Why BMW S.A. is now selling cars through twitter (and how marketers are spending their money in S.A.)
Jessica Hubbard, Deputy Editor; 5 August 2015
For most marketers, assessing whether their marketing and advertising spend is truly having an impact on the business/brand is a complex and difficult task. As one quickly discovers, there is no established set of metrics or go-to measurement tools that marketers can simply apply to every business or brand. Every business has different objectives, different metrics and hence different approaches to measuring marketing effectiveness. We interviewed some of SA’s top marketers to find out exactly how they tackle the tricky business of matching marketing spend with business results.
A Dynamic Process
Over at BMW, Guy Kilfoil, General Manager of Brand Management, explains that for the Group, it’s very important to understand exactly how its spend is ‘filling the sales funnel.’
“So we measure, on a weekly basis, the cost per lead we are generating out of the various channels,” says Kilfoil. “It’s actually a very dynamic process, because in the digital space and social media we are changing advertising and messaging on an almost daily basis, based on response rates. Out of the response rate we are able to generate a rand per lead generated (and these are obviously the qualified leads generated), and then we track the conversion rate of that and generate a rand per sale.”
Kilfoil maintains that ‘anything in the above the line [ATL] space which doesn’t have a specific call to action is impossible to track.’
“I have no idea of where it goes, or what it does,” he says. “With a TV ad that doesn’t have a specific URL or specific SMS code, for example, it is almost impossible for me to see what benefit I’m getting out of that.”
Selling BMWs on Twitter
According to Kilfoil, brands initially regarded social media as a ‘space they needed to play in, but once they opened the church doors, they realised they couldn’t throw anybody out.’
“What we’re finding with social now is that it’s actually becoming a business tool,” he says. “Using Promoted Tweets and the right sorts of offers on Twitter, for example, we’re actually able to generate real leads which we then push into the sales funnel…and we’re selling cars out of Twitter at the moment.”
He adds: “And the great thing about it is I can tweak a message immediately – if something doesn’t work I know how to change it the next time. And I’m getting a very good cost per lead generated out of that – we’re under R40 a lead on social media for the leads we’re generating, which is dirt cheap…”
BMW’s Cost Per Car model
Kilfoil says that at BMW, budget allocation is a central process driven by the business model and a specific profit ratio.
‘So how much of a contribution are we making to the group in total versus the cost,” he explains. “It’s quite a difficult thing to track as well because there’s obviously pressure on the markets around the world to make sure you keep your overheads as low as possible, and marketing is an overhead.”
He notes that it’s something that’s tracked on a cost per car – so if the team has a volume projection for next year that is lower than this year, their marketing budget for next year will be lower than this year.
“I believe we are under-spending in our market relating to how we are performing, which is a good measure for our effectiveness as a marketing team…however, it does put us under resource pressure to deliver when the going does get tough – and the market is getting tougher at the moment.”
BMW’s Shift to Experiential sales
“We were a brand that was very ATL focused 5 years ago, and now digital and social media is really growing exponentially,” he says. “So it doubled from last year to this year, it will double again from this year to next year in terms of how much money we’re spending on those channels.”
He adds: “And experiential is changing for us as well. We used to be a very experiential brand in the 90s and the heydays of massive marketing budget…and unfortunately experiential marketing got cut. I believe that’s a fundamental flaw. The emotionality of driving a BMW specifically is only experienced when you drive it.”
As a result, Kilfoil says he is going to try shift almost up to 40% of the budget next year into experiential marketing – and that covers sponsorships and experiential events. “
“So 60% on brand communication, 40% on experiential, and of that 60%, I’d say probably only 20-25% is going to be spent on ATL in the future,” he explains.
Quit Reverse Engineering
Andy Rice, a renowned branding and advertising consultant, says the first step is to clarify whether your company is brand-led or operationally led.
“If you’re operationally led, which is a perfectly correct and appropriate strategy, then the likelihood is that you’re less concerned about your brand investment than if you’re a brand-led business,” he explains. “If you are the latter, that’s where you have to make sure that the investment in your brand is working – because that’s your fundamental differentiation versus your competitors’.”
According to Rice, the most important thing is to set clear, ‘aggressive but realistic’ objectives upfront.
“We see too many instances of measurement of advertising and marketing investments being reverse engineered into convenient objectives that make it look like they are working,” he adds. “That’s fooling no one…the most important thing is to set objectives that you know can be met, albeit with a real stretch, and then ensure that you are measuring – afterwards – the metrics that clearly indicated whether that investment was indeed meeting those objectives.”
Rice adds that the kind of metrics that you will be looking for will depend on your own strategy, but notes that it is ‘naïve to suggest it should be a simple: ‘we invest, and sales result’ approach.
“The most important thing is to understand the process by which brands evolve their position in the marketplace, derive their differentiation, and steadily get towards the long-term objective you are seeking,” he says. “So it won’t just be a straight commercial kneejerk result, it will be the gradual attribution of new perceptions and new attributes to the brand over time. The acquisition of those revised brand attributes means, in due course, that you will be affecting people’s perceptions of the brand, their likelihood to consider it part of their repertoire, and their propensity to purchase.”
Start with Some Numbers
Heidi Brauer, Chief Marketing Officer at insurance giant Hollard, says that the key question to ask is: are you spending your budget the best way that you can?
“So we can go to science and say, are you measuring ROMI – return on marketing investment – and ROMI in itself is a whole field of investigation,” she explains. “Or you can just simply start to be conscious in your team about saying, for this spend, what return do I expect to get? And just start putting numbers in your marketing reports – something which most marketing departments don’t even have.”
“I always get the question, how much should I spend [on marketing]?” adds Brauer. “When I joined Hollard, instead of whipping out my magical percentage, I decided to do a bit of research. So I went to the Oracle (which is Twitter) and I asked my marketing friends, what are you using as benchmarks? And people who are high up at academic institutions and at big consulting firms, all responded with ‘that’s the magical question…do let us know when you find out!”
“So I went and consulted my usual research sources, and came back to my magical number – which is approximately 6% of turnover,” she adds. “But it also depends on what you include in marketing and at what life stage you are as an organisation.”
According to Brauer, if you’re in a maintenance phase, it should be about 6% of turnover, depending on what you include in marketing. But if you’re in a brand build phase, or you’re in the launch of a new brand, then you need to spend more.
“Then you need to spend between 12-20%,” she says. “That’s enough to send any CFO or CEO into a panic attack. And I have never even had 6%…you’ve got to make do with less.”
What’s in that 6%?
“The first thing you have to do is decide what you’re calling marketing, and then be consistent about that so that you can be consistent about tracking that as a percentage of your turnover,” she explains. “It will be different for every organisation, and the only thing you can do is compare yourself to yourself.”
Brauer maintains that at the end of the day, you know it’s enough if there’s talkability, Word of Mouth, your social media presence is going up, your sales figures are increasing, and people are purchasing and recommending your brand more than ever. These are just some of the elements to track and take note of.
“I think there are multiple sources that are going to tell you that your marketing is or isn’t working, and you can’t rely on only one,” she adds. “You have to be inclusive, and you have to put the science and the art together…and then you’ll know. And your gut…trust your gut!”