Vanguard has a unique proposition for an investment company.
The 35-year-old investment-management firm is owned by its shareholders and all of its funds are operated at-cost. The company works hard to return profits to its customers, meaning costs -- including advertising -- are scrutinized.
Michael Ma, head of retail advertising and prospect marketing, says pinching pennies is simply part of the culture at Vanguard. And in an environment where copy machines feature signage requesting that users pay 5 cents for personal copies, one can only imagine how carefully Mr. Ma's marketing budget is watched. But Mr. Ma relishes the challenge, telling Ad Age he has to make his case for advertising funds to everyone from the board to employees to shareholders like his grandfather.
Mr. Ma will further discuss how he makes the case for marketing investment and how he quantifies the return on that investment at Ad Age 's upcoming CMO Strategy Summit in Chicago. Here, a preview of what he has to say.
Ad Age : Why is it critical that you demonstrate a return on your marketing investments?
Mr. Ma: We have to show advertising lowers, not increases, expenses for our current shareholders. From the investment strategies we employ to the copier paper we use, one question asked in every decision at Vanguard is 'What is the value to the shareholder?' Advertising is no different, and that makes us a bit unique.
Ad Age : What is the primary goal of your marketing?
Mr. Ma: Our advertising is primarily aimed at gaining new prospective households to join the Vanguard family. For our current investors, we have some of the industry's highest Net Promoter Scores that range in the 70s, rivaling Apple, Harley-Davidson and other revered brands. However, we still lag our competitors when you look at broader awareness figures. If we can cross that bridge, we know we can lower the costs and complexity of investing for both our new prospects and our existing clients as well.
Ad Age : What media best accomplishes that goal?
Mr. Ma: The best media buy we made is not actually media at all -- it has been investing in a world-class measurement infrastructure. Because we are outspent by our competitors by several multiples and our promise to our shareholders, we have to make every dollar count. So we have developed a robust combination of fractional attribution and agent-based media mix models to lay a blueprint for what works against our business goals. We have invested heavily in search and display because of its ability to test these models, and are confident of our results.
As we interpret these results, we have the ability to make smarter buys where we see advantages where our competitors are not -- be they on Facebook, in the movie theaters through our Vanguard at the Movies Campaign, or on the streets of New York with our At-Cost Cafe.