new sampling behaviour to prompting repeat sales. Unlike advertising, it provides a more immediate opportunity to encourage a purchase and is commonly used to convert browsers to buyers. For example, not-for-profits send letters soliciting donations to past and current donors via mail and often include an envelope for the return contribution. Retailers and wholesalers send catalogues to likely purchasers of their products to encourage comparative shopping and make a purchase easier. E-mail campaigns advertise specials to repeat shoppers, often including specific products with pricing in targeted advertisements, along with links to their website for purchase. Telemarketers may inform someone about a service but may also double as a sales channel, making appointments or even taking payments over the phone.

Websites

Websites have joined business cards and stationary as a marketing communications staple. Almost every business has a website. However, how it uses the site can and should differ significantly depending on the type of business and the customers it targets.

Who It Reaches: Websites reach everyone with Internet access. In the United States, 81% of adults use the Internet.¹⁰ In Europe, Internet penetration is slightly lower, at 63.2%. In Oceania/Australia, usage is about 67.6%. In Asia, Internet penetration is significantly lower, at 27.5%.¹¹

Factors Affecting Success: As with any promotional materials, a company’s website should clearly communicate its value proposition to its markets, differentiating itself visually and verbally from competitors. However, there are a number of other factors that influence success:

• Strong user interface. The website should be easy to navigate and use. Technology in this area changes continuously, as do customer expectations. This has become a specialty field within the web development arena, and experts are called UI (user interface) designers.

  As smartphone and tablet users do more web surfing and purchasing on their mobile devices, it is increasingly important to make sure a website works across multiple platforms. Any website designed for a consumer audience, in particular, should be designed to work on any of the major web browsers and on most common mobile platforms. This is called responsive design.

• Staying current. Many companies launch their websites and forget about them. However, most websites need at least periodic reviews. Retail websites need to be updated continually to capture shoppers whose purchases are more frequent. On the other hand, a professional service firm might not need to update its website as frequently because its services are unlikely to undergo major changes. Still, both the look of the website and its content should be current, particularly if the content includes professional biographies of team members.

• Traffic. A website that has no traffic is delivering little benefit. Companies should track both the volume of traffic to their website and the behaviour of their visitors. This provides helpful information about who is visiting your site and why and may give you an opportunity to follow up with them directly.

  Research indicates that 91% of online adults use a search engine to find information on the Internet.¹² Regardless of how a company uses its website, management teams should also give careful thought to whether and how the market will find it when it needs the solution the company offers. There are many ways to do this, some of which are highlighted in sidebar 10-4.

What It Costs: Initial website development costs vary significantly depending on size, complexity, whether the site has a shopping cart, security requirements, platform and design. There are typically three key groups of individuals involved: web copywriters, web designers and developers. Once the site is launched, a company will continue to incur expense in order to keep the site updated.

Sidebar 10-4: Driving Website Traffic

Companies that use their websites for e-commerce, provide information or access to accounts or other confidential information or use their website as a portal to a company intranet should also factor in the costs of website security. Companies of all sizes are increasingly at risk for data theft, and security breaches can make a significant negative impact on a company’s brand reputation.

Common Tactical Metrics: The most common metrics used to evaluate success relative to websites are as follows:

• Visitors. The number of people who view a website during a given period.

• Visits. The number of times a website is viewed by all viewers.

• Hits. The number of times the website is requested from the server.

• Page views. The number of pages a particular viewer visited within the website before leaving. Some companies also track ‘unique’ page views, which provide data about new traffic, as opposed to repeat visitors.

• Page time viewed (also known as session duration or visit duration). These metrics all measure the time a visitor spent on a page or site before leaving.

• Abandonment rate. The number of people who begin a purchase but do not complete it as a percentage of the number of people who begin a purchase transaction.

Sidebar 10-5: The Cost of Web Traffic

Sources: ‘Direct Mail Gets Most Responses; Email Highest ROI,’ Rochester Institute of Technology, Print in the Mix blog, June 14, 2012. http://printinthemix.com/fastfacts/show/575

Lunden, Ingrid. ‘Forrester: US Online Display Ad Spend $12.7B in 2012, Rich Media + Video Leading the Charge,’ Tech Crunch Blog, October, 9, 2012. http://techcrunch.com/2012/10/09/forrester-us-online-display-ad-spend-to-hit-12-7b-in-2012-rich-media-video-leading-the-charge/

Potential Returns: The return on a website must be evaluated in the context of how it is used. If the website is predominately a distribution channel, it should be evaluated as such. If its primary function is to provide information about products or services, serving as a part of the company’s marketing communications, rather than as a sales channel, the evaluation of the return received would be calculated differently.

Traffic enhancement promotion, such as search engine optimisation, paid searches and display ads should be evaluated based on the amount of leverage they provide to the distribution channel or the amount of traffic they contribute to the site. Although the latter is likely to be based on analytics and tracking tools associated with the site and grouped into the website maintenance costs overall, sites that serve as distribution channels can benefit from returns estimates based on industry averages.

Best Used When: Although it has become increasingly rare, I am still occasionally asked by a small business whether it needs a website. The answer is almost invariably ‘yes’ because a website is one of the first references a prospective purchaser will check to confirm that the vendor is viable. However, the purpose and functionality of the website will vary significantly according to the type of company and the way that the customer makes a purchase decision. The more important the role of the website in the customer’s decision process, the more complex a company’s website approach, and the more significant the investments are likely to be.

For companies selling a product, online retail websites function as both marketing communications, providing information about products so that consumers can research a purchase or browse products before making a choice, and as distribution channels, allowing customers to make an immediate purchase online. In 2009, online sales represented 6% of all retail purchases in the United States. That number is expected to reach 8% by 2014, growing at about 10% compounding annually, compared to 2.5% growth in in-store sales. Europe’s growth rates are expected to be more aggressive, at about 11% compounding annually.¹³ As a distribution channel for retailers, websites have been a very effective way to reach consumers in markets in which they don’t have physical presence.

Many companies offer other services to customers through their website. For example, hospitals and health insurers often offer online access to medical help. Banks and other financial institutions allow you to manage your accounts online. CPA societies may offer members the opportunity to track continuing professional education online as a member benefit. Some companies offer customer support chat features that allow customers to interact with their support staff whenever it is most convenient for the customer.

Other types of organisations have fairly simple websites that describe their products or services, provide reference materials, manuals or other resources and supply contact information. This is the case with most professional service firms and companies whose products are customised or simply not purchased in an online environment.

Social Media

Social media has been one of the hottest areas of marketing promotions in recent years, the subject of extensive articles, research and financial investment. Social media is a loose term referencing digital media that provides for two-way (or community-wide) conversations, as opposed to websites and other digital media that are designed to inform, but not to invite, discussion. As technologies evolve, so do the types of social platforms and formats available. The most common include the following:

• Social networking sites such as Facebook, LinkedIn, Google+, Nexopia, Badoo or XING give people an opportunity to connect with friends and family, reconnect with others and share interests and information regardless of geographic proximity. Social networking sites are the most popular form of social media. Online adults spend about 20% of their personal computer time and 30% of their mobile time on social media websites.¹⁴

• Blogs, short for weblogs, provide opportunities for one or more authors to comment on a particular topic and invite feedback through comments. Although many blogs are stand-alone websites, blogs can also appear on an organisation’s website, such as a corporation or university or on a magazine or newspaper website.

• Microblogs are shorter versions of blogs, allowing authors to post short pieces of information to which others can respond. The most popular applications include Twitter and Jaiku, both of which severely limit the number of characters that can be used within a posting.

• Wikis are informational websites that allow users to contribute, modify or delete content using a web browser and text editor, allowing collaborative creation of content. Although there are several public iterations of wikis, such as Wikipedia, wikis are also frequently used within closed communities, such as corporate intranets, for knowledge sharing and management.

• Digital magazines and news sites sometimes allow comments on stories. Most print publications have some form of online social media presence, and many publications are moving to, or were created in, an entirely digital format. Although most continue to publish content using the tradition editorial board and observing the same journalistic standards, many offer a place for readers to comment or respond, both to a particular article and to other readers’ responses. It is this communication aspect of their websites that makes the social media.

• Social bookmarking sites, such as Delicious, Digg and Reddit, allow users to reference and share other content on the Internet. In some respects, they resemble Twitter and other microblogs because they gather an eclectic cross-section of postings.

• Content sharing sites allow individuals to share original digital media content, either within a closed community or with the public. Popular sites include the video-sharing site YouTube, which hosts content from individuals, organisations and media companies and photo-sharing sites, such as Instagram and Pinterest.

• Virtual worlds are websites that allow people to take on a real or assumed persona (depicted as an avatar) and interact with others in a computer-animated role-play environment. These interactions can include games in which the player assumes a single character, such as Vanguard, and virtual social worlds, where the player can assume several different characters and participate in an on-going social environment, as in Second Life.

Who It Reaches: Internationally, social media has become an immensely powerful way to connect people across geographies. Sixty-six per cent of all online adults use some form of social media platform. In the United States, social media is used more heavily by younger (under 55) and female segments of the population. Most people access social networks on personal computers, but mobile devices and tablets are gaining in popularity, especial in the Asia-Pacific region.¹⁵

Research indicates that the primary reason people participate in social media is to maintain close ties to friends (67%) or reconnect with people they once knew (50%). Most users also acknowledge that information shared on social media has influenced their purchasing decisions.¹⁶ In particular, Internet users check social media and are influenced by online commentary when making purchases for travel, entertainment, technology, clothing and other major purchases.

Factors Affecting Success: Despite social media’s popularity, most companies struggle to find strong financial returns from investments here. To generate promotional profits from social media, organisations need to do the following

• Confirm the match. One of the most frequent reasons social media investments fail to deliver returns is that the targeted market or markets don’t consider that form of social media as a place to find information about solutions to the types of problems the organisation solves. The key is to pick social media that might be used to help the purchaser make a decision.

  For consumer products, a Facebook approach might be effective because many individuals consult friends using Facebook for recommendations on entertainment and other purchases. However, for a business-to-business service organisation, Facebook makes less sense. Facebook users indicate that their primary interest in that particular media is to connect with friends. The business-to-business company is very unlikely to connect with, or even be noticed by, their target market. And if they do, it’s relatively unlikely that their messages will influence a purchase. The communication mechanism is simply too far removed from the purchaser’s decision-making process. Instead, they might consider blogs that will give their experts an opportunity to demonstrate expertise or describe their innovative new product, a key influencer in many business-to-business purchasing decisions.

• Be active. Many social media, including blogs and microblogs, rely on fresh material to keep people engaged. As with the advertising approach, postings on content-rich sites should be frequent enough to encourage repeat interactions. This can present problems for many companies, especially professional service providers, who launch aggressively into the blogosphere, only to find that their professional commitments constrain activity. Frustrated, they eventually stop, and their investment is largely wasted.

• Find your fans. The postings that are most quickly noticed are those that get shared between friends. Although research indicates that social media users are very protective of the people and businesses that intrude on their media, companies can benefit significantly when a person ‘likes,’ ‘friends’ or otherwise endorses their company and its products or services.¹⁷ This is the reason many companies encourage customers to ‘like’ them (or the equivalent) in social networking media.

• Understand the costs. One of the greatest myths about social media is that it is free. Social media is not free. In fact, it is often quite expensive. The cost in social media comes not from the technology itself, which is typically maintained by the social media company. Instead, the cost is in the labour required to execute a campaign or plan. Because social media is interactive by nature, most social media approaches will require at least the part-time attention of a smart and articulate communicator. Often, they require much more time and expertise than this.

• Make it versatile. According to a 2012 research study by Nielsen, U.S. social media users nearly doubled both their use of social media using mobile apps and mobile web access. In Asia, the Middle East and Africa, the use of mobile devices for social media is even more significant. In addition, there are any number of platforms on which social media can be used. Any social media approach should carefully consider how users are engaging in social media—and ensure that the impression the investment makes is as strong in a mobile environment, and on any particular operating software, as it would be on the systems used by the company developing it.

• Remember that social media is social. Companies accustomed to traditional media often make the mistake of using social media to conduct a one-way conversation. However, that isn’t the consumer’s expectation. Consumers expect social media to be social, an exchange or conversation between a company and its customers. One-way communications are less likely to become interesting or engaging. Even blogs, which provide an easy way for a person or company to express an opinion, should allow for reader response. In fact, successful blogs are judged not only by the number of followers they attract, but the amount of conversation in which their followers engage both on the original blog and beyond.

  The social nature of social media provides two other valuable opportunities for organisations. The first is that companies can use social media to address customer needs, answer questions or provide customer service. In fact, 30% of consumers prefer to address customer service needs in a social environment rather than picking up the phone. Because customer concerns, and the approach the company takes to addressing them, are often very visible to the public, this poses both an opportunity and a risk to companies actively engaged in social media. Although the media provides an opportunity to be responsive, the company must actually respond quickly and diplomatically. In this very public setting, there is even less room for error or poor service.

  The second opportunity is to engage with and learn about the customer. Social media provides excellent opportunities to learn about the market by soliciting input and feedback, monitoring conversations and mining data for information about customer purchasing habits and process, other products or services he or she likes and purchases, and his or her interests and preferences. Social media provides savvy managers the opportunity to engage in conversations with customers—and with employees—at unprecedented levels.

A Different Kind of Social Service

Source: ‘Peter Shankman Joke Leads to Morton’s Surprise Steak Dinner at Newark Airport (TWEETS),’ The Huffington Post, August 18, 2011. http://www.huffingtonpost.com/2011/08/18/peter-shankman-mortons-steak-tweet_n_930744.html

• Manage the risk. In a 2012 study, ‘Aftershock: Adjusting to the New World of Risk Management,’ Deloitte and Forbes Insight noted that social media is now considered the fourth largest source of risk for executives, on par with financial risk and following risk associated with the global economic environment, governmental spending and budget issues and regulatory changes.¹⁸

  The reasons that executives consider social media to represent such a great source of risk are the same reasons that it can be such an asset for promotions or customer intelligence: Word travels quickly. When that word is positive, so is the impact. However, social media also presents the opportunity for bad news, misinformation or deliberate lies that spread like wildfire among customers and other stakeholders. Company secrets, insider information and rumours spread more quickly and can cause damage more rapidly than they did with e-mail or the traditional media.

  Unfortunately, there is little a company can do to prevent malicious misinformation from entering circulation. Employee education and a strong social media policy can, on the other hand, help prevent unintentional breaches of confidentiality or unintended misinformation.

  Despite the widely acknowledged risk to brand reputation acknowledged by survey respondents, only about 20% actively monitor their reputation in social media and only about 31% have a social media policy executives have shared with employees.¹⁹ Perhaps one of the reasons that companies are slow to adopt such policies is that employees indicate some resistance to following them. About half of employees (42%) indicate that they don’t believe they should be held liable by their employer for damaging or inappropriate content posted on their own social media pages, and 15% believe social media policies invade their privacy.

  Despite this resistance, every company should create a social media policy, monitor for compliance among employees and take appropriate punitive actions if it is violated. Every organisation should also actively monitor social media for information that may affect the organisation’s reputation and ensure it has thoughtfully-crafted protocols to respond in a timely and factual manner, just as if the situation arose in a press conference or in the traditional media.

What It Costs: It is usually free to set up a social media profile. However, as stated previously, the true cost of social media approaches and campaigns will vary significantly depending on scope. Generally, the greatest investment is in time, either from in-house staff or from external consultants. A company may also incur costs associated with tracking and data collection, paid links or advertising.

Common Tactical Metrics: In addition to monitoring the conversation itself, the most common metrics used to evaluate success relative to social media are as follows:

• Followers, likes, supporters or friends. The number of people who have joined your company’s social network. Many companies also track changes in the size of their membership base.

• Mentions. The number of times your company and/or product or service was mentioned in a particular social media or across the entire spectrum of social networks.

• Activity, posts, comments, ideas, threads. The number of comments, retweets or other activities demonstrating social connectivity.

• Trackbacks. The number of times someone cited the company’s posting in his or her own feed or website and the number of times someone commented on that posting.

• Active contributors. The number of people who actively participated in the social conversation in a given period of time.

Potential Returns: Returns, like costs, vary dramatically, and not necessarily proportionately. There are few solid research studies that look at the impact social media makes at a financial level. Most focus on intermediate metrics, such as the number of followers or fans a site has or the number of people who respond to any particular post. Whether this translates to purchasing behaviour is often neglected.

As with other promotional tactics, non-marketing executives should inquire about the impact their marketing team believes investments in social media will have, why they believe the investment will have that level of impact and how those numbers connect to financial returns. Although the model will undoubtedly be based on some assumptions, as all models are, careful consideration of the potential return before an investment is far better than wondering whether the expense was justified after it has been spent.

Best Used When: The term social media encompasses a broad cross-section of tools. Each one is appropriate for some audiences and purposes and not for others.

For example, at the point at which this book was written, based on available research on user demographics and behaviours, most social networking and similar media will be most effective when used to reach broad consumer audiences about technology, entertainment, travel and fashion. They are likely to be significantly less useful to professional or business-to-business service organisations or companies that sell products purchased only occasionally. On the other hand, information-based social media, like blogs and microblogs, can be useful to organisations whose primary value to the customer is as a source of expertise, such as professional services, because they present an exceptional way to inform the public or demonstrate capabilities.

Collateral Materials and Related Marketing Communications

Marketing collateral and marketing communications are both catch-all terms. Collateral generally refers to printed or digital materials used in sales or communications on behalf of a company. A company’s collaterals and marketing communications tools may include printed or digital versions of brochures, technical data or sell sheets, newsletters, fact sheets and even stationary and business cards. They can also include point of purchase displays and trade show exhibits.

Who It Reaches: Collateral pieces can be used for any audience and should be tailored to the way the customer expects to receive information. For example, many individuals still exchange paper business cards, but in more technology-intensive communities, v-cards or digital information may be more commonly expected in conjunction with business interactions. In some industries, customers expect printed specification sheets for products. In others, they expect the information to be delivered in a digital document. The combination of collateral materials a company produces will depend heavily on both industry standards and customer expectations.

Factors Affecting Success: Many of the factors affecting success in the development of collateral materials are no different than they are in other promotional efforts. The collateral must provide the appropriate information, in the format most expected by customers, using appealing design and engaging messaging. However, collaterals should also maintain visual consistency.

This means that when a company’s collateral materials are displayed next to one another, the visual similarities should be obvious. The use of logo, colours, typeface and images should all readily identify the pieces as being connected with that particular organisation. This substantially reduces the amount of mental attention a customer must give to identifying the vendor, allowing him or her to focus instead on the products or services for sale.

When a company is considering new design standards, it is important to keep in mind how it will translate to all the company’s collateral materials. For example, some colours cannot be replicated on certain types of paper, such as newsprint. Some logos, when placed next to those of competitors at an event, appear small or difficult to read. Others use design standards that do not work as fluidly in black and white as they do in print. For more information about graphics standards, refer to the description of the graphics standards document’s use and common elements found in chapter 3.

What It Costs: Clearly, printed materials require printing expense. In general, the per-piece price is quite high for small runs and dramatically smaller for large quantities. The company should also anticipate significant design and copywriting costs associated with print collateral development.

Digital media require no printing costs, but some companies do incur a cost associated with producing CDs or DVDs or providing customers with a USB drive containing relevant information. On the design side, it is often more expensive to produce digital materials, especially if interactive features, animation or video production are involved, and digital media other than static information pieces may also require coding or other technical production skills.

Common Tactical Metrics: The most common metrics for collateral materials are related to the sales they facilitate. Either win rates (the percentage of customer accounts won as a percentage of all customer proposals submitted) or the average amount of time required to win an account might serve as good metrics to evaluate effectiveness.

Potential Returns: Because many collateral pieces provide such critical information during the sales process, these materials can be virtually indispensable to a sales person looking to close a deal. Even materials with a more distant connection, such as newsletters or point-of-purchase materials, can have a strong impact on sales. The return will depend on how critical the information or message delivered is to the decision process and how effective the collateral is in engaging the potential customer and prompting them to take action.

Best Used When: Every company has at least some form of collateral, whether it is extremely basic, such as a business card or sales invoice with a logo, or extremely complex, including elements like tradeshow exhibits, brochures and product specification sheets, or somewhere in between. Collaterals provide important information about the products or services a company offers, the value the company delivers to customers and basic information about how to do business with the company.

Media Relations

In general, the goal of media relations efforts is to manage the relationship between professional journalists and an organisation, proactively providing information to them and answering questions they might have. Although the media makes many non-marketing executives nervous because they feel a lack of control over outcomes, ignoring the media, especially when a company is in a crisis situation, can often be more damaging to a company’s reputation than providing appropriate information, even if it is misinterpreted.

The term media includes consumer and trade newspapers and magazines, television and radio stations, webzines, professional bloggers, publishers of newsletters and others. Media relations work often includes a strong social media component, both as a tool for communicating with journalists and as a way of attracting public attention.

Most companies have a media kit or press kit available to reporters. Press kits include background information about the company, its leadership and its products or services, as well as examples of previous media coverage. Whether or not a company includes elements of media relations in its promotional plans, every organisation should have a crisis communications plan that specifies who will speak to the media. Every company should also identify a media relations professional whose expertise could be tapped, if needed, in such a situation.

Who It Reaches: Almost every audience reads and is influenced by some form of traditional (or professional) media. The audience for each category of media, and for each individual publication, will differ significantly. Most media outlets provide a media kit that profiles their audience. However, the statistics they identify may more accurately indicate generic distribution or geographic makeup than the psychosocial profiles of readers. Media relations professionals often have a deep understanding of the media related to the industries they serve and can help identify media outlets that might otherwise be missed.

Who’s Listening?

Source: The Pew Research Center for The People & The Press. ‘Trends in News Consumption: 1991-2012: In Changing News Landscape, Even Television is Vulnerable,’ published September 27, 2012. www.people-press.org/files/legacy-pdf/2012%20News%20Consumption%20Report.pdf

Factors Affecting Success: Characteristics of the most successful media relations programmes are as follows:

• They are built on strong relationships with the media. Like any relationship, relationships with the media should be built on trust and nurtured over time. Professional reporters are trained to check facts before they are printed, and they are constantly battling tight timelines and competitive pressure. If they are covering an organisation with which they have a strong, trusting relationship, they will have greater confidence that the information is accurate and be willing to expedite coverage. This can be a substantial advantage whether a company is launching a new service or product or responding to something negative that has happened.

  As with any relationship, trust is built on sincerity and experience. Companies should provide only true and verified information and not speculate about situations for which they have no information. Whereas an individual reporter may be arrogant, uninformed, negligent or even malicious, most are not. Most reporters are professionals who care about the people they cover and the public they serve. They are under intense pressure to meet deadlines and deliver news that will get readers/viewers to pay attention. Be professional, cooperative, truthful and respectful of their deadlines, and your communications efforts will go much more smoothly.

• They are carefully managed. Whether an organisation is speaking to the media about good news, such as an expansion in products, services or locations, or bad news, such as a product failure, accident or management impropriety, external communications should be carefully coordinated and centralised. A single, designated company spokesperson should handle media relations, and others in the company should defer to that individual. Anyone interfacing with the media should have appropriate training, be prepared with all the relevant facts and information and remain professional regardless of public or media response. Timeliness is also important. In an age when information sharing is practically instantaneous, it is important to focus first on media relations if a particular news item is paired with other promotional approaches.

• Professional help. If a company does not have strong existing relationships with the media or the experience to manage significant news, the executive team should consider retaining outside public relations expertise. As with any discipline, the media relations professional(s) should have experience handling the specific type of situation involved. The field of media relations, as a subset of public relations, includes many specialists, including individuals who specialise in crisis communications, technology product launches, not-for-profit events and other corporate activities that might be of interest to a specific group of reporters. Finding the team with the right skills and relationships can make a substantial difference in how productive the investment in external resources will be.

What It Costs: Although press coverage is often referred to as earned media rather than paid media, like advertising, there is still a substantial cost to effectively working with the press. In particular, the labour costs associated with nurturing media relationships, whether through in-house personnel or external media relations professionals, can be substantial.

Common Tactical Metrics: There are a number of objectives that are used as intermediate, or tactical, metrics for media relations. Some companies engage third-party research companies to gauge public perception of the organisation, measuring improvements against the media relations efforts invested. Other common metrics include the following:

• Column inches. The number of inches of earned media printed in news media as a result of proactive media relations.

• Broadcast seconds. The number of seconds of earned media coverage on broadcast stations such as radio or television.

• Clips/impressions. The number of articles or broadcasts citing the company’s name and/or its product or services.

• Advertising value equivalency. This is used when someone, usually a marketer or a public relations firm, compares the amount of column inches or broadcast seconds of unpaid, earned media against rate cards (pricing sheets) for advertising in an effort to give a dollar value to the media relations outcomes. However, this practice is dangerous because it can mislead individuals who are unfamiliar with this metric to believe the advertising value represents income to the organisation.

Potential Returns: Although the traditional media’s influence and credibility have both suffered in recent years, it remains an extremely powerful influence on consumer behaviour. Positive coverage is more likely to be perceived as credible by purchasers than its paid counterparts, such as advertising. Negative coverage is more likely to be believed and affect behaviour than if it were not covered by the press. The traditional press also feeds other communications sources, especially social media. Because of this impact, wise investments in carefully crafted media relations efforts can have significant impact.

Best Used When: Every company should be prepared to handle basic media relations, either in a crisis situation or when a reporter calls. However, larger organisations, companies in industries that receive disproportionate amounts of media interest and companies who are interested in expanding visibility or educating target markets will generally benefit from a sustained relationship development effort between media read by their stakeholders and a spokesperson or public relations professional within their company.

Public Relations (Other Than Media Relations and Social Media)

Public relations is a broad term that includes many different tactics designed to educate and build relationships between a company and its various audiences and markets. Originally, the term included primarily media relations and broader publicity efforts (other than advertising), such as trade shows or other events. Over time, it has evolved to include a myriad of activities, all designed to monitor or influence public perception.

Among the more popular public relations activities outside of media relations and social media activities are

• special events hosted by an organisation, including receptions, product sampling events, seminars and lunch-and-learns;

• special events hosted by others in which the organisation participates, including trade shows, sponsorships and conferences;

• third-party endorsements of products or services, including product placement on television shows and in films, celebrity endorsements and client testimonials; and

• guerrilla and viral marketing approaches, which draw on their uniqueness to expand visibility.

Who It Reaches: When designed with the target audience in mind, public relations efforts can reach virtually any audience.

Factors Affecting Success: In addition to reaching the right audience with the right message, public relations efforts must interest the audience enough to capture their attention and turn that attention into action. The most effective public relations campaigns are creative enough to stand out and still relevant enough to generate sales as a result. Unfortunately, many companies are not as successful in turning attention into action.

Sidebar 10-6: A Whale of a Tale (And a Very Successful PR Campaign!)

Source: Lacitis, Erik. ‘Ivar’s undersea billboards a hoax devised as marketing ploy,’ The Seattle Times, November 12, 2009. http://seattletimes.com/html/localnews/2010253767_ivars12m.html

For example, many professional service organisations host seminars to help demonstrate their expertise to prospective and existing clients. In general, these professionals know what will appeal to their clients. The clients and prospects who attend are most likely to make a purchase because they have a relationship with a particular service provider, and, yet, most CPAs, attorneys and other presenters dart out the door at the end of a seminar, relieved to have a project off their list. They fail to do the one activity that is most likely to make their public outreach produce returns: build relationships with individuals in their audience. The most effective seminars are hosted by professionals who arrive early, talk extensively with participants during and after the presentation and follow up after the event, building those relationships that will generate sales.

What It Costs: One of the advantages to public relations initiatives is that they can be extremely inexpensive relative to other forms of promotions. However, they do require creativity and coordination, and often, other forms of promotions should be used to gain maximum leverage, driving up cost. If external public relations teams are used, this can also drive up cost.

Common Tactical Metrics: The intermediate metrics used in public relations include those mentioned in media relations and social media, as well as the public perception tools developed by researchers to assess progress. At the individual tactic level, they also include metrics such as the number of event attendees or participants, number of seminars or workshops hosted and other customised metrics.

Potential Returns: The returns depend entirely on how carefully crafted the approach has been. Some companies lose money on public relations efforts because they attract attention, but not from the right audiences, or because they fail to include a strong enough call to action that will produce sales. However, the low cost of public relations outreach can make the returns exceptionally high. The key, again, is creativity and the ability to convert the attention to revenues.

Best Used When: Because the cost of public relations tends to be lower, it is a great fit for smaller companies. However, every company should include some public relations initiatives, including media relations and social media, in their promotions repertoire.

QUESTIONS FOR NON-MARKETING MANAGERS TO ASK ABOUT PROMOTIONS

To ensure that promotions are contributing to marketing objectives, the following questions should be high on a non-marketing manager’s list:

• Why did we select the particular tactics we did?

• How do the selected promotional tactics tie to the marketing strategies identified? What impact are they expected to have on the customer’s purchasing decision criteria?

• How do we know where our target customer/client looks for information about the products/services we deliver?

• What are the key messages these promotional efforts will communicate? How important are those issues in the minds of customers? Is there anything that is more important? If so, how are we addressing that issue?

• What messages are our competitors communicating? Do we sound like them? Does our proposed campaign look or sound similar to others in a way that could be confusing to the market?

• What intermediate, or tactical, metrics will we use to ensure the plan is on target?

• What impact, in financial terms, should we anticipate from the marketing promotions in which we are engaging?

• Over what time frame will we measure success?

• Will these promotions require changes relative to the other aspects of the marketing mix?

CHAPTER 10 SUMMARY

The fourth ‘P’ of marketing is promotions, which includes a broad range of tactics, including advertising, public relations, direct mail, social media, websites, collateral materials and other activities. It is also one of the most expensive aspects of marketing, and the ‘P’ most likely to cause non-marketing managers concern about the efficacy of marketing investments.

This concern is often the result of four mistakes made in the way promotions are managed:

1. Because of a lack of clarity about the two primary functional objectives of marketing, there is inconsistency between expectations and potential outcomes. Working in careful coordination with other aspects of the marketing plan, promotions provides leverage to the sales team and assists in proactive reputation management in the marketplace.

2. When oversight is delegated away from senior leadership, the result is sometimes poor alignment between promotions and other aspects of marketing within either the discipline or marketing the function. It can also lead to risky copycat marketing behaviours.

3. When leaders aren’t familiar with how messaging works and how it should be delivered, they are less likely to catch messaging that is inconsistent with their brand reputation or value proposition, or they miss visual inconsistencies that lead to poor brand recall.

4. If they don’t know enough about the tactics employed in marketing, it is difficult to ask informed questions about why they were selected. As a result, it is more difficult to effectively monitor recommendations. In the worst cases, non-marketing managers add to their own marketing losses by encouraging their marketing team to engage in tactics that are not a good fit for their market. To be effective, the non-marketing manager must have a basic understanding about common marketing tactics and be prepared to ask informed questions about fit with the company’s target market, business objectives, marketing strategies and targeted influencers.

Endnotes

1 Sources:

Praetorius, Dean. ‘The Red Cross’ Rogue Tweet: # gettngslizzerd On Dogfish Head’s Midas Touch,’ The Huffington Post, February 16, 2011. www.huffingtonpost.com/2011/02/16/Ted-cross-rogue-tweet_n_824114.html

Crenshaw, Dorothy. ‘PR disasters averted: 7 cases of strong crisis management,’ Ragan’s PR Daily, March 20, 2012. www.prdaily.com/Main/Articles/PR_disasters_averted_7_cases_of_strong_crisis_mana_11111.aspx#

Segall, Laurie. ‘Boozy Red Cross tweet turns into marketing bonanza for Dogfish Brewery,’ CNN Money, February 15, 2011. http://noney.cnn.com/2011/02/L7/mallbusiness/dogfish_redcross/index.htm

2 Morrison, Maureen. ‘Starbucks Hits No. 3 Despite Limited Ad Spending,’ Advertising Age, May 2, 2011. http://adage.com/article/news/starbucks-hits-3-limited-ad-spending/227316/

3 Johnson, Caitlin. ‘Cutting Through Advertising Clutter,’ CBS News, February 11, 2009. www.cbsnews.com/8301-3445_162-2015684.html

4 Associated Press. ‘Super Bowl ads cost average of $3.5M,’ as reported on the ESPN website (www.espn.com), February 6, 2012. http:/espn.go.com/ifl/playoffs/2011/tory/_/id/7544243/uper-bowl-2012-commercials-cost-average-35m

5 Crupi, Anthony. ‘In their Prime: Broadcast Spot Costs Soar,’ AdWeek, June 22, 2011. www.adweek.com/news/television/their-prime-broadcast-spot-costs-soar-132805

6 Bruell, Alexandra. ‘DMA Survey Shows Snail Mail, Phone Beat Digital in Response Rates,’ Ad Age, June 13, 2012. http://adage.com/print/235364

7 Ibid.

Haskel, Debora. ‘2012 DMA Response Rate Report: Direct Mail Shows Well-Rounded Performance,’ IWCO Direct blog. Retrieved December 26, 2012. www.iwco.com/blog/2012/07/11/lma-response-rate-report/

8 ‘Direct Mail Gets Most Responses; Email Highest ROI,’ Rochester Institute of Technology, Print in the Mix blog, June 14, 2012. http://printinthemix.com/fastfacts/show/575

Direct Mail Tops Email for Response Rates; Costs per Lead Similar,’ Marketing Charts blog, June 15, 2012. www.marketingcharts.com/print/direct-mail-tops-email-for-response-rates-costs-per-lead-similar-22395/

9 For more information, look at the latest edition of the Direct Marketing Association’s Response Rate Trend Report. For example, see www.the-dma.org/cgi/dispannouncements?article=1451.

10 Research by Pew Internet & American Life Project, Pew Research Center, conducted in August and September, 2012: ‘Demographics of Internet Users’ http://pewinternet.org/Trend-Data-(Adults)/Whos-Online.aspx

11 Research by Pew Internet & American Life Project, Pew Research Center, conducted in June, 2012: ‘World Internet Usage and Population Statistics’ www.internetworldstats.com/stats.htm

12 Research by Pew Internet & American Life Project, Pew Research Center: ‘Search Engine Use 2012’ http://pewinternet.org/~/nedia/Files/Reports/2012/PIP_Search_Engine_Use_2012.pdf

13 Schonfeld, Erick. ‘Forrester Forecast: Online Retail Sales will Grow to $250 Billion by 2014,’ TechCrunch blog, Monday, March 8, 2010. http:/techcrunch.com/2010/03/08/forrester-forecast-online-retail-sales-will-grow-to-250-billion-by-2014/

14 The Neilson Company. ‘State of the Media: The Social Media Report 2012,’ Nielsen Holdings NV and NM Incite, July 2012. http://blog.nielsen.com/nielsenwire/social/2012/

15 Ibid.

16 Smith, Aaron. ‘Why Americans Use Social Media,’ Pew Internet, November 15, 2011. www.pewinternet.org/Reports/2011/Why-Americans-Use-Social-Media/Main-report.aspx

17 The Neilson Company. ‘State of the Media: The Social Media Report 2012,’ Nielsen Holdings NV and NM Incite, July 2012. http://blog.nielsen.com/nielsenwire/social/2012/

18 Deloitte Development LLC & Forbes Insight. ‘Aftershock: Adjusting to the new world of risk management,’ © 2012 Deloitte Development LLC. www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/IMOs/Governance%20and%20Risk%20Management/us_grm_aftershock_062812.PDF

19 Survey conducted on behalf of Workplace Options by Public Policy Polling in May 2012. See press release dated June 5, 2012 and related polling data, both available online at www.workplaceoptions.com/news/press-releases/press-release.asp?id=9AAF1BE