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TitleProfit Driven Digital Marketing
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Total Pages28
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DIGITAL MARKETING
P R O F I T - D R I V E N

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Profit-Driven Digital Marketing
According to a Gartner report, digital marketing budgets now average about 2.5 percent of revenues and are

growing at 9 percent this year, but as the report concludes, “Increased funding is a double-edged sword. It brings

new opportunities but puts more pressure on marketers to deliver and prove a return on the investments.” It’s

probably fair to say that most companies still see marketing as a cost center, a necessary evil that needs to be

justified in order to survive the line item veto. That’s unfortunate, because marketing can do much more than

justify itself through ROI analysis. It can become a profit center.

Setting Goals
The Big Picture
The role of marketing and the funding it receives need to be defined and planned in order to deliver profitability.

There are many moving parts, including:

• Business Goals - revenue growth, market expansion, market share, company growth (employees, locations, divisions etc.),

talent accrual, capital formation, liquidity and profitability

• Sales Goals - revenue targets, cost of goods sold, cost to acquire a customer (CAC), customer lifetime value (LTV or CLTV),

retention rates (churn), sales cycle, close rates, sales productivity (revenues per rep, % of targets achieved), ROI

• Marketing Goals - revenues attributable to marketing, opportunities delivered to sales (sales accepted leads or SAL),

cost per lead (CPL), lifecycle stage conversion rates, campaign conversion rates, channel conversion rates, lifecycle stage

timing (velocity), brand awareness and PR (visits, likes, follows, comments, mentions, links, syndication, etc.), thought

leadership, retention rates (churn), ROI

• Customer Service Goals - free trial conversions to sales, retention (churn), LTV/CLTV, support plan sales, upsells

and upgrades, brand reputation (sentiment, reviews & ratings, brand advocacy, response time)

“Profit in business comes from repeat customers, customers that boast
about your project or service and that bring friends with them.”

– W. Edwards Deming

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http://www.gartner.com/technology/research/digital-marketing/digital-marketing-spend-report.jsp

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To get that done, we need the following team, time commitments and technology:

• 3 blog posts per week

• 1 video per month

• 8-10 social media updates per week

• SEO-optimized content

• 1 demand generation campaign per quarter (email, PPC, social media)

• 1 new landing page and CTA (for downloads etc.) per quarter promoting existing content
(no new advanced content needed)

• 1 press release per month

• Copywriter/Content Specialist - 4 hours per week

• Inbound Marketing Consultant - 8 hours per week

• Graphic Designer - 2 hours per week

• Product Manager - 1 hour per week

• Marketing Director/Reviewer - 1 hour per week

• Sales Team - 4 hours per week

• Software - $1,000 per month

• Press Release Fees - $300 per month

• PPC Budget - $2,000 per month

Total: 80 hours per month @ $100/hour + $3,300 = $11,300 per month

“ ...recent research finds that marketers will continue to invest

in the digital channels and advanced marketing technology with

71% of companies increasing digital spend in 2013 vs just 20%

increasing offline spend. This is largely fuelled by the desire to

have individual conversations with consumers at scale, measure

ROI across channels and derive value from the vast amount of

data available to marketers. To that end, this year’s figures show

that over two- thirds of companies are driving more than half

of their revenues from digital marketing spend.”

– Econsultancy

Model 2 - Slow Growth in Marketing KPIs – Year 1
In this model, we need to grow website traffic 25 percent per year while keeping conversion

rates constant (or growing slightly). To accomplish this, we focus on brand awareness and thought

leadership via content marketing, social media marketing and possibly PPC and/or email marketing.

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http://econsultancy.com/us/reports/marketing-budgets

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Model 3 - Moderate Growth in Marketing KPIs – Year 1
In this model, we need to increase visit-lead conversion rates by developing and promoting top-funnel

content (inbound marketing). Depending on your industry and current online visibility, this model calls for

an increase in content marketing, demand generation, landing page and CTA optimization and marketing

automation capabilities. For example:

To get that done, we need the following team, time commitments and technology:

• 5 blog posts per week

• 1 video per month

• 12-15 social media updates per week

• SEO-optimized content

• 2 demand generation campaigns per quarter (email, PPC, social media)

• 1 new landing page and CTA (for downloads etc.) per month promoting new content

• 1 press release per month

• Copywriter/Content Specialist - 10 hours per week

• Inbound Marketing Consultant - 10 hours per week

• Graphic Designer - 3 hours per week

• Product Manager - 1 hour per week

• Marketing Director/Reviewer - 1 hour per week

• Sales Team - 5 hours per week

• Software - $1,000 per month

• Press Release Fees - $300 per month

• PPC Budget - $3,000 per month

Total: 120 hours per month @ $100/hour + $4,300 = $16,300 per month

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How Can You Achieve a Balance Between Growth and Profitability?
Growth and profitability don’t necessarily go hand-in-hand. Successful companies create detailed plans to achieve short

and long-term goals based on market conditions, product development and, in many cases, directives handed down by

a parent company and/or investors. Marketing plays a key role in both growth and profitability because it stands at the

core of new business development. Without fresh new sales leads every month and a process to help develop them

into loyal customers, how will the business grow and become more profitable? Digital marketing is the primary driver

of modern marketing, because the Internet is where most B2B and B2C consumers do their research, evaluate their

choices and make their decisions. Without a strong investment in digital marketing, the only thing you can count on is

that your competitors will pass you by.

Bottom Line
In evaluating marketing spend, it’s always a good idea to look at industry trends—how your competitors are sizing

up and deploying their marketing dollars. According to a recent Forrester’s B2B Marketing Tactics and Benchmarks

Survey, the average B2B marketing budget is about 2 percent of revenues. An earlier MarketingSherpa survey showed

marketing budgets ranging from 11 percent of sales for small companies (< 100 employees) to 6 percent for large

companies (> 1000 employees). It may seem counterintuitive that larger companies would spend a smaller percentage

of budget, but as companies build critical marketing infrastructure (people, platforms and processes), especially digital

marketing, marketing operations tend to become more scalable and cost-effective. Here’s a great tool from BrainRider

for evaluating your marketing budget and budget allocation.

Chances are also good your competitors are increasing their marketing budgets this year. According to B2B, almost

50 percent of companies are boosting their marketing budgets, compared with 40 percent last year. Nearly 70 percent

is being spent on demand generation and customer acquisition, while brand awareness gets about 18 percent and

customer retention about 13 percent. Breaking this down further, 62 percent will increase budget for email marketing, 56

percent for social media, 56 percent for online video and 53 percent for search marketing. According to the Content Marketing

Institute and MarketingProfs, companies are spending 33 percent of their marketing budgets on content marketing,

compared with 26 percent last year, and 56 percent say they are increasing their content marketing budgets this year.

More than half will spend more on CRM and marketing automation to help enable their Sales and Marketing Teams.

The Bottom Line: Across the board, your competitors are likely spending at least 2 percent of revenues on marketing

(and the data suggests that number is low), and they are progressively moving that budget into content marketing,

demand generation, lead nurturing and marketing automation.

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http://www.slideshare.net/pardot/gr2-wed-9a-lwizdo-forrester
http://www.slideshare.net/pardot/gr2-wed-9a-lwizdo-forrester
http://www.meclabs.com/training/
http://www.brainrider.com/resource/2013-b2b-marketing-budget-planning-tool/
http://www.btobonline.com/article/20130111/STRATEGY01/301119988/almost-half-of-marketers-to-boost-budgets-this-year?utm_source=bb-online-edition&utm_medium=email&utm_content=editorial&utm_campaign=bboe-clicks
http://www.slideshare.net/CMI/b2b-content-marketing-2013-benchmarks-budgets-and-trendsnorth-america-14855770
http://www.slideshare.net/CMI/b2b-content-marketing-2013-benchmarks-budgets-and-trendsnorth-america-14855770
http://www.kunocreative.com/content-marketing-services/

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If you can’t compete for a respectable share of brand
awareness, thought leadership and, ultimately, sales
from digital marketing, how will you survive?
It’s one thing to talk about alignment with your competitors, but many C-Suite executives are still reluctant

to spend the requisite budget on digital marketing because it fails to deliver positive ROI. Fair enough. Surely

every component in your organization should contribute in some way to the growth and profitability of the

company, and each one should be 100 percent accountable for its share. What they fail to realize is that sales

and marketing performance measurement has come a long way in the past few years.

This new approach is often referred to as Revenue Performance Management, or RPM, defined as “a strategy to optimize

interactions with buyers across the revenue cycle to accelerate predictable revenue growth.” This boils down to a

combination of strategy and marketing automation to optimize the sales funnel from top-funnel demand generation

through lead capture, lead nurturing and hand-off of sales qualified leads (SQLs) to the sales team. We call this process

Enterprise Inbound Marketing. Throughout the process, Sales and Marketing are aligned in terms of messaging, lead

lifecyle and lead scoring criteria and communications. Another new aspect of Revenue Performance Management is

the emphasis on revenue-centric metrics, like cost-per-lead, cost to acquire a customer, percentage of target revenue

achieved and percentage of pipeline sourced by marketing. With this kind of approach, CMOs can easily evaluate

marketing performance and justify budgets.

We have shown some possible scenarios for revenue growth and cost effectiveness using digital marketing. You can use

these models to evaluate your own growth scenarios based on achieving your business goals and budget planning. It is

possible to make digital marketing the primary driver of both revenue growth and sales efficiency, but in the next few

years, the winners in your industry are likely to be early adopters and aggressive implementers.

Publication Date: June 2013

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