The Top 200 Brands Ad Budgets

Ad Age kindly sent me this interesting graphic of ad budgets by brand. They say a picture is worth a thousand words so, enough said. Enjoy the view.


Designed by Marketing Degree, to see the research please click here

B2B Marketers Take Their Seat at the Table

This post appears on Forbes CMO Network today.  I'll be writing a monthly post for the site.   

In 2004, I was part of research project with a professor at the Kellogg School of Management and the CMO Council that sought to understand what CMO’s believed to be critical for their success.  The most common response was a seat at the table with other senior executives. 

Four years ago, I was part of another research effort focused on the CMO’s top priorities, and number one on the list was to be viewed by their peers as strategic thinkers.   Finally, I believe the day has come for that to happen.  To continue reading click here

Apple Killed the Radio Star

When MTV launched on August 1, 1981, the first video played was “Video Killed the Radio Star” by the Buggles.  It was a warning shot across the bow of the “establishment” that the world was about to change.   I still remember where I was that day; at beach week with a bunch of other high school knuckleheads, wasting our day watching MTV instead of being on the beach.   It was our “big thing,” as we were to become the “MTV generation.”       

Last week, Apple basically made the same statement when they announced ICloud.  Steve Jobs proclaimed: “We’re going to demote the PC and Mac to just be a device…is equivalent to saying the “Cloud Killed the PC Star.”  An amazing comment coming from the company that helped create the personal computer segment with the Apple I and Apple II in 70’s & early 80’s. 

How is it that Apple - a company that was almost out of business 15 years ago - produces home run after home run, and now threatens to cannibalizing one of its core products, the MacBook?  What has changed over the last decade and a half?  Besides the obvious, including culture, resources, and talent, there are four key drivers of their success.  

1.     Learning from the past – Apple has learned that it no longer has to be the innovator of the technology; a learned behavior I attribute to observing the success of Microsoft.   Apple’s strategy has shifted to creating innovative products built off existing technology.   For example, the IPod was a better MP3 player (or DAP).  The IPhone is a better Smartphone.  The IPad – is an infinitely better version of a Netbook.  And the Cloud, not exactly born yesterday.

2.     Timing the market – Apple now allows others (similar to Microsoft) to create the market.  They model the adoption curve and introduce products just as consumer adoption is about to take off (typical 2-4 years after the technology is introduced).    This allows them to learn from consumer usage and hit the market at the right time with a better product. 

3.     It’s the App + the cool device – Apple learned this lesson early and probably applied it better than anyone in the industry.   Not only do they design a great looking product but they also get how consumers want to use it. And their open-source platform allows troves of software programmers and developers to create programs to be used and loved by the masses, further increasing the desirability to own their hardware.  Enabling that functionality also happens to create incredibly scalable revenue streams.  

4.     Being held accountable and challenged by customers– this is perhaps the most important success driver for Apple.  Each year Jobs knows he has to go in front of thousands of rabid Apple fans with something new.  There is no time to rest or to be complicit with their current success; Apple fans want to know what‘s next and desire to be wowed by it.  As a result, Apple has to constantly be in “innovation” mode.  This creates, maintains, and nurtures their culture.  We all know that often times, we produce our best work or solution for our most difficult customers and clients.  Apple embraces this and uses it to fuel future product development unlike any of their competitors or any other company for that matter. 

So what’s the next big thing for Apple?  Well, if you follow the formula above just track new technology innovations, give it 2-3 years and voila…a new Apple product.    In the meantime, look for the IPAD to take over the world.   My kids will be probably be known as the “IPAD generation.”  

Why Measuring Customer Lifetime Value Matters for Lead Generation

Post is featured on MarketingProfs.com

This month BtoB magazine published the Lead Generation Guide 2011.   The special issue is filled with articles focused on all facets of lead generation written by marketing experts and journalist over the last two years.

The final section titled, “Data” contains charts with assorted research findings.  One of the most interesting is a slide from a Benchmark report produced by ITSMA.    The graph show the metrics regularly used to measure the success of lead-generation activities. 

The top responses are what one would expect; Number of Qualified Leads (68%), Number of Closed Deals (63%), Revenue Growth (54%).  The metrics that ranked lowest are far more interesting: Cost per Customer Acquired (15%) and Lifetime Value of Customers Acquired (19%).  

If you are a tactical marketer, I can understand why those metrics ranked the lowest since the data is hard for marketing to track, it may not be marketing’s responsibility, and/or the calculation is too complicated. However, if you are a strategic marketer, capturing and tracking these metrics is very important.  

Years ago, I consulted for a research division within a professional services firm.  The company sold primary research and custom reports that typically cost between $80,000 – $150,000 Acquiring new customers was largely a transactional effort. As a result, it relied heavily on marketing and new business activities to fill the pipeline.  Increased revenue targets meant that it required increased marketing budgets to meet corporate goals.

I was tasked to find a solution since the model was unsustainable.   The key to unlocking the answer came from calculating their Customer Lifetime Value (CLV).   Almost immediately the analysis pointed to issues with their average price point, YOY churn rate (retention) and average account size.   Not surprisingly, the company had a negative CLV, but no one was measuring it or analyzing it.

Even though the symptom of the problem manifested itself as marketing, this was not only a marketing issue.  The challenges reached across the organization and into the product and sales groups as well.  Of course, understanding the cost envelop for acquiring customers helped guide future marketing investments and activities, but fixing this problem was not only about cutting or right sizing the marketing budget.

As a result of the analysis, the firm set on a course to build and implement other areas of improvement:

• An upsell and cross sell program. 
• Complimentary products that could be sold as follow on/add on 
• Enhanced products to drive a higher initial (01) price points
• An account management and retention program
• Account managers

By implementing the aforementioned items, the company was able to correct the problem and generate a profitable CLV, which became a key performance indicator (KPI).

While it is not commonly used, CLV is one of my favorite metrics to track because it is a “process” metric.  It can help guide sales and marketing performance by ensuring that profitability, acquisition cost, and retention rates are being properly measured.  Marketers tracking CLV have an early warning system that can indicate:

• Targeting the wrong audience  - too small, short term focused, etc.  
• Creating the wrong type of leads – clients may only be interested in the initial offer and are not interested in a longer term relationship (see the next point for more).  The value of the lead is not worth the cost.
• Promoting the wrong offer – the offer may be incenting the wrong behaviors - this especially true with discounts associated with individual purchases such as retail store cards that offer 10% off the first purchase if a customer opens an account.
• Setting the wrong price point – the true cost of sale may not have been considered or known.
• Having a retention and/or account management issue – this will show up quickly (the “leaky bucket”).

Marketers that ignore this important metric are in danger of missing out on an early indicator of top line performance measures.  While CLV may not be included in the performance report, it is important to track and understand the CLV goal or baseline.  

As illustrated in the case study, the symptom may show up in marketing, however these issues will cut across the organization. Budget cutting will not fix the problem. Marketers need to be able to point to other parts of the equation that are contributing to the issues, which is good for the other CLV: Career Lifetime Value.