The importance of financial analysis in determining marketing priorities

This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

In dealing with the management of marketing, a significant component of the work we do is assessing and benchmarking the value of the marketing investment of our clients. This budget is spent with a range of external suppliers.

These external suppliers include advertising, digital and media agencies, but also the thousands of other suppliers who are competing for the share of the marketing budget. These suppliers can include everything from printers and merchandising providers to market researchers and software providers.

Marketing priorities

But much like the industry discussion on whether marketing is Art of Science, or if the Math Men are replacing the Mad Men, the truth of the matter is the TrinityP3 methodology uses both qualitative and quantitative approaches to provide the insights our clients require.

This allows them to better understand how well their marketing investment is performing and where and how they can improve their return on investment.

The Quantitative Approach

While we hear that a lot of marketing consulting is simply opinion, one of the hallmarks of the TrinityP3 methodology is our use of financial modelling, analysis and benchmarking. This quantitative approach is applied across all of our services, including marketing structures, agency rosters, remuneration, media performance and production.

The financial approach to remuneration is not just simply cost, but also the quality and quantity of the resources, along with the mix and the resource utilisation. This allows us to make detailed analysis of current arrangements and equally as important, provide detailed analysis to inform the decision making process in a pitch or tender beyond simply cost.

The detail and depth of this analysis and the insights it provides often genuinely surprises our clients the first time they work with us. The issue is that it is incredibly difficult to demonstrate the outputs of the process, as beyond the issue of confidentiality the results are often meaningless unless you understand the situation or circumstances that are being analysed.

Of course the numerical basis of financial arrangements make it obvious as the basis of a quantitative analysis. But as mentioned, we have developed specific methodologies beyond costs that allow us to provide quantitative analysis of sources across a wide range of marketing, advertising and media functions.

The reason this approach is so important to us is it allows TrinityP3 to not just assist our clients make more informed decisions, but the analysis across categories, disciplines and markets provides us with critical insights into the broader market trends.

The Qualitative Approach

But we also understand that marketing is more than simply money and resources. Innovation, strategy and creativity are essential tools in the marketing process. My personal 15 years as a copywriter and creative director inform our approach. This is why we do not rely on quantitative analytics alone.

To achieve this we engage with key stakeholders both inside the marketing team and organisation and outside service providers and suppliers. This takes both a structured and unstructured approach through surveys, interviews, workshops and discussions.

One of the key insights we have found is that there is often a difference between the qualitative findings and the quantitative results. One area is when we are benchmarking agency resources and remuneration.

It is common for the agency team to talk about the most recent issues of miscommunication or mistakes, believing that this will support an increase in the number of agency hours, for us to find that in fact there is no inflation in the agency resources required.

Likewise marketers will often believe that agencies are under staffed or under resourced leading to the belief that the agency is either underperforming or over charging. Yet the quantitative analysis will show that the agency will have exactly the right level of resourcing for the scope of work delivered.

The issue here is due to perspective and framing. Often agencies will be responding to either the casual feedback of the marketers or influenced by the most recent circumstances. While the marketers are responding to the fact that they rarely see the whole agency team and are judging agency performance based on the account team and their communications to the client.

Irrespective of the lack of alignment between the qualitative and quantitative analysis, the fact is the differences are also insightful into both the agency and the marketers.

Quantifying and Qualifying

For those familiar with the concept of structured and unstructured data, we work with both. Even when collecting opinions, feedback and beliefs we have designed and develop techniques to provide structure to the unstructured data to allow analysis and minimise the consultant bias.

This is a major issue when the consultant relies on opinion and subjective analysis alone as they bring their bias and perceptions based on past experience to the project. It is also difficult to address when the consultant is working alone as they have no alternative perspective provided by working with a colleague of partner, who can challenge their assumptions, bias and misconceptions.

Even when a single consultant is working on a TrinityP3 project we have a peer review process to minimise the effect.

Collecting the narrative and identifying the issues then prioritising those issues is important as it allows us to identify the priorities of each of the stakeholder groups. Differences in the magnitude and frequency of the issues and the priorities in addressing these issues means that we can assess where the most significant benefit can be delivered

Even when we undertake what is primarily a quantifiable analysis such as agency remuneration, we ensure we then test the financial findings through discussions with the agency and marketing team to provide context.

We have found the numbers will provide a very clear understanding of what has happened, or is happening, from which at best we can hypothesise the causes. But we can probe these hypotheses with very direct discussions to understand the underlying cause.

Often we have found that agencies and marketers prefer to provide the qualitative discussions first before we undertake the quantitative analysis. This can certainly be accommodated, but we have found that often it covers territory that is either irrelevant or minor.

Instead by undertaking the quantitative analysis first and then using this to inform the qualitative discussions, it is more efficient and effective.

Two Approaches Improving One Outcome

It is interesting that often we find that when we initially propose this two-stream approach, some marketers are concerned that it will be protracted and costly. Instead they often want to jump straight to the solution. But our experience has been that both time and cost are relatively insignificant to delivering the right solution.

The problems and issues we address impact more than the cost of the agency, they impact the overall performance of the marketing.

  • The transformation of the marketing function through the selection and implementation of the right technology platform
  • The alignment of the agency roster to optimise the performance of the entire roster,
  • The implementation of a media agency contract that ensures transparency and performance,
  • The development of an accountable and high performance in-house resource, and more.

Marketing is a combination of science and art, strategy and creativity. Therefore the approach we have developed to analyse the performance and management of the marketing takes the same two-stream approach of qualitative and quantitative analysis to deliver solutions to improve the performance.

As the saying goes ‘Everyone has an opinion” but when you are wanting to solve a problem or issue you need more than just another opinion.

TrinityP3’s Marketing Business Alignment service strikes at the heart of our reason for being: driving enhanced marketing performance via alignment of process and commercial purpose.

Why do you need this service? Learn more here

About Darren Woolley

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 – Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren’s Bio Here Email: darren@trinityp3.com

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