How to Figure a Marketing Budget That Pays

"We don't have money to spend on marketing." I've heard that excuse so many times, only to find out that whomever said it, turned right around and wasted money on some ill-conceived, roll-of-the-dice gambit that paid back nothing. Without careful forethought, you simply won't have money to spend on marketing. That is certain. So let me offer some advice:
Marketing should not be viewed as an expense. In fact, if it is budgeted correctly, it will serve as an investment, and yield a pay off many times greater than anything you could expect in the stock market. It will be an investment in yourself, and you will have total control over the outcome. Here's how you do it:
1. Write down how much you expect to gain in revenue for the period in question. Let's say, for the sake of illustration, you're marketing a gadget that sells for $10,000. After one year, you expect to sell $1,000,000 worth of gadgets. That's 100 sales in one year.
2. Subtract your overhead from that. By overhead, I mean cost of goods sold, salaries, taxes, real estate, insurance, everything you need to pay out before all the rest is yours. Staying with our illustration, let's say that number is $750,000. You now have $250,000 to spend on whatever you want. Conservatively, that's a 25% margin. You've been paid, your employees have been paid. Your vendors are all paid. The rest belongs to you to use as you wish. You can buy a boat, put it in the stock market, bank it, even bury it. OR, you can re-invest a portion of it back into your company.
3. According to the World Advertising Research Council, benchmarks for marketing budgets in a business-to-business environment hover at around 15-25% of total margin. In consumer circles, where audiences are larger and more unwieldy, the benchmark is 25-35%. Some companies reinvest as much as 75%. Taking our current example, let's re-invest 25% of the margin. That's 25% of the $250,000 left over, or $62,500 in marketing budget.
4. With one sale equaling $10,000, anything after your sixth sale is gravy. So, your 1:1 ROI on the campaign would be six sales. Odds are, you'll likely tee up well more than that on your $62,500 marketing investment. If you do it right, you should get 100 sales for that investment. Will your stock investment yield a better return? Probably not.
Carve your marketing budget out of your available margin, and you won't be looking at an expense burden. You'll be reinvesting a portion of your proceeds. Tie those to the number of sales you need to make to determine your ROI. And build a plan that hits the target.
I'll be happy to visit with you for more on this topic, if you like. Email me or call the office. We are in business to help your business grow.

Pro Bono Marketing Heart Check

With the economy muddling along and business at a startling ebb, many agencies are finding time to provide pro bono work to favorite charities. I know MarketGarden has done a fair amount of pro bono work over the past year, and I'd like to offer some reflections on the experience.
In general, people who work for free tend to consider their contributions in kind as having some amount of value. And, even though payment may not be in cash, other forms of payback can be every bit as rewarding. Especially when no payback is expected.
I got a gift card from one charity I did a lot of work for, and although it nowhere near covered what I put into the job, the gesture was very much appreciated, and the recognition and thanks that came with it were gratifying indeed. On another occasion, the organization I had serviced for free invited me to contact some promising prospects among their list of friends and donors. They even made the introductions, which aided in advancing the discussions.
Another charity was rather less appreciative. I can only guess that when you live off of charity, you sometimes grow numb to the sacrifice people make to advance your cause. In this instance, when I finally did request a sample of some of their material I found useful to a project I was working on, I had to ask several times, and there was a delay. They finally did come through, but it created an awkward moment. So, if you're on the charity side of this deal, please don't lose sight of the wind beneath your sails. Not that we're due anything for volunteering, but just be sensitive. It doesn't take much to express an ounce of thanks.
On the other hand, I have worked among groups of volunteers and heard much grumbling from the troops about not being appreciated enough, or finding offense when their contributions are questioned or modified whatsoever in the slightest. Just because you volunteer your time or effort on a project, doesn't mean you get to be the king or queen of everything. There's a reason it's called charity work. The organization retains the right to make changes or reject your wonderful stuff. If you are doing pro bono work because you need some sort of ego stroke, you're better off seeing a counselor. Expect nothing. Give from the heart. Check 2 Corinthians 9: 7. God loves a cheerful giver.

Pay-For-Performance Marketing Requires Leadership

MarketGarden has been offering a pay-for-performance option to clients since we opened up shop in 2004. Basically, it requires a partnership agreement between the agency and the client, wherein we define up front what counts as "performance," how that will be measured, how that will be verified, and what rewards or penalties trigger as a result. We came up with this stance to help differentiate MarketGarden from other ad agencies or marketing design firms in and around Dallas. Quite frankly, I haven't heard anyone else lead with this sort of offering - and for good reason. Marketing is difficult enough to measure, and no one wants to be held accountable for a client who is not willing to execute a plan. That said, this dismal economy has sent a lot of businesses holing up in fear. Business owners and marketing chiefs don't want to make mistakes, much less spend precious resources on perceived "risky" ventures. Marketing budgets have been cut, as a consequence. And marketing departments are doing everything they can in-house just to save their own jobs. Where is the leadership in that? No wonder we're not seeing much of any upside. Everyone's planning for the worst - and getting it! I say now is the time for bold leadership. Now, more than ever, pay-for-performance makes sense. If you want to talk to an agency that is not afraid to put skin in the game - if you want an agency that has trademarked a process and created a mechanism to execute it equitably - give me a call. I'll gladly lead the charge - and accept my share of the blame or the glory. We've been waiting for just such a time as this! Let's talk.

Teach, Inspire or Get Out of the Way

It is sometimes amazing, yet altogether predictable, what people find interesting in the stuff they share online. A recent article from John Tierney of the New York Times details a study regarding what kind of information travels fastest over the internet. Sex? Puppies? Politics? Guess again. The most likely topics to be forwarded where either highly detailed pieces about science or technology - or awe-inspiring missives of a positively profound and important nature. We're talking about "The Promise and Power of RNA" or slide shows featuring the depths of the galaxies and God's creation. People either seem to want to learn something new or interesting (not necessarily useful) or feel connected to a larger view of the world (i.e., out-of-the-ordinary or routine). Sure, recipes, financial advice and daily jokes will always be in the mix, but at a higher level, we seek value, either by what we send (and what that says about us) or by what we read (and how that somehow completes us). We all want to feel smarter and part a larger purpose. As I sit here contemplating viral campaigns for our precious list of clients, I'm openly wondering - what about their product or service elevates the collective consciousness? If I can tap into any of that, we are going to be golden. To view Mr. Tierney's article, visit http://www.nytimes.com/2010/02/09/science/09tier.html.

Confessions of an Ad Man

I remember when AOL first came out. I was fortunate enough to have a high-ranking friend at a big-time agency plug me into one of AOL's first free beta accounts. AOL didn't wise up to me for the better part of three years. And, while other people were picking up CDs at gas stations with 1000 free minutes of AOL, I was living the free life, combing chat rooms, posting comments and "getting mail" at all hours of the day (and night).
Then, AOL caught on and pulled the plug. I joined the paying ranks and continued my bad habits. Until somewhere along the way, I dropped out and allowed the next wave to wash in unattended.
Social media has come a long way since then. And since then, I admit, I have been oh-so-very reluctant to rejoin the ranks. I guess it was when my sons started IM-ing their friends and texting incessantly at the dinner table. I suddenly pegged social media as some teeny-bopper sinkhole, not worth mine or my client's time.
Peers created pressure, however, and now I have a Facebook page. And a LinkedIn account. I tweet. I blog. I attend social media seminars. I sit in client meetings fielding questions about social media to which I often cannot provide any reasonable answers. I must confess. I am behind the curve.
Yet, I am trying. Thanks to websites such as mashable, comscore and quantcast, I am catching on. Little by little. Bit by bit. I learn a little more each day. And, with every new revelation, I must be progressing (or digressing, as the case may be.) Look for me on wefollow.com. I'm in there. Somewhere.

My "Tony The Tiger" Cup

Every year, I look forward to getting the final edition of "Advertising Age," so I can review the year's milestones and ponder our collective futures. This year being 2010, "Advertising Age" listed the 10 best ideas of the decade, including one interesting item called "branded utility." This idea cropped up somewhere around the middle of the decade, when interactive wunderkids were dreaming up new widgets and bots and gadgets for online use. The new online utilities found their ways into advertisers' hands and -- viola! -- branded utilities were born. One U.K. bank offered a widget that fed bank customers pop-up stock quotes four times a day on any designated personal computer. Nike came out with a widget that helped runners track mileage using a hand-held iPod. The other day, I heard GEICO offering a "glove box" iPhone app for roadside assistance. In my opinion, the idea of a branded utility is not so revolutionary as many people think. I remember when I was a kid, having a "Tony the Tiger" plate, cup and silverware set, making my breakfast times enjoyable and anticipated events. I remember using that set so regularly, the paint washed off the cup, leaving Tony stripe-less after several months of trips through the dishwasher. The utilities may have changed, but the idea hasn't. Branded utilities are not only a great way to get consumers interacting with your brand, they often extend the brand value, moving prospects into the customer fold, and customers into the loyal advocates fold. I would agree that Hyundai's consumer Assurance program is one such example, offering car buyers the ability to return their cars without credit damage in case of losing a job (quite a value proposition, if not an online application). Hyunda no doubt moved more than a few fence-sitters into the market with that one. And, consider Bud Light's crazy "Tailgate" approved spoof series (3-in-1 condiment gun; speaker box 12 pack; etc.). With a little in-depth research and clever thinking, there could there be a utility locked inside your company brand. Let's think about it together. Call me at 214-750-6601. We might come up with something G-r-r-r-reat!

Golubke For You!

It's holiday time, and I'm not thinking about advertising. I'm thinking about golubke. That's pronounced "Ga-WUM-key" by my family in Chicago. It's a Polish dish. It's stuffed cabbage, actually, and from the reviews in my family - and I'm talking from parents and siblings to great aunts, nieces and nephews - my golubke is the world's best. The reason why is I "Tex-ify" it. Any which way you slice it, it's a whole mound of trouble, only worth doing once a year. Here's what I do. And, by the way, this process takes hours, so clear out the day and prepare to make a bunch. You can freeze it when you finish.
I get a couple of large heads of cabbage, a couple of pounds of quality ground beef and a couple of pounds of ground lamb, 3 whole eggs, some white rice, celery, onions, green and red peppers, a large can of tomato soup, mushrooms, a couple of cans of stewed tomatoes (Rotel makes for an extra "Tex-y" batch), some picante sauce and a couple of jars of Ragu spaghetti sauce.
I first steam the cabbage so that I can peel the leaves off intact. There's a trick to this. If you steam it too much, the leaves disintegrate in your hands. If you steam it too little, the leaves are tough, so you gotta tend to it constantly as you go, peeling back layer after layer of leaf until the cabbage yields only the smallest leaves. You may want to carefully shave the spines of the leaves, to ensure a tender wrap. At this point, you'll have about 60 decent sized leaves stacked on a tray.
Next, prepare the rice (about 4 cups) and finely chop the celery, onions, peppers and mushrooms, holding the mushrooms aside in a separate bowl. When the rice is ready, mix it with the celery, onions, peppers, can of tomato soup, lamb, beef and eggs. Have fun mushing it into a meaty dough. Add spices to your liking (I usually add some Tabasco, to give it a kick). This is the stuffing for your cabbage rolls.
Next pull a single cabbage leaf and place a chuck of meaty-dough in the center of it (about the size of a baby's fist). Fold the leaf over the meat and set it in a large baking pan. Keep it up until the leaves or the meat are completely used up (if you do it right, the meat runs out first). You'll now have one or two baking pans stacked tight with cabbage rolls.
Next, take the cans of stewed tomatoes, the Ragu, and the mushrooms, mix it together as you would a spaghetti sauce, season it to taste (I add a few heaping tablespoons of picante sauce to Tex-ify it) and when the pot of sauce has simmered under low-medium heat for about an hour (long enough to blend the flavors) spoon it out over the cabbage rolls so that the sauce covers every roll. I usually tuck some in between each, just to make sure every one is fully glazed in sauce. You're almost finished.
Now, you'll have a couple of baking pans filled with stuffed cabbage rolls, glazed in red sauce, ready to place in the oven at about 350-degrees for an hour or so. Check on your masterpiece about 45 minutes in and make sure you aren't burning the top. You'll want it bubbling around the edges, and you want the insides of the rolls to be fully cooked.
When you're satisfied it's finished, pull the pans from the oven and place a roll or two on your plate. Always good with a glass of cold beer. Golubke. Tex-ified. Mmm-mmm! You are gonna love it! Happy holidays!