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Lecture Week 4 Integrated Marketing Communications & Budgeting

UTS 24736 Marketing Communications

SPRING 2019

Subject Coordinator: Dr. Valeria Noguti

Subject Structure

MC Strategy

Integrated MC and Budgeting

Creative Strategy

Media Strategy

Evaluation and Metrics

Introduction to MC

MC Industry

Buyers

#1: Advertising, sponsorship

#2: Direct marketing, personal selling, sale promotion, field and experiential marketing, placement, exhibitions, packaging, licensing

#3: Digital, PR

Foundations

Managing Marketing Communications

Marketing Communications Mix

So what is IMC?

IMC is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communications programs over time with consumers, customers, prospects, employees, associates, and other targeted relevant external and internal audiences. The goal is to generate both short-term financial returns and build long-term brand and shareholder value (Don Schultz)

What is good and what is bad about IMC?

Major Marketing Communications Platforms

Platform	Components
Advertising	Print and broadcast ads, Packaging, outer,, Packaging inserts, Cinema, Brochures and booklets, Posters and leaflets, Directories (e.g. yellow pages), Reprints of ads, Billboards, Display signs, Point-of-purchase displays, DVDs
Promotion	Contests, games, sweepstakes, lotteries, Premiums and gifts, Sampling, Fairs and trade shows, Exhibits, Demonstrations, Coupons, Rebates, Low-interest Financing, Trade-in allowances, Continuity programs, Tie-ins (Cross-selling)
Events and experiences	Sports, Entertainment festivals, Arts, Causes, Factory tours, Company museums, Street activities
Public Relations (PR)	Press kits, Speeches, Seminars, Annual reports, Charitable donations, Publications, Community relations, Lobbying, Company magazine
Online and social media marketing	Websites, E-mail, Search ads, Display ads, Company blogs, Third-party chatrooms, forums, and blogs, Facebook, Twitter and other platform messages, YouTube channels and videos
Mobile marketing	Text messages, Online marketing, Social media marketing, Apps
Direct / database marketing	Catalogues, Mailings, Telemarketing, Electronic shopping, TV shopping
Personal selling	Sales presentations, Sales meetings, Incentive programs, Samples, Fairs and trade shows

(Keller 2016)

What is there to be integrated?

Not only this part

The Whole Marketing Mix Communicates…

Advantages vs Disadvantages of IMC

Short vs Long Term

How much of your budget should you allocate to short vs long-term?

What does the graph mean?

Brand vs Activation Campaign effects

Source: Les Binet and Peter Field, The Long and The Short of It

To grow, brands need new customers (penetration)

Source: Les Binet and Peter Field, The Long and The Short of It

Overall, campaigns targeting new customers outperform those targeting existing customers. But both are necessary. Need to consider brand strategy and budget allocation

Why does the balance short and long term work?

Source: Les Binet and Peter Field, The Long and The Short of It

Where the effects are

Brand building vs Sales activation

Sales uplift: Brand building vs Sales activation

Trade-off Across Channels

Question…

When an ad for a car airs on TV, would you expect to see significant increased online brand search?

Multi-tasker Audiences: TV-to-online spill-over effects

Example of synergistic effects across media (Du, Xu, Wilbur, 2019):

Immediate Responses of Online Brand Search and Price Search to TV Ads

TV ads for SUV brands in the US

Analysed +27,000 ad spots on national TV and +750,000 spots on local TV

Multi-tasker Audiences: TV-to-online spill-over effects

Results

National or local TV generate both brand search and price search spikes immediately after the ad airs

Nearly all of immediate response occurs within 5 min

Brand search peaks during the first min after ad airs, then dissipates quickly

Price search is spread more evenly over the 5 mins

National ads lead to competitor-brand searches, not competitor-price searches

National ads more cost-effective at generating immediate brand searches whereas local ads more cost-effective for price searches

What TV does

Online vs Offline: the Power of Synergy

Online is on average 15-30% more efficient, but not across brands and multi-channel approach is best.

Online costs have been increasing…

Variance is much higher for Online, TV is more predictable

Journeys and Communications Mix

(Batra and Keller 2016)

Cross-media strategies are more effective: Recent findings

The highest campaign ROI comes from a combined multi-channel approach: combining offline and online is 50% more efficient than offline alone and more efficient than online alone.

Online media with a TV campaign drives ROI across all categories, more so in high consideration categories: e.g. travel campaigns with TV + online reach on average 56% higher ROI than TV alone.

4/10 marketers focus primarily on short-term as indicator of success but on average 30% of the value of incremental transactions are generated after the campaign spend period.

Source: IAB “10 learnings from MeasureUp 2018”, Christian Manie (2019)

$$ Mass

Advertising

Limited $, targeted campaigns:

Direct Marketing; PR; merchandising, POP, Social media, paid search, SEO

$$: To generate engagement, done in stages: e.g. Advertising + Interaction

Focus on Conversion (call-to-action): uses mix of channels

No formal comms;

WOM; experience

Budgeting: What is “the line”?

Budgeting Techniques (from Chapter 9)

Budgeting Techniques (cont’d)

Budgeting – Marginal analysis Sales – Response Function

Theoretical basis to explain relationship between advertising spend & sales

Budgeting Sales – Response Function

What does this curve say?

Budgeting Sales – Response Function

• What does this curve say?

What are the differences in these responses?

Model	Concave-Downward	S-shaped
Response to advertising investment (immediate or delayed?)
Involvement level (high or low?)
Product categories (durables or non-durables?)

Marginal analysis

***

Importance of Share of Voice (SOV)

Strategy to Gain Market Share by Increasing Ad Spend

Budgeting for Other Elements of the Marketing Communications Mix

Besides campaigns focusing on communicating about products and brands, there is corporate advertising, direct marketing that need budgeting as well

Sales promotions can be more easily budgeted as their effects are more quantifiable, especially as a company builds experience. Factors to consider include:

Redemption rate: how many coupons will be used, extra units will be sold, samples demanded, price deals taken

What is the cost covered by the extra units sold?

PR: staffing/agency costs are relatively fixed, no media costs, need to include production/event costs

Sales force: higher in B2B, fixed costs, take time to train, harder to change quickly

Which budgeting methods are most used?

28% judgmental budgeting, 28% objective and task processes, 20% measurement-based, 15% sales, 9% competitive (West el al 2009)

But more precisely, companies use a combination of methods. A popular one is heuristics (e.g. maximum advertising/sales ratio) with analytics (West et al 2014)

Budgeting largely depends on corporate culture, access to data, personalities, industry, timing, risk, etc.

Usually there are many players involved: marketing, finance/accounting, operations, R&D, corporate management, etc.

When would you increase your budget?

Competition

Launching a new product

Product differentiation

Low observability of product qualities

Absence of strong price competition

Retailer-manufacturer opportunities or constraints

Lidl (Aldi competitor)

Prior to 2014, perceived as cheap, without any value other than low price

In 2014, “Taste Test” national TV advertising showing people eating appealing food and later revealing it was from Lidl

Added 2.2% market share over 4 years (they had gained 3.1 share over the previous 20 years, mostly because they expanded number of stores)

Why did it grow?

How Lidl grew

Wrapping up

Integrate Marketing Communications & Budgeting discussed

Next week: Creative Strategy

Week following the next: Guest speaker Katrina Jarratt - Creative Director at TBWA 