Cost-outcome analysis for marketing

Why your marketing budget should be dependent on carefully chosen key performance indicators.

This week

???First, flashback to last Sunday:?As you were relaxing with your iPad and your copy of?IMTW issue #51, I was taking in the?Royal Academy’s Summer Exhibition. Always an eclectic experience, this year the show even tipped its hat to fintech.

?????Now, read on?to learn why:

①?The tide has turned?for fintech firms.

②?The cost of your KPIs?is as important as achieving them at all.?

③?Technology is the?how, never the?why.

④?Central bank digital currencies?are inevitable.

⑤?Great content is worthless?unless your audience finds it.

⑥?Britain is a good place?to start a company, but not to scale.

⑦?Great leadership demands vision?and iron will.

What's new?

Both?the Financial Times?and?The Economist?carry stories this week about the downturn in the fintech sector.

In short:

• “Rising interest rates and the threat of an economic slowdown are hanging over the industry. Many listed fintechs have seen their market capitalisation crash by more than 75% since July 2021; private firms are being forced into ‘down rounds’ that value them at less than their previous worth. In total, fintechs have sacked about 5,500 employees since May 1st.”
• “The tide is turning in other ways. Some firms had sought to exploit loopholes that helped them avoid some of the regulatory burdens faced by banks; many of these are now being closed up. Others have seen their products commoditised as rivals have swarmed in. BNPL has been hit by both problems.”
• “Large fintechs with ample cash are responding to the crunch by diversifying faster. Banks and credit-card giants, meanwhile, are on the lookout for bargains as startup valuations tumble. The incumbents, in other words, are crashing the party.”

Why does it matter?

Fintech is hardly the only sector suffering considerable headwinds so we should take this news with a grain of salt. But one aspect of The Economist’s story certainly made me prick up my ears:

The boss of one ‘neobank’ says he is planning to cut his marketing budget by 75%.

I would argue that a downturn is exactly when you should be ramping?up?your marketing spend - both to protect your existing growth but also to take advantage of competitors facing similar challenges. Never let a crisis go to waste, after all.

② But, I’m the marketing guy, you’d expect me to say that, wouldn’t you? Don’t worry, I know I’m not going to win you over with platitudes and management clichés. And that’s why this story matters: because it reminds us how vital considered reporting is. If you don’t know what your marketing spend is delivering in terms of outcomes for your business, how can you possibly know whether (downturn or not) it’s sensible to cut it? What’s needed is something akin to cost-outcome analysis for marketing.

What's next?

Take action

I’ve no doubt your head of marketing can supply myriad KPI data: website traffic, click-through rates, social media engagement. But how are these impacting your business and - just as critical - how much are they costing you? In short, what’s the bottomline? If that’s not clear to you, this week is the time to rejig how your marketing team reports its results.

There are two elements to this:

1. Choose the right KPIs:?In the digital age, there is no shortage of things to measure. The challenge today is ensuring you’re watching the things that actually deliver on your strategic objectives. If you’re focused on revenue growth, have your marketing team report on qualified leads and income derived from them. If reputational issues are your focus, have your marketing team report on positive earned media coverage. Any data point that doesn’t link directly to your business objectives should be cut from management reporting.
2. Cost those KPIs:?Once you know you’re measuring the right things, it’s critical you know what delivering them costs. How much did you spend to generate that marketing one lead? How much does one positive press story cost you in fees to your PR agency?

Get help

Visit InMarketing, my resource library?for leaders in finance or technology who want to innovate, interact and influence.

Join my InMarketing Twitter community, where you can ask questions or comments of me but also your fellow community members of senior marketing practitioners.

Share

Can I ask you a favour??If you found this useful?or know someone who would, please share it. It would really help me to grow the community of regular IMTW readers.

What else?

Three other articles?that are worthy of your time.

FINANCE

No, Russia won’t replace Swift with the blockchain

③?The?why?is always the money.?Technology is just the?how.?

• “The Swift cross-border money transfer network routes 42mn financial messages a day to connect more than 11,000 institutions and 4bn account holders in at least 200 countries. NIPS’s proposed replacement is arguably over-specified, reportedly handling up to 100,000 transactions per second, though capacity is really not the problem here.”
• “About half of all global payments are made in dollars. Along with about 90 per cent of trade finance. When instructions are sent via networks such as Swift, many of those dollar payments need to be made between institutions that do not have accounts with one another. What that means is that a correspondent bank — probably with operations in the US, policed by the American authorities — will act as an intermediary…. Even for transactions that are legal, parties are unwilling to take the risk of alienating the US authorities by processing payments for businesses based in countries that have fallen foul of Washington.”
• “What are the chances that any non-Russian counterparty would adopt a mystery meat ledger that’s centrally controlled by a company that parades its tanks through Red Square every May 9?”

TECHNOLOGY

BIS puts CBDCs at centre of future monetary system

④?Central bank digital currencies are inevitable?but likely a decade away.

• “The Bank for International Settlements has drawn up a blueprint for a future monetary system grounded in a digital representation of central bank money, warning of the ‘deep structural inadequacies’ of cryptocurrencies.”
• “A digital version of money issued by the central bank could provide for many of the same features offered by cryptocurrencies and stablecoins while building on a strong foundation of trust. With a sovereign currency at its core, the BIS believes CBDCs can avoid the structural limitations and risks of crypto, which include congestion, high fees, fragmentation and pseudo-anonymity.”
• “In the cross-border context, the BIS Innovation Hub has been leading practical experiments to show how CBDCs could help deliver faster, cheaper and more transparent international payments. The BIS states that the experiments demonstrate that common systems encompassing multiple CBDCs are operationally feasible and could bring efficiencies. However, policy, legal, governance and economic questions remain.”

MEDIA & MARKETING

Nine ways to improve your content marketing SEO

⑤?Great content is worthless?unless your audience finds it.

1. Create original, high quality content.
2. Modify your URLs.
3. Use SEO keywords.
4. Design for the user.
5. Delete duplicate versions of pages.
6. Try out helpful tools.
7. Make valuable connections.
8. Check your website’s loading time.
9. Invest in SEO.

One more thing...

⑥?The Economist reports?on?why Britain is a great place to start a company, but a bad one to scale it up.

• “Venture capital, once the preserve of Silicon Valley, has flooded into Europe in recent years, with Britain being the prime beneficiary. British startups raised 14% of the money invested globally in pre-seed rounds in 2021, and 11% of the total in seed rounds. [But] by the time they are after $15m or more, British startups’ share of global funding has more than halved.”
• “Just 49% of British deep-tech firms reach their second funding round, compared with 63% for American ones. By the sixth funding round, the average American deep-tech firm has raised ￡113m; the average British one just ￡25m. After adjusting for GDP, deep-tech firms in America, China, Israel and Sweden are all better funded than British ones.”
• “By the time they are looking to raise hundreds of millions of dollars, they can tap the private-equity market. Private-equity investors struck deals worth $1.1trn in 2021, around a fifth of which was for British firms. But as firms grow bigger still, they often seek amounts that can only be found on the public market. And here another funding gap opens up. Britain’s stockmarket is a shadow of its former self.”

Off cuts

The stories that?almost?made this week’s newsletter.

FINANCE

???BNPL regulation by UK gov set to protect millions

???Northern Trust creates digital assets and financial markets group

???How financial services is tackling its ‘existential skills crisis’

???Surging use of digital wallets threatens credit card market

?????Bank of America invests in fintech platform

TECHNOLOGY

???? Singapore regulator vows to be ‘unrelentingly hard’ on crypto

???Proving our identity will be a job for our iPhone

???The end of the neobank era

???Zuckerberg plans to create a digital wallet for the metaverse

???Citibank chooses Swiss firm Metaco for digital asset custody

MEDIA & MARKETING

????How to adapt your writing for a global audience

???High CMO churn: red flag or a sign of health?

???How to develop your own content marketing roadmap

???How inflation can be a challenge and opportunity for CMOs

???Investing unicorn Vise loses CMO

The last word

⑦?Henry Kissinger?on leadership, as quoted by Jim Kelly in?his review of Kissinger’s latest book:

“Ordinary leaders seek to manage the immediate; great ones attempt to raise their society to their visions.”

About

Written for CEOs, marketers and other leaders in the financial sector,?InMarketing This Week?is a showcase for news likely to impact them - delivered with insight on why it matters and ideas on what to do about it. It’s published every Sunday to give you a head start on the week. Read it?here, or?subscribe?to?have it delivered straight to your inbox at six, before it's available anywhere else.