Marketing Budget ROI

1
Marketing BudgetROI New Initiatives

• Sample PowerPoint showing the presentation for
  the new scratch budget. It introduces new
  expenditures and their expected ROI. It was from
  an actual presentation within the company, but
  the company name, products and numbers were
  changed to make it generic enough to share.
• We were grilled by the CFO during the meeting,
  but we got 100 of what were asking
  forspecifically since we could show the expected
  return for every dollar requested.

2
Marketing Objective Approach

• Our 2010 objective is to maintain existing
  business, while capturing new accounts to grow
  sales from 50 million to 59 million.
• Our marketing approach includes
• Introduce a new product line with associated new
  revenue (Widget)
• Introduce three major new product releases
  (Widget2, Widget3 and Widget .x)
• Improve our pricing strategy w/Widget via
  promotions to better penetrate and re-capture
  market share (while protecting existing profits)
• Increase our width of distribution (add more
  better qualified resellers) and improve our
  reseller recommendation rate (better support,
  leads)
• Instigate smarter promotions (Ads, events) to
  generate greater ROI. Cut those that do not
  perform
• Utilize more promotional tools (PR, direct
  response, channel, roadshow, etc.) to generate
  more leadswhile still requiring each program to
  maximize ROI

3
Budget Summary Expense/ROI

• Channel Marketing recruit new resellers, sell
  more through existing resellers (increase
  recommendation rate). Expense 310k. Return
  4.9 million.
• Advertising new product announcements, generate
  leads for sales and resellers. Expense 416k
  Return 1.8 million.
• Promotional PR generate leads, credibility and
  awareness. Expense 244k. Return 2.3 million.
• Events generate leads, customer, consultant,
  reseller and press meetings. Expense 515.
  Return Negative
• Customer Reseller Conference customer,
  consultant and reseller support, pre-sell
  on-going releases. Expense 440k. Return Not
  calculated
• Collateral product catalog, price lists, CDs
  (support material), reseller sales kits, product
  slicks, etc. Expense 619. Return Cost.
  Required to sell the products. Covers 30 of the
  57 different Division products.

4
Integrated Marketing Premises

• The initiatives ROI is based on much of the
  work done internally. Head cuts force us to use
  external agencies, often increasing expenses 5 to
  10x.
• This is an integrated campaign. Each initiative
  is designed to work in tandem with the others.
  For example
• If we recruit new resellers, but cant provide
  leads (by cutting ads), our expected ROI/reseller
  drops.
• PR will actually drive our sales more than
  advertising. However, press coverage is often
  highly influenced by ad placement (particularly
  with smaller pubs). PR creates the overall
  interest, with Ads differenting the product and
  showing where to buy (leads).
• It is expected that we will be smarter with our
  ongoing campaigns. Past examples changed ad from
  brand identity to direct response
  formatincreased leads 35x. Utilitized Web for
  resellers, decreased pricing list print postage
  expense
• ROI on leads is contingent on changing our
  internal processes and behavior (being addressed
  now). Better quality better tracking better
  follow-up greater ROI
• Total new product revenue and ROI equals
  greater than the expected 9 million to meet this
  years budget. The additional ROI represents
  total revenue as a result of the specific
  campaign, of which the associated sales revenue
  may not close within the calendar year.

5
Channel Marketing

• Objectives Recruit new resellers (some have
  defected, others cover new verticals), improve
  existing recommendation rate, joint promotions,
  leads. The proposed campaign would bring us 49
  new resellers (VARs) and 5 million in new
  revenue (over a 1 year period, with additional
  on-going revenue). Total expense, with a channel
  director (150k fully burdened) 310k.
• Promotions
• Advertising
• 4 Ads VARBusiness/Other (3k each (designed
  internally)) 12k
• ROI 10 qualified responses / ad 40
  responses. 25 conversion 10 new resellers x
  100k/reseller/1st year 1 million
• 4 Carddecks VAR/System Int Specific (2.5k)
  10k
• ROI 4 qualified responses/deck 16 responses.
  25 conversion 4 new resellers x
  100k/reseller/1st year 400k

6
Channel Marketing

• Promotions
• Direct Response
• 2,000 targeted locations 8k
• ROI 2,000 x 5 response 100 leads x 10
  conversion 10 resellers x 100k/reseller/1st
  year 1 million
• Reseller database list - 5k ROI Needed to run
  campaign
• Events
• Reseller Roadshow (10 cities, 80k less
  contribution) - 25k
• ROI 10 cities x 25 resellers/each x 10
  conversion 25 resellers x 100k 2.5 million
• Reseller Collateral ((brochure, binders) (2,000 x
  50/ea)) - 100k
• ROI Necessary to run the program.

7
Promotional PR

• Objective To generate leads, credibility, and
  awareness. The recommend PR activity, at program
  cost of 144k, plus 100k weighted salary, would
  total 244k and would generate more than 2.3
  million.
• Items
• Clipping Service (300/mo 1.95/Clip/100) - 10k
• Potential Acme add-on discount
• ROI Cost needed to determine ROI response for
  all PR
• External Agency (3 x 20k (Trade Show, Conf,
  Tour)) - 60k. ROI Augment internal capability.
  Return is associated with Press hit ROI.
• Reviewers Guide - 10k ROI Increases our chance
  of a positive reviewmaximizing PR effectiveness
• Press Tour Widget (introduction, position) -
  35k
• 3 Cities, at least 3 Locations/City
• ROI 3 cities x 3 editors each 9 articles x
  2,500/hit (MQQ value) 22.5k. The short-term
  ROI is a related article. The real ROI is the
  increased personal relationship, which increases
  our hits on an ongoing basis, since we got on the
  radar screen of the top editors.

8
Promotional PR

• Items
• Press Release news wire services (each x 550
  20k). ROI The Press Releases are required to
  help generate hits
• Press Kits (1,000 x 4, Plus 5k x 3 Reprints) -
  19k ROI Cost. Materials required to run PR
  campaigns
• The budget only accounts for the cost and ROI for
  each expensewhich stands on its own. However,
  the overall expense also has a long and
  short-term residual effect since it helps ensure
  reviews, referencing, and Web hits.

9
Promotional PR

• ROI Analysis (how to measure PR effectiveness)
• The promotional goal is to maximize the budget to
  get the greatest exposure ( of impressions) and
  ROI for leads. Choose medium. To reduce ads, we
  use PR, which is 15 times more believable, yet
  1/7th the cost. Ads help us get PR coverage and
  give phone for direct response.

Compared to Sample Ad
Sample Press hit
- A positive press hit has a greater value than
advertisement. We use the ad replacement cost
to calculate ROI in terms of placement saving
cost (what it would cost us to get the same
impression count via advertising). - ROI for
press is calculated with a formula called the
Media Quality Quotient analysis.
10
Advertising

• Objective We have 1 new product and 2 new major
  release launches in 2003. We expect to generate
  new sales via the new product and releases, plus
  penetrate 6 new vertical markets. Total expense
  is 416k, our ROI is 1.8 million.
• 6 different verticals, 1 best pub per vertical,
  6 placements each 36 placements
• 4 different horizontal (security) pubs x 6
  placements each 24 placements.
• 6k each (with graphics/placement). Each launch
  campaign will run for 90 days.

59 sales of Widget3 equal 12.6k/sale. Widget2
is much greater.
11
Events

• Objective Generate leads, setup customer,
  consultant, reseller and press meetings. Expense
  451. Return NEGATIVE
• Our primary show is ASIS. Additional events
  include Trade Show 1, Show 2, Show 3, Show 4.
• Our ROI is based on Trade Show 1 (where we have
  the most accurate data) and the ratio is applied
  to all.
• In 2001 we generated 600 leads at Tradeshow 1. 75
  were deemed quality. We cannot attribute a
  single sale to these leads.
• Assuming we put the tracking systems in place
  (current initiative outlined in appendix), and
  assuming we use the same expected leads and close
  ratio as the ad campaign (conservative), we have
  the following ROI

12
Events Discussion

• Based on current data, should we do Trade Show 1?
• Weve been at Trade Show 1 for 13 consecutive
  years. However, ROI kills sacred cows (sacred
  cows make the best burgers)
• Expected changes for Trade Show 1 2010, with
  refinements for 2011
• MUCH more aggressive at getting leads show and
  daily goals
• Microphone stations to draw more attention to the
  demos
• Promotions to pull people to the booth (more
  traffic)
• Pre Post Day team meetings with recognition for
  those that pull in the most leads
• A clear understanding of what we need to get out
  of the show (LEADS first, everything else second)
• A new lead qualification form (A, B, C) with
  real qualifying questions ( doors/readers,
  employees, time to decide, etc.)
• Everybody works the booth to cut expense (no ½
  days)
• New lead tracking process (template w/managerial
  information for follow-up) internal buy-in
• Incentive plan with Sr. MarCom Mgr based on
  leads
• Reduce costs smaller size, consolidation

13
Events Expectations

• Following are the expectations for Trade Show 1
  2010
• Increase the leads from 600 to 1000
• Microphones, promos, much more assertive and
  qualifying
• Improve the qualification process, pass on tire
  kickers and seek out those most interested
• Even still, with these ratios, the lead ROI is
  the lowest of all campaigns
• We have to also track the value of meetings,
  press, competitive intelligence
• But, we must pull a better ROI or re-consider our
  ongoing participation
• The concept of noticeable by absents can be
  made up by re-allocating the money to more
  profitable campaigns, then setting up sales
  meetings with key accounts during the show,
  without the high cost of the booth
• May consider off show floor event

14
Customer Conference

• Objective Customer, consultant and reseller
  confidence support, pre-sell on-going releases.
  Expense 320k. Return
• I do not have enough data to calculate an ROI for
  this event.

15
Research Risk Reduction

• Objective Reduce the risk from missing the mark
  with our product lines. Total cost is 78k. ROI
  The reduction in loss sales resulting from not
  identifying, prioritizing and developing the
  correct features (from Win/Loss Reports).
  Microsoft, HP and other high-tech research ratio
  is 1 of sales. Ours is 0. It will be 01 after
  we add this expense.
• Activity / Investment
• Analyst Reports (specific category information)
• Two at 5k each
• Usability Study Widget software interface 10k
• Focus Groups (identify key issues to test)
• 1 set external (3 locations) 20k
• 2 sets Division 6k
• Surveys (Prioritize features Roadmap) 25k
• 1 survey set for Widget 1/Widget 2/Widget
  3/Hardware/Reseller
• Consulting (survey setup, Business Intelligence
  setup) 3k

16
Brochures Catalogs

• Objective To provide the appropriate collateral
  to position and sell our products. Currently our
  collateral looks very old (grey marble 70s
  style), does not reflect the Acme brand, is not
  translated for International sales, has incorrect
  data/positioning, Cost 619k (includes annual
  re-prints, design cost)
• A large portion of our on-going budget is
  re-prints, much like the packaging cost of goods.
• The budget only includes re-prints or re-do (new
  product revisions) for 24 of the 37 Division
  products (avg cost 16k per 20,000 print run (avg
  /year), plus 1,500 - 6,000 production/art/desig
  n cost)
• All re-prints and new pieces reflect additional
  design/production cost, since they will require
  new design work that uses the Acme brand

17
Industry Ratios Marketing Only
Source Software Success, 3rd Edition, Software
Industry Operating Ratios. Based on 122 surveys
for the 1st eight months of 2001. Data is apx. 1
year old.

• Acme / Division Marketing Expense Ratio
• 2009-10
• 2011
• We will use 9 as an acceptable ratio (we have
  over 25 million, but most revenue comes from
  resellers). Even with the new initiatives, we
  are still below the industry ratios, based on all
  of the data we could compile.

18
New 2003 Revisions to Budget

• Play smarter
• Do something different maintaining ROI
• New Initiatives
• Promotional PR
• Research (Risk Aversion)
• Channel Marketing Reseller Programs
• Webmaster Online Marketing
• Vertical Leads