As discussed in a previous blog post, it is vital to connect our marketing efforts to the organization’s bottom line using KPIs. However, not all of our marketing investments translate into immediate short-term revenue gains. If we only focus on reporting revenue, we only paint half the picture to our clients or leadership. For the full picture, we must also report on the assets we are building – assets that grease the skids for future marketing efforts, improving future efficiency and performance of our programs.
Short-Term Investment vs. Long-Term Asset
When a business owner or executive is evaluating the health and well-being of a business, they look primarily at two documents: the profit and loss statement (P&L) and the balance sheet. The P&L represents the profitability of the business. It compares the investment in raw materials and direct labor to the revenue generated when the produced product or service is sold. We make the same comparison when we apply KPIs to calculate the anticipated return on investment (ROI) of our marketing efforts.
So if ROI calculation is marketing’s version of a P&L, what is our version of the balance sheet? In business, the balance sheet compares the debts of the business to the assets it holds. Assets help a business produce more output at a higher level of profitability. Cash or working capital makes purchasing more efficient. Machinery and software makes production more efficient.
Imagine you started a business making jams and jellies out of your kitchen. As you grow, you quickly find that you need to hire staff. So you lease a commercial kitchen and hire a bunch of jelly-makers to produce more jelly and jam. After you pay for your fruit, sugar and the wages of your jelly-makers, you make one dollar profit on every jar. At some point, you start talking to a machine vendor who can provide you with a machine that cuts your jelly-making staff in half and allows you to double your production. Now, you are able to make $3.50 on each jar of jam and produce twice the number of jars each shift. The asset (your jelly jarring machine) improves the efficiency of your business, leading to a greater return on investment (fruit, sugar and jelly-maker pay).
In the context of marketing, we have the same opportunity. Instead of paying for fruit, sugar and jelly-makers, we pay for media, creative and marketers. Instead of producing jars of jam, we produce sales and leads. So what are the assets that improve our output and our efficiency? What is marketing’s jelly jarring machine?
Below, we outline three major marketing assets we should all be building, measuring and reporting: content, brand and data.
Content as a Marketing Asset
Joe Pulizzi, one of the founders of Content Marketing Institute, writes, “Marketers view spending on content marketing as an expense. This is something we as marketing professionals have to change.” He goes on to position content as an asset. Once built, our content can be used over and over again to acquire new audiences and engage or nurture existing ones. This is true, regardless of whether it’s a blog post, white paper, case study, video or infographic. As long as our content isn’t too timely, it can be put to work far into the future (just like a jelly jarring machine) improving returns on our other marketing spend.
When reporting on our assets, we want to be sure to report on the volume of evergreen content we have created, the impact of that content on SEO and the number of engaged new prospects the content drove to our brand.
Brand as a Marketing Asset
Investopedia defines brand equity as “the value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent.” The key point in that definition is the “premium that a company realizes,” implying that a company or product with an established, trusted brand can demand a higher price in the same market as a company or product without a solid, recognizable brand.
A 2010 research report from Credit Suisse validates this theory. The report states, “Our research indicates that companies focused on brand building consistently generate outsized long-term growth, profitability, and returns.” They go on to recommend 27 global stocks based on their analysis of how each company invests in its brand, along with the maturity of the brand itself. Had you invested in the seven US stocks on their recommended list, you would have realized a 311% return on your investment over the five years following the report. Their list of companies with mature, well-built brands outperformed the market by more than a factor of three*.
Measuring brand as an asset can be tricky. There are three key metrics to consider: awareness, alignment and resonance. Awareness speaks to what percentage of our target audience can recall our brand. But just because they can recall our brand, doesn’t mean our brand is working for us. We also need to ensure our brand is in alignment with our organization. Is management’s vision in alignment with customers’ and prospects’ perception? Are both in alignment with employee’s actions? Finally, we want to make sure that our brand personality and position appeal (or still appeal) to our target audience. These three metrics will give us an idea of the value of our brand as an asset and should improve as we invest in refining and communicating our brand internally and externally.
Data as a Marketing Asset
When I think of organizations leveraging data as a marketing asset, none come to mind faster than Kraft foods. You probably don’t think of Kraft as a cutting-edge digital organization, but they have spent the last decade-and-a-half building content assets such as KraftRecipes.com (Alexa rank of 1,797 in the US) that give them phenomenal insight into their customers.
When asked in an interview in late 2014, Bob Rupczynski, VP of media and consumer engagement at Kraft Foods, said that the goals of their data initiatives are “addressability, understanding of the consumer, understanding their context, knowing what that connection to them means, and being able to deliver the relevant message.”
In modern marketing, first-party data (the data we own, that we create from our organization’s interaction with prospects and customers) is extremely powerful. First-party data allows us to segment our audiences based on their needs, wants and affinities. It allows us to open direct channels to our audiences using email, direct mail, as well as mobile, social and web-based advertising.
When reporting on our assets, we want to be sure to report on the size and completeness of our contact database as well as the size of any anonymous audiences we can reach via retargeting on the web, mobile and social media.
Content, Brand and Data Working Together
These three assets, when applied in concert, actually build on each other. The content we produce pulls contacts into our database and allows for richer segmentation of our audience. A strong brand ensures that our database is filled with contacts whose values align with our business or product. Our brand can also build trust, making it easier to capture contact info and move anonymous traffic into our contact database. Our content is a vehicle for our brand personality and messaging, giving us a way to connect with our audiences wherever they may lie in the buyer’s journey.
Above all, if we grow these three assets (content, brand and data), we will make our future investments in direct marketing more effective, incrementally improving our ROI.
* Based on comparing an equally rated portfolio of the seven recommended US stocks to investing in an S&P 500 index fund.