introduction
When a mid-size business decreased their marketing budget by 20%, they experienced an increase in sales. Their success had nothing to do with creative advertising or getting lucky with a “viral” advertisement. The change was because they performed a marketing audit to identify areas of lost revenue due to ineffective campaigns, tools, or channels.
Although marketing audits may seem like they are mundane or boring in nature, when performed correctly, they become one of the most effective strategies to boost performance without adding additional expenditures. With marketing budgets constantly being under examination, it is essential to have an understanding of where you are wasting your money, as well as where you should be allocating additional resources.
This article will discuss that the most effective marketing audits identify waste by focusing on three specific factors: ensuring that marketing expenditures are aligned with business objectives; assessing performance at the channel level; and discovering hidden waste through ineffective methods of workflow, tools and targeting.
Body
- Connect the Marketing Budget to Measurable Business Results
The primary reason that a marketing audit fails is quite simple: it begins with tactical considerations rather than objectives. The value of an advertising campaign is frequently measured in clicks, impressions, and lease agreements, all of which may indicate success, but don’t measure the revenue returned from the effort.
When companies measure their budgets and evaluate how much money is wasted for lack of alignment with their strategic or long-term objectives, they can measure the effectiveness of these investments. Without knowing how much revenue you are losing due to lack of alignment between business objectives and marketing activity, you are unable to determine the true return on your marketing investment.
When conducting an audit to determine the level of alignment between business goals/objectives and marketing activities, you should consider the following questions:
Current Top Portfolio Objectives are:
- Increase Revenue
- Gain New Market Share
- Increase Customer Retention
- increase Brand Awareness
- What marketing activity supports each of the objectives listed above?
- Which of these activities will not be affected regardless of the current economic situation?
Each of these objective-driven marketing activities provides a means to measure the delivery of value.
A very successful B2B company discovered in their audit process that while 40% of their marketing budget was allocated to brand awareness advertising efforts, it did not support the current top priority for the company—retention.
The audit revealed a mismatch in performance by first identifying areas for improvement to achieve the intended outcome—not the level of performance achieved. This is very different than how the performance evaluation is conducted for the most part.
Most audits consider how efficient the activities are (are we getting a high click through rate) whereas a waste-focused audit begins with the more in-depth question of whether the outcome of the activity is yielding a level of return sufficient enough to meet the needs of the business.
2. Assess Performance at the Channel and Campaign Level
With goals defined, the next step is to analyze how much $$ is being spent and what return on that spending is being yielded. The reason many marketing audits fail to provide useful insight is because they are based on superficial and often “vanity” metrics.
Don’t Stop At Vanity Metrics
Things like impressions, likes or visit count hide the potential for waste. A marketing audit that highlights waste would likely focus on these metrics:
- Cost per acquisition (CPA)
- Customer lifetime value (CLV)
- Conversion rates by channel
- Revenue or pipeline contribution
- Retention/repeat purchasing rates.
Proof from Real Life:
Research demonstrates that a very small number of channels will produce most of the results within an organization. In some audit reports, over 60% – 70% of revenue can be attributed to 2 or 3 marketing channels.
- How To Structure The Channel Audit
Deconstruct performance by: - Paid Marketing (search ,social, display)
- Owned Channels (email, web, content)
- Earned Media (public relations, referrals, organic social)
For each channel evaluate:
- Is performance improving, flat or decreasing?
- Is cost in line with performance?
- Does this channel produce the right types of customers or simply the high volume of customers?
Differences in “Best Practice” Types of Thinking
Many companies are afraid to cut a channel; consider it “essential”. This is where a waste focused audit provides a new perspective on whether a particular channel truly is essential to the overall marketing strategy. If a channel.
3. Find Unhidden Waste in Tools, Processes and Targeting
Most marketing waste is invisible, living in overlapping tools, inefficient workflows and poorly defined audiences.
Tool Waste
Modern marketing stacks are overloaded with tools. Many businesses have collected tools over time that are under-utilized or redundant.
Three audit questions to consider are:
1) What tools are currently being used by your employees?
2) Are multiple tools performing the same function?
3) Are advanced features being paid for but not used?
For example, one marketing team was paying for three different analytics tools but used spreadsheets for reporting instead. They were able to eliminate two of the tools during their audit, resulting in annual savings of tens of thousands of dollars without losing insight.
Process Inefficiencies
Waste may also be found in how the marketing work gets done:
- Lengthy approvals that slow down campaigns.
- Rework due to unclear brief.
- Campaigns being delivered too late in order to make an impact.
- No documentation that leads to double attendance.
These types of waste may not be captured by a budgeting number, however they drain time, energy and opportunity.
Targeting and Audience Waste
Targeting generally yields the greatest amount of waste.
Signs of ineffective targeting include:
- Broad audience type with poor conversion rates.
- High volume of traffic but little participation or retention.
- Messaging trying to hit everyone.
The ultimate way to even-check for targeting waste is with a strong audit.
calculation
To effectively identify waste in marketing through a marketing audit is to take a step beyond typical methods (checklists and dashboards). An effective marketing audit begins with linking the dollar spent in marketing back to the dollar earned in business, evaluating channel performance based on measurable outcomes, and determining where there is waste in tools, processes and targeting.
The key message conveyed herein is that—waste is not usually apparent. It is disguised by good intentions, comfortable tactics and/or acceptable outcomes. Upon investigation, once waste has been identified, it typically provides one of quickest ways to increase ROI from marketing investment—without increasing budget.
- Future Considerations and Suggestions
- Perform marketing audits at least once a year, or at the point of any extensive change in strategy.
- Enlist the assistance of finance or sales teams to ensure consistency of measurement and accountability for results.
- View audits as a strategic opportunity to reset objectives, not to assign blame.
Utilize insights obtained from audit as a reallocation of funds, not just to decrease the amount spent on marketing.
The call to action
If your marketing budget is tight with little sign of improvement, do not rush into increasing budget spend. Start by completing a marketing audit on your current marketing expenditures. A successful outcome is the removal of waste from your marketing budget, leaving the opportunity to turn waste into financial opportunity and make every dollar work harder for you.