True Efficiency Requires More Than Cutting Costs

Marketers Need to Determine Where They're Wasting Time, Money, Resources

By Published on .

Michael Fassnacht
Michael Fassnacht
The pressure to cut costs is stronger than ever, leading more and more marketing organizations, both advertiser and agency, to talk about how to reconfigure their marketing processes with one goal in mind: reducing costs.

Typically the cuts focus on cutting the marketing/media budget, headcount and nonessential expenses by a certain percentage. Instead, companies and agencies need to take a close look at how their marketing organizations are structured as well as their processes for getting things done.

A recent New York Times article about the changes in management thinking and strategies in the lens of today's crises featured this prediction: "The sharp downturn will force companies to go beyond simple cost cutting to take a hard look at the economics of their business. Most companies are actually bundles of three different businesses: infrastructure management, product and service development and commercialization, and customer relations."

Transferred to marketing and marketing organizations, those three bundles and that hard look equate to the three core areas of marketing value generation: production, ideas and strategy, and client management.

Marketers have got to dissect their organization, processes and value generation into those three domains. To truly redefine where they are generating real value, and where they are wasting time, money and resources, they must then ask themselves the following:

  • Which tasks are truly critical and can be used as a competitive advantage in the long term?
  • Which old beliefs and business myths slow down the speed and increase the workload without improving the quality of the work?
  • How can technology improve the workflow and the output quality?
  • What kind of talent gaps or mismatches does the organization have in any given area?
  • Which talents will be needed less, and which will be needed more over the coming years?
  • Where does this particular marketing organization want to be in three years?
  • What steps need to be taken -- without increasing cost structure -- to achieve this vision?

When it comes to production, for example, define the elements that are truly core to value generation. Then determine which could be outsourced at a lower cost -- for example, moving website production to Argentina, while TV production remains in-house.

Marketers must also determine whether, in terms of generating ideas and strategy, it would be helpful to include external partners. For example, P&G drives a significant amount of new-product innovations by third parties. And many marketers partner with marketing-mix-modeling firms to better understand the right marketing mix.

Client management is one of the most challenging areas for strategic cost reduction because of set behaviors and patterns. Yet it may provide the greatest opportunity to greatly improve the management process. Possibilities could include a stronger empowerment of strategic partners, an upgrade of in-house talent, or fewer meetings between client and agency as a result of better-defined roles and responsibilities.

Efficiency is not just about nonstrategic cost cutting, but about fine-tuning marketing's business model around production, ideas and strategies, and client management. Detrimental behaviors and unnecessary tasks have survived and thrived remarkably well within marketing over the past 20 years. Most marketing organizations react by simply reducing headcount, without a thorough analysis of how they work and how the marketing organization truly generates value.

Smart marketers will continue to focus on accountability and how to build marketing programs with the greatest impact. But the need for efficiency will increase in coming years with unprecedented intensity. This recession will continue to dramatically change marketing and yet it offers a rare opportunity for marketers who are willing to be brutally honest about what they do, why they do it and how they do it.

ABOUT THE AUTHOR
Michael Fassnacht, exec VP-worldwide chief strategy officer, DraftFCB, is a data guru with more than two decades of experience in marketing strategy, analytics and relationship marketing. He blogs at marketinggeek.blogspot.com.
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