Advertising Environmentalism

Let's take a break from budget talk to note an article that appeared recently on the MarketingProfs site: The Tragedy of the Advertising Commons, by Matthew Syrett, a VP at an interactive agency in New York.

I won't summarize the article (it's not that long, and you can click the link to read it) but I will note that Syrett is talking in general about some of the issues I addressed specifically with regard to email marketing and search engine optimization: how our own marketing activities can change the common environment in which we work, to the detriment of all. Have a look.

Marketing Budgets: Market Building

In the last article I talked about the general components of a marketing budget. The first, and most important, is market building activities.

"But wait! What about generating leads! Making sales!" The danger of saying "most important" is that something has to be "least important" so let me explain what I mean: if you had no resources, nothing, and had to just do what you could, this is where I would recommend you start.

Here's how I described market building activities in the last article: "Basic market building is the foundation for everything you do. This is the unglamorous stuff that makes or breaks you: marketing research, basic public relations, and analyst relations if it makes sense for your industry."

When you think of your budget it's important to think about it in two ways. First, you want to think about how you will use all the resources at your disposal; not just your money, but your time, your staff's time if you have a staff, your connections with colleagues, and so on. From that, you can develop the formal budget - the document that meets the requirements of your finance folks to help them figure out how much you will spend, when you will realize those expenses, when you'll actually pay for them, and so on. That document is important but as a marketer you need to think about the overall plan and the activities that may not hit that formal budget.

So let's take the items I talked about one by one.

Market Research: at a high level, I mean "building a picture of your market that tells you what the size of the market is, how it's segmented, what segments you can address, and what the trends in those segments and the overall market are." In other words, know where you are going so you can figure out how to get there.

You may have started a company because you had a great idea. Market research is where you do a complete reality check and make sure that your great idea is also the kind of idea that people are going to put down money for. It's also figuring out which people of all the potential customers are going to do that now, which will in the future, and what other options for spending their money are out there.

Depending on your means and your needs, this might mean doing primary research with the help of a research firm, or (more likely) purchasing reports on your market that someone has already written. It can also mean meetings with the analysts that cover your space.

While all of that research is helpful, don't forget that it can also be wrong. Analysts made bad predictions. Make sure it passes your own "smell test." And consider what it means for your own business.

If you can't afford all of that, there are ways to do your own research. Not that long ago I became so frustrated with the available data on a specific managed IT service that I gave up on getting what I needed from an analyst or researcher publications. They weren't segmenting the market in ways that let me identify the people we could sell our services too. So I took a clean sheet of paper and started with a simple source of data (US Census figures on small and medium sized businesses), made some assumptions on adoption of our service based on my own experience in the space, and came up with a segmentation model and market sizing estimates that I'd put up against what the analysts were saying any day. Don't underestimate your own intelligence and knowledge - but don't forget to test it against what others have come up with.

Public and Analyst Relations: You want the "thought leaders" in your space to be talking about you. For B2B markets that usually means editors and analysts who cover your space. But the concept applies to other markets as well; if you are opening a pet day care service, your thought leaders might include the lifestyle writer for your local paper, the president of a local kennel club, or anyone else who is recognized as an authority in your market. It's important that these people know who you are, know why you're unique, and can talk about you. In some markets mentions by thought leaders can bring immediate sales; in others they simply get you on the radar of potential buyers.

Even if you can't afford a PR firm to execute a full campaign for you, they key people in your business can get out there and talk to them. This is a step that's often neglected, but will help you time and again as you take advantage of opportunities for news coverage, are asked to provide industry references for you business, or simply want some mindshare among your buyers. If you can't pay someone to do this, you should budget some of your time to make the calls and set up the meetings to accomplish this. (And you want to be sure to do it correctly - a topic that would take much longer than this article to cover adequately.)

These are not activities that bring in sales leads or that give you nice ad clippings to show around the office. They are, however, fundamentals that will keep your business on course and in the minds of your next customers.

Building Your Marketing Budget

What's the right way to build a marketing budget? How do you come up with something that will accomplish your goals, make sense to your non-marketer colleagues, and that you can sell to your organizations management?

Ask ten marketing pros this question and you'll get ten answers. And in reality, there isn't one answer that's right. But building a budget from scratch - or evaluating a budget you've inherited - can frustrate some of the smartest people around. So I'm going to share my answer to the question, with some explanation of why I like my approach.

A good budget process does more than give you numbers to put into buckets for the accounting folks to track. It should help you plan you activities, think about why you are doing them, explain to others why they're valuable, and help you make decisions when you don't have enough money to do it all. (That's almost all the time for most marketers!)

My process is built on a few key ideas:

• Take care of basics first - or else nothing will work well.


• Understand what parts of the budget you can sensibly do ROI on, and what parts are "fixed costs" of doing business.


• Have a framework that lets you decide where to pull back when times are tight - and how to communicate to your peers what the results for the business will be.

The Basic Categories

In this article I'm going to talk about the basic categories that you can assign your marketing expenses to. When I say basic categories, I do mean basic. We're not talking about brochures vs web content vs online advertising vs printing here - but important marketing functional areas that need to be covered.

• Basic market building is the foundation for everything you do. This is the unglamorous stuff that makes or breaks you: marketing research, basic public relations, and analyst relations if it makes sense for your industry.


• Support materials are the things that you need to do business. This is where you budget for your web site, collateral (printed or electronic, depending on your customer expectations), and so on - the things that your sales force will need to have to talk to a customer, or that you will need when you sit down to meet with a partner. Depending on your business, there may be other items that fit here logically. For example, if attending a certain conference is an absolute requirement for your industry ("If you're not at WidgiCon, no one will talk to you") that would be a basic support item.


• Programs are the things that makes your sales boss love you and that most of your executives will immediately understand. These are the activities that produce measurable results - your direct marketing campaign, your lead generation telemarketing, and so on. These are usually the easiest things to get buy-in on, because people understand the impact on business.

The order of those items is meaningful. All three are important, but without basic market building and support materials, you will have a very hard time getting far - and all of the programs you do will be far less effective (on a return per dollar basis) than they are for companies that are working from a strong marketing foundation.

There are a few types of expenses I haven't mentioned, because they can be in different categories depending on the dynamics of your market. Advertising is the best example - if you are doing basic brand awareness advertising, you can make a strong argument that it's a support activity or a market building activity. If you're doing direct response advertising, it's clearly a program.

It's also important to remember that the priority of these activities is not necessarily reflected in the expenditures. There are certain costs to doing programs that you cannot avoid. You can also spend a lot of marketing research and analyst briefings - but if you're in guerilla marketing mode, you can also dig out a lot of information yourself, make your own analyst calls, and use your "sunk costs" (that would be your salary) to cover these items.

Up next - building the budgets for each of these areas.

Killing the Goose (Part 2)

In my last article I talked about how email marketing, which was supposed to be the greatest new thing in marketing, became just another direct response technique (with a particularly strong potential to annoy customers – or just be ignored by them). Now I want to talk about the “new big thing,” and we might avoid having it become another example on unfulfilled potential.

Search engine marketing is the hot topic in online marketing now. That’s because search engines are the key to your web audience. When people are looking for information – whether it’s a news article, a place to buy something, whatever happened to that old high school buddy, whatever – they usually start with a search engine query.

And Google has risen quickly to the top of the search engine heap, for a very simple reason; its results have usually been better. Google shows people links to the information they are searching for. So people use it.

The marketing potential here is obvious. If someone is searching for “widgets,” and you make widgets, they are probably a good buyer. If they are searching for “FDA-approved widgets” or “widgets with automatic re-widgetizing” the odds get better. You want to be in front of these people.

There have been two main approaches to achieving that. The obvious one is the ads that appear on search pages. Joe User does a search for “grade-A widgets,” and along with a page of results, your ad appears. Joe, probably in widget-buying mode, may click on it and visit a special landing page on your site where you can tell him about Acme Widgets and invite him to learn more, sign up for your widget newsletter, take advantage of special promotions, and so on.

Consumers are savvy. They know that those things appearing around the results are ads. (It took a while for people to catch on to Google’s simple text ads, which look a lot like more results, but it’s safe to assume that most people understand what’s going on.) They are also realistic – they understand that those ads are paying the bills, and may in fact be useful to them.

The second approach to using search engines to market is to make sure your page comes up in the “organic results” – the actual list of pages that match the query terms. Unlike a search engine ad, you can’t just buy this. You need to adjust the content of your site so that when search engines index your site, you will match common search terms for your market. You also need to have links to your site, since more sophisticated search engines look at the popularity of a site (as measured in links to the site) as a sign of high-value content.

This is where things get dicey. Remember why search engines are popular? It’s because they point people to useful sites. If you optimize your site and start showing up in the top ten hits, people will start coming to your site as a result of search engine queries.

However, if your site is not actually a very good match – just a site that’s consciously added the right content to generate hits – people will not stay long. And if they keep ending up on low-value sites, they will start to distrust search engine results. And then the value of search engine marketing starts to drop.

This is why the folks at Google and other search engines carefully guard the methodology they use to determine results, and change it often. They do not want you to know. Because they know that we marketers, if you have the operating manual to search technology, will game the system so our pages come up, destroy the value proposition of search engines for consumers, and kill the system. (We’re good at that. Remember email.)

This is already happening. I remember how much I loved Google a few years ago. You typed in a search term, and the pages you wanted appeared before you. It was an excellent experience. Today, it’s okay. You can find things, but it takes more searches and more wading through junk.

Recently I was trying to find information about Houston flood plain maps. I am in the market for our house, and one important consideration when you buy a house in Houston is whether – no, pardon me, how often – it is going to flood. (We’re on a giant flood plain. It’s going to flood. The question is, will that happen every five years or every fifty? And for any Californian snickering about that, I can only say, “Earthquake.”) When I did Google searches on terms like “Houston flood plain” or “flood pain maps,” I got some useful sites, and a whole lot of sites that wanted to sell me flood insurance.

Now, if I were looking for flood insurance, I would have typed “insurance” in my query. I didn’t. These were stupid results for my search. I found myself annoyed at the companies whose sites were appearing, because they clearly were doing some search engine optimization to show up in my list of results, making the task at hand for me more tedious.

Here’s the interesting part – I just did the same searches now, a few weeks later, and got much better results. My guess is that Google has adjusted their search algorithms to improve the results. Of course, marketers for insurance companies are now busy adjusting their sites to get them back up in the rankings.

It’s an ongoing arms race between search companies and marketers. Here’s my prediction on where this goes:

If marketers are wildly successful with search engine optimization, we will make search engine results into catalog pages and consumers will stop using the search technologies we’re good at optimizing. End result is that in a few years SEO will cost more and accomplish less, and a useful tool for people looking for information on the web will be much less useful. It’s the lose-lose-lose scenario.

In reality, though, the early leaders in SEO will get great marketing results from it. So, everyone will follow – it’s already happening – and a whole new industry of SEO consulting will appear (it’s here actually). As more people do it, the marginal benefits will shrink, until it’s just another one of those things that you have to do, but that doesn’t buy you much.

Should you do SEO? Of course you should. You should also be sure to only do optimize your site on terms that make sense. Otherwise, you’re just that car salesman who won’t leave the customer alone while she wants to simply look at some of the brochures until she’s ready to move on to the next stage in the purchase process. In other words, the car salesman that made me buy my last car at Carmax – but that’s another story.