The first Monday of each month, I dust off a favorite post from the Bennis Inc Blog archives and give you another chance to enjoy the wit and wisdom that’s been shared. Enjoy this month’s treasure – and if it inspires you – be sure to share it with family and friends!
When we think of waste in business spending, we might first think of overhead, office space and supplies, or inefficient processes. While these are all common culprits, one of the more alarming areas of wasteful business spending falls under marketing. More than just my own observation from working with hundreds of clients, combined with gut instinct, there are countless surveys and reports out there to back up the fact that as much as a quarter of a business’s overall marketing budget is wasted!
In a survey of 1,000 marketers worldwide by Rakuten Marketing, respondents estimated they waste an average of 26% of their budgets on ineffective channels and strategies. And about half of respondents said they misspend at least 20% of their budgets.
Even more shocking, about 3% of respondents believe they’re wasting as much as 80% of their marketing dollars year-over-year. Pessimists? Maybe. But why then aren’t more businesses taking the initiative to eliminate this waste, or at least lean it down to a more reasonable number?
There’s no – strategizing – monitoring – analyzing – adjusting – taking place. At least not consistently.
I realize I threw at lot at you there with that last statement, but those four actions are what will save businesses from devastating, and growth inhibiting, amounts of marketing waste. Here’s why.
Marketing spending, big or small, must always begin with a strategy as its foundation. Next, all of your marketing tactics must be carefully monitored to provide accurate and useful data. Even the best data will not be of much use, unless it is analyzed to determine if your strategy is working. Finally, you must be willing to change. Be proactive about adjusting your marketing strategy to eliminate activities that produce less than desired results and reallocate this money to other strategies that performed as intended. If you don’t go through this 4-step process frequently and consistently, you are far more likely to waste significant amounts of money on tactics that aren’t producing results.
What are the biggest culprits of wasteful marketing spending? Here are eight factors that most commonly result in waste. Businesses, take note!
- Reaching a broad audience, but not your target audience.
Many businesses make the mistake of trying to get the largest reach for their money, but overlook the fact that bigger is not always better. It is well worth spending a little more, or reaching fewer (but better targeted) individuals who fit the profile of your ideal customer.
- Being locked into a long-term contract.
Media outlets, or marketing and advertising agencies, may try to sell you on a slight discount or locked in rates so long as you sign into a long-term contract with them. This is dangerous for any business, but especially small businesses who need flexibility with their budget and who need the ability to change up their strategy if they’re not seeing results.
- Falling for the “deal of the week.”
Media sales reps are trained to package deals a certain way and sell businesses on the latest and greatest advertising opportunity they can offer. In most cases, at least in my experience, these deals aren’t so great and tend to include a lot of fluff you don’t need that ultimately ends up costing you more money.
- Letting a different business guide your strategy.
Often I see businesses compare their marketing and advertising strategy to what another local business is doing. Comparing is only effective if it’s apples to apples. In these instances, they’re using businesses who have different goals and objectives, or who work in an entirely different industry, to guide their marketing strategy. This never ends well.
- Using ineffective messaging.
Let’s say you do find the right media channel to effectively reach your target audience. Great! But when it comes to developing your messaging, you fall short. The result is you still may grab the consumer’s attention, but when you do, it creates a negative first impression or simply blends into the background. Again, another major waste of marketing dollars!
- Continuing to do what’s always been done.
So many businesses pick up last year’s marketing strategy (or last decade’s), dust it off and recycle it for this year’s marketing strategy. In no other aspect of business – or really, life – does this prove to yield the best results. A fresh look is always warranted. New technology, new trends, changing consumer mindsets, and new developments in your own business are every reason to look at each year, and each quarter as a new starting line.
- Spending just to spend.
So you’ve set aside a certain budget for marketing, developed a strategy, implemented the strategy, and lo and behold there is actually some money still left in the pot! Feeling great about this, you look for any way to use of the last of your change and end up throwing it at some ineffective marketing tactics. But why? Don’t spend money just to spend money. If you don’t use 100% of your marketing budget in a given season, save it for the next season and put it towards efforts that are in line with your strategy and have a greater chance at producing desired results.
- Failing to have a call to action.
Finally and most importantly, any marketing that fails to have a call to action – and not just any call to action, but one that will actually make the customer MOVE – is a waste of time and money. It’s like screaming “Hey!” and once you get the person’s attention you just stand there awkwardly. Always, always have a clear and compelling call to action.
If your business was asked to estimate the percentage of wasteful spending in its marketing budget, what answer would you provide? Are you comfortable with this number, or is it concerning enough that you need to make a change?
Let’s talk waste. Comment below with additional advice for eliminating marketing waste, or pose a follow-up question that we can help answer!