Philadelphia merchant John Wanamaker’s quip that half of all advertising spending is wasted (but no one knows which half) may contain more truth than he realized. And no more so than in today’s digitally enhanced commerce.
One analysis puts the actual wasted portion at roughly a third of the total annual advertising spending in the United States, or about $112 billion. What’s more, while digital channels allow marketers to target consumers more accurately than ever, they also pose threats to firms that fail to cultivate a deep understanding of the needs and behaviors of target customer groups. One study puts the amount of wasted digital marketing spending caused by fraudulent Internet bots pretending to be consumer traffic at $11.6 billion in 2014. In this case, because advertisers don’t really understand their customers, they end up paying for “eyeballs” that aren’t really there.
More than ever, marketers need to gain greater control over how and where they spend each advertising dollar. However, little evidence exists that companies are overly concerned about marketing ROI.
Accenture believes just-in-time (JIT) marketing can drive out much of this waste by creating tangible links with real customers who are ready and able to buy. The concepts underpinning this approach are adapted from the Japanese manufacturing techniques that now protect many factories from the scourges of inventory and waste.
First, JIT marketers should apply Kanban methods, which ensure that the creation of new marketing is always calibrated to meet actual marketing needs. Second, they should cultivate a mindset of Kaizen, in which the entire organization is continuously improving processes and practices to eliminate waste and enhance quality. And, finally, they should assure the “total quality” of each and every output. These concepts may seem straight-forward, but making them work on a daily basis can be challenging.
In practice, JIT marketing means that companies spend only what’s needed, when it’s needed, introducing a customized message or offer to target consumers in ways that can quickly close a sale. It does away with the expensive “inventories” of surplus effort that mass marketing creates, replacing advertising clutter and promotional waste with effective messages attuned to the needs of interested people exactly when they are in the buying mood. JIT marketing targets distinctive customer segments whose interests span many product categories. It then enlists cross-functional teams of “creatives”—programmers, data scientists and quality assurance specialists—who work together to cut costs and improve the effectiveness of marketing investments.
But shifting your marketing organization to this “lean thinking” mindset isn’t easy, as companies learned a few decades back when Toyota introduced the concept of JIT manufacturing. While many Western companies attempted to replicate Toyota’s success with lean manufacturing, only a few did so effectively. The problem? Most focused on the most visible elements of JIT without understanding its underlying philosophy.
The same thing could happen with JIT marketing, which is why marketing leaders should keep the following ideas in mind.
One example of this kind of engagement is Amazon’s purchase of Goodreads, a social network for avid readers. The acquisition gives Amazon, the world’s largest bookseller, a knowledgeable, disinterested source of recommendations that it can integrate with its powerful personalized recommendation algorithms to provide shoppers with a customized list of books they could be legitimately interested in buying.
A leading drugstore chain wanted to improve the effectiveness and efficiency of its promotions by offering its marketers easier and more timely access to detailed market insights. The information enabled staffers to fine-tune promotions, drive greater sales within existing customer segments and even create useful new micro-segments. This data-sharing plan encouraged experimentation, and teams could rapidly adjust promotions to get the most out of every marketing dollar they spent. In addition to boosting sales, the program ultimately delivered significant marketing efficiency gains.
Paul F. Nunes
is the Global Managing Director at the Accenture Institute for High Performance. He is the author of Big Bang Disruption: Strategy in the Age of Devastating Innovation and Jumping the S-Curve. Nunes is based in Boston.
is a research fellow at the Accenture Institute for High Performance. Bellin is based in Boston.