With few exceptions, media spending is one of the largest expenses in a client organization. And with any large expense, there is ever-increasing scrutiny to reduce these costs. There is always a good reason to review these expenditures, but often the quickest ways to make reductions are one-time fixes rather than long-term solutions.
To truly optimize this large expense, our stewardship of these budgets must be focused on revenue and margin versus simply media KPIs, thereby ultimately reducing the cost of selling. Reducing the cost of selling is a long-term approach to spend better, optimize and make adjustments that keep a client's business needs at the heart of any investment they make.
When margin and profitability are at the center of the decision-making process, the approach changes. It can never be a one-size-fits-all solution. Every media choice should be driven by desired client business outcomes while recognizing the need to connect with different audiences in different stages of the consumer journey. This full-journey approach is further nuanced; given brands have varying degrees of brand health, be it awareness, opinion, etc.
The complexity of the journey requires that we finally master the adage of reaching the right person, at the right place, at the right time, with the right message. While not a new concept, technology and data now allow us to deliver this -- in part due to the nature of digital, and more important, through high levels of addressability, now including television (~60% of homes). With this level of addressability, we are able to better understand cross-channel exposure and its impact on online shopping behaviors at various stages of the purchase journey.
Addressability and programmatic media are not new to the marketplace, but they have been primarily focused on lower-funnel tactics for near-term conversion to sale. We believe the real opportunity is upstream. When meeting our prospects earlier in their purchase journey, we are able to understand them in a much more nuanced way, so that we can connect earlier and with a more relevant message. This allows a brand to build interest, consideration and early opinion, to support the brand health metrics and ideally reinforce a relationship (with current customers) or create a budding relationship where we will steal share from the competition.
If we build this relationship before any decisions are made, we can stimulate and respond to behaviors with greater relevance and create a high-value exchange with customers. For example, in the automotive category, when we know someone has a competitive vehicle in the garage and is 18 months from coming off-lease. We want to connect differently than how we would with a loyalist at that stage -- or certainly anyone three to six months from purchase.
Messaging differently at different points of the journey acknowledges multiple conversions that will need to occur prior to the ultimate conversion of sale. If the early and mid-conversions take place, people will be more steadfast with their brand selection. This means fewer additional incentives (e.g., discounts, rebates, coupons) are needed, thus making them a higher-margin conversion.
This strategy can be highly precise in today's media landscape, because technology and data have evolved to finally enable our ability to find the right person, at the right place, at the right time. While this capability is incredible, all of this media precision is compromised if we don't solve for "right message." This means delivering the right message (or messages) is evolving as we are able to connect a highly relevant communication at the right time to impact online shopping behaviors.
With multiple conversions necessary to bring a higher-value customer to the final sale, media and creative are required to work through a more iterative and integrated process than ever before. Again, we can only maximize the sophisticated targeting ability if we pair it with the message with the highest level of relevance and deliver it effectively at the right moments in the purchase journey. This iterative process challenges all marketers to re-think the number of, and type of, creative assets needed to succeed in this model.
Ultimately, with the right approach, it changes the way we do business. Marketers can connect with their high-value audiences, build brand equity that gives permission to pay a premium, reduce cross shopping, limit incentives, create higher-frequency purchasers and expedite customers through the journey.
We are at a true tipping point in executing this type of marketing. Take the ever-expanding footprint of addressability, high degrees of confidence around the customer journey and shopping behavior, and responsive creative messaging, and we aren't just buying media more intelligently -- we're reducing the cost of selling.
By Jim Helberg, EVP, Chief Media Officer