• by Craig Macdonald , December 12, 2013

According to various reports, media budgets globally are expected to grow approximately one to two percent in 2014. However, beyond that rather anemic overall increase in budget, marketers and advertisers are likely to face huge increases in their productivity goals in 2014. 

Marketers have many goals they would like to achieve in the coming year, including a shift in budgets from offline to online advertising like paid-search, social media and display -- both on PCs and mobile devices, and driving a minimum of a 10 percent improvement in the productivity of key performance indicators (KPIs) -- such as contributions to sales, brand health, or digital and mobile conversions. Finally, they would like to accomplish all this while making huge investments in the processes necessary to build content, metrics and frameworks to satisfy an ever-increasing number of screens and formats necessary to conduct advertising -- from PCs to tablets to mobile devices. 

So how can these productivity goals, or business challenges, be met with budgets remaining essentially flat? 

Most marketers agree there are two ways to drive productivity. First, continue to build scale and efficiency into executional processes to reduce cost and free up resources for investment. Second, marketing in general -- and advertising in particular -- must keep getting smarter through improvements in analytics. We are seeing businesses implement through these two approaches in very distinctive ways.

Uncovering efficiencies and reducing cost

Companies are building scale and efficiency in processes by using a framework called Marketing as a Service (MaaS) -- a formalized way to measure KPIs and the efficiency of key marketing processes such as campaign management and digital Web development. Through MaaS, businesses can identify alternative ways to manage their marketing processes and resources for lower cost -- perhaps by using global share services or outsourcing. In fact, through the MaaS framework, it is not uncommon for businesses to uncover a potential 15-20 percent budgetary savings option.

The MaaS framework is an effective way to develop capital within the fixed budget that can be invested in improved demand generation programs. Example programs could be improved content development, or expanding the form factors supported by marketing to drive customer interactions across a wider variety of media devices -- most notably mobile phones and tablets.

Focusing on data and analytics to improve productivity

There is an old saying in marketing that “media is an exercise in how much wastage one is willing to tolerate.” This saying came from the time when most media and marketing programs lacked granular measurement, which resulted in a lack of accountability for media budgets. With the level of scrutiny applied today to marketing budgets -- which are usually the largest discretionary budgets in a firm -- a lack of precise measurement of media impact on sales or KPIs is not an option. This is where data and analytics come into play to help businesses.  

When a business establishes a formalized and mature data process, it opens the door to becoming smarter in its marketing and media management practices. To aid the creation of a successful data strategy, there are two key components that a business should pursue.

First, investing in the ability to measure campaign effectiveness comprehensively across both online and offline channels is crucial. For many companies, this can be difficult -- as it means integration of up to 75 or more underlying third-party data platforms from agencies, competitive data sources, Google, publisher platforms, Nielsen, comScore, etc. Second is investing in a customer database that can drive micro-segmentation of customer behaviors and highly targeted campaigns based on the customer segments. Today, most companies struggle with their customer database. To remove some of the expense and challenge, companies should shy away from integrating all of their customer data and look to invest in integrating only relevant customer data for particular purposes like churn management, or up-sell/cross-sell.

With data and analytics in place, marketing is in a position to be running its media and marketing programs with far more intelligence and accountability than in the past. The result is, in many cases, larger increases in subsequent media budgets, as the connection between investment and result is developed and mastered. Reaching this level of maturity is a major objective for marketing in 2014, as budget discussions take place for 2015.