The B2B CMO's Playbook for Marketing Cost Optimization

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The B2B CMO’s Playbook for Marketing Cost Optimization

The B2B CMO’s Playbook for Marketing Cost Optimization

CMOs are fighting an eternal battle to deliver more with less

Today’s CMOs face an impossible choice. Entire industries are off revenue plan, and businesses are looking to make significant cost cuts. Marketing—often seen as a discretionary expense, a variable lever that can easily be adjusted—is on the chopping block. Marketers are being asked to make do with less, and make cuts across the board so that businesses can trim expenses in the hopes of either staying afloat, or build war chests to sustain them if and when times get tougher. At the same time, sales teams are also being pushed to deliver more revenue. These two goals—reducing marketing spend and increasing sales—are at odds. The secret weapon of driving more sales is a well-run marketing engine. Marketing produces demand and brings in leads, and these leads turn into opportunities and eventually revenue. Without marketing, there’s much less pipeline feeding sales, so the math on cutting the marketing budget and growing sales doesn’t work. If marketing spending drops, so does the impact it creates. So what are CMOs to do? If the quality or breadth of services marketing offers to the business suffers, so does the reputation of marketing as a contributor to revenue and growth. The last thing a CMO wants in this uncertain time is for marketing to be seen as “just another cost center.” How can CMOs cut costs without impacting services? It’s an impossible ask—or is it? This playbook provides several areas of improvement CMOs can explore for effective cost optimization. These are more than mere suggestions. They’re battle-tested methods developed and utilized by mid-sized organizations and multi-billion-dollar enterprise leaders. But beyond these tactical approaches which you can put into practice immediately, there exists a more exciting proposition: a growing concept that allows CMOs to reduce costs by 25-50% while maintaining service levels.

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© 2020 2X | Marketing as a Service. All rights reserved.

The B2B CMO’s Playbook for Marketing Cost Optimization

Transforming the marketing operating model

What if a CMO could walk into the boardroom and say “Hey, I’ve found a way to cut our marketing costs by 25-50%, and we can expand services in the process”? Not only would CMOs become immediate superheroes in the eyes of the executive leadership, they’d also cement both their and the entire marketing functions’ position as a cost-conscious business unit that’s actively exploring innovative solutions when faced with challenging circumstances.

The average B2B marketing budget is 9% of annual revenue. 50% of that budget is labor spend. 1

For years now, marketers have focused their cost optimization efforts squarely in the program half of the budget. They’ve dialed advertising spend up and down, they’ve trialed new initiatives within demand generation and email marketing, they’ve even spent considerably on technology for more efficient (and cost-efficient) marketing programs. To an extent, that’s worked, but as with all technological methods, eventually you hit a plateau of improvement. At this point, most marketing functions have gotten to where only incremental cost improvements can be made in terms of marketing programs, so it’s time to explore the other half of the budget: labor.

1 The CMO Survey, August 2019

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The B2B CMO’s Playbook for Marketing Cost Optimization

In the U.S., up to 50% of the marketing budget goes towards labor and headcount. The average fully-burdened cost of a marketer in the U.S. is between $100,000 and $150,000 annually 2 . Scaled up across your entire marketing function, that’s millions of dollars of labor costs—but what’s the result of that labor investment? What should you be expecting from your marketing workforce? If a mid-size firm doing around $100 million in business annually can save 50% on marketing labor expenses, that amounts to approximately $2 million in hard dollar savings. These substantial savings are recovered funds that the business can hold on to in these uncertain times, or choose to spend elsewhere to grow revenue further, such as new marketing initiatives like an account-based marketing (ABM) program. B2B marketing execution isn’t a core competency Here’s a fact: for most businesses, marketing execution isn’t a core competency. Some aspects of marketing are, of course. Your unique value proposition, the elements of your brand and voice, your competitive differentiation story —these are the basics you need to establish and govern. But there are many operational and executional elements to marketing that are ancillary, such as leveraging new marketing technology, managing the day-to-day of digital advertising and email campaigns, running demand generation and outreach efforts, performing campaign optimization and lead routing. These are necessary components for a well-run marketing engine, but they are not core competencies for most businesses. Marketing execution needs to follow standardized best practices and workflows that don’t vary greatly from company to company (e.g. designing impactful LinkedIn ads, writing engaging email subject lines, deploying lead scoring processes, etc.). The experimentation with managing these activities internally, in situations where teams may be deploying and optimizing these activities for the first time, often leads to inefficiency, driving higher costs, suboptimal results, and forming a distraction from core focus areas of the business, in the same way that other administrative functions like IT, finance, and accounting are not often core competencies. To use a simple analogy, if a pipe bursts and the basement starts flooding, few of us would try to fix it ourselves with simple (possibly inadequate) tools and an hour of YouTube tutorials. Instead, we turn the water off and pay a plumber who’s spent a decade fixing these kinds of problems. We rely on experience and institutional knowledge to get the job done fast and well, while we focus on more important things that only we can do. Similarly, businesses should focus on their core competencies (software development, consulting, cloud infrastructure, etc.) and leave marketing execution to professional marketing executors.

2 The Hays 2020 U.S. Salary Guide

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© 2020 2X | Marketing as a Service. All rights reserved.

The B2B CMO’s Playbook for Marketing Cost Optimization

In-house marketing: a flawed model

CMOs have tried to do that by hiring and building marketing functions in-house, but the model is inherently flawed. Most CMOs know that the bulk of day-to-day operations is transactional execution work, including tasks that are performed repeatedly, but unfortunately are often not following a best practice standard. Large marketing outfits breed silos of tribal knowledge as teams devolve into functions, and that’s a vicious cycle of inefficiency and greater operating costs. Enter offshore outsourcing. There’s a reason that a host of functions—IT, HR, Finance & Accounting—have been outsourcing execution labor for years: it works. Offshore outsourcing is one of the biggest cost-saving measures a business can take, and if done well, it has no adverse impact on efficiency and quality of service, and in fact often improves service quality. With an offshore model, you can extend the strength of the workforce while staff retained onshore focuses on more strategic and high-value work, leaving execution and operational tasks to the offshore team who operates in the business of best practice process implementation and management. Again, the average cost of a marketer in the U.S. is between $100,000 and $150,000. Offshore, you can purchase a marketer of equivalent or greater skill from a marketing as a service (MaaS) company for about $50,000. Shifting a single role to the outsourced model can immediately net you a 66% cost reduction, and the best part is, you may even get a more experienced marketer out of that decision. The cost difference is significant. What CMOs are spending onshore can get them twice the labor output offshore , and often to a much higher quality and standard. Factor in that delivery agencies put a greater emphasis on codified best practices and training, and you can effectively double the size of your marketing teamwith no additional cost outlay. Plus, the capabilities that you gain with an offshore team of experienced B2B marketers allows exploring new avenues and initiatives , which means the potential for even greater impact.

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The B2B CMO’s Playbook for Marketing Cost Optimization

The Cost of a Marketer

United States

Offshore

+

+

+

+

Senior Graphic Designer

Digital Advertising Specialist

Onshore Marketer

10+ years’ experience, creative agency art director, strong PowerPoint background

10+ years’ experience, Google, Facebook, and LinkedIn certifications who also understands content syndication, extensive B2B experience

5-7 years’ experience, degree in marketing, some B2B experience, generalist focus: • $75,000 salary • $12,000 bonus • $18,000 in burden costs (taxes and benefits) $210K

VS

$46K

$60K annual all-in cost

annual all-in cost

Senior Copywriter

Marketing Operations Specialist

annual all-in cost for two marketers

5+ years’ experience,

10-15 years’ experience, undergraduate and graduate degree, extensive technical writing background

Marketo certified, extensive martech experience

$53K

$51K

annual all-in cost

annual all-in cost

$210K annual all-in cost total

The proposition is clear: by outsourcing your marketing execution functions, you can net up to 50% savings on your labor costs (usually about 25% of your entire marketing budget) without impacting service delivery. Numerous B2B CMOs are already leveraging the operating model transformation—a new operating model born in the digital age that allows marketers to drive greater impact at a lower cost. It’s the fastest-growing transformation in B2B marketing, and the new lever to turn for value creation at an affordable price.

It’s the answer to the impossible dilemma. It’s how you deliver more with less.

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Four other things you can do right now to optimize your marketing costs

Transforming the marketing operating model through offshore outsourcing isn’t just sound from a financial point of view. In addition to the initial cost improvement through labor, CMOs who explore this strategy also benefit from the deep expertise and knowledge and capabilities that marketing outsourcing companies have developed and perfected. As discussed, offshore marketing execution isn’t just less expensive, it’s better. To illustrate that point, these are examples of cost savings actions that a marketing outsourcing company would be working on for you if they were retained:

Optimizing digital ad spend

Leveraging intent data for content syndication

Developing better demand gen programs that build brand

Optimizing website conversion

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Audit your digital ad spend

Stop chasing vanity metrics and tie your ad dollars back to real results: Leads, Pipeline, and Revenue.

Advice point

Some businesses outsource digital ad campaigns to ad agencies, but the issue with this approach is that often these external agencies are paid in the form of a percentage of the ad budget, so they have a vested interest in keeping budgets “healthy.” If your vendors aren’t actively helping you save money, look for other alternatives.

In today’s digital-first world, programmatic advertising is a given. The reach that LinkedIn, Google, and Facebook (the key players in the B2B sphere) offer for contact- and profile-specific targeting, and the ease of use of their platforms, means that businesses often spend considerable dollars on digital advertising. However, too often, this spend isn’t adequately managed on an ongoing basis. Whether it’s a case of not having enough manpower, lacking the right experience, or constantly moving from new advertising program launch to launch (vs. optimizing the active programs), there are far too many instances of “set it and forget it” when it comes to digital ads. Digital ad campaigns need careful and constant optimization in terms of targets, spend thresholds, and other metrics. And they need to be the right kind of metrics.

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Standard metrics like cost per click (CPC) and cost per thousand impressions (CPM) are well and good, but when it comes to quantifying the true impact of digital advertising, you need to measure cost per lead (CPL) or cost per opportunity (CPO), because it’s leads that translate to opportunities and sales. The true barometer of how effective marketing efforts are is how many leads they generate, so eschew vanity metrics in favor of CPL/CPO. But as simple as that metric sounds, don’t get sucked in by one overarching indicator—always drill down. There are instances where overall CPL is good (in the $100 range), but all of the leads come from programs utilizing 70% of the budget with 30% of the spend being allocated to programs that produce no results. Reducing the spend of those low-performing programs (which could be campaigns, keywords, creative sets, or channels) can result in an easy savings without impacting results; or instead, redeploying it can result in an improvement of results without needing to add budget.

Measure what matters

Why are CPC and CPM usually the metric of performance? Simple—

they’re the default metrics presented by ad platforms like Google. Translating these raw numbers into useful information (i.e. if clicks and impressions resulted in actual leads) requires unifying ad platform data with lead data from your CRM or marketing automation systems. That’s a down-the-line step that some marketers either don’t know how to or don’t bother to take. Generalist marketers believe CPC, CPM, or overall CPL is sufficient. No surprises that it’s not.

Here are three areas you can explore in your audit:

2X customer story

Rigorously examine your digital ad operations. Track and trace every dollar, and decide if it’s delivering ROI as expected.

2X worked with a B2B software development company to optimize ad spend. We investigated their $80,000 digital ad budget, and discovered that $49,000 of it was spent on platforms delivering zero leads. That’s 60% of the ad spend driving no results! Our suggestion was to eliminate those channels and double down on the better-performing ones, which would cut down CPL by more than half, and more than double lead volumes. Now, ad spend is focused on proven campaigns that deliver consistent leads, as opposed to a “spray and pray” method.

Examine your Google search keywords— are certain terms generating much more volume of spend relative to volume of leads?

Look into your individual LinkedIn campaigns— are any particular audience groups underindexing in terms of response?

The devil is in the details when it comes to digital ads, and it’s far too easy to overspend. Budget must be carefully rationed, and directed towards programs with the lowest CPL/CPO to make sure you’re getting your money’s worth when it comes to results.

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Give content syndication a boost with intent data

Advice point

As good as it sounds, no single marketing channel or tool is a magic bullet. Content syndication is just one (very sophisticated) tool that needs to work in concert with your overall marketing strategy to deliver impact. It takes time, experimentation, and optimization—in other words, dedicated execution—to garner consistent results.

Leverage innovative new ways to get your content in front of high-propensity prospects.

Content syndication is a well-established marketing channel, and it works well—marketers get access to a much wider audience than they have on their internal opt-in list and can get it at a reasonable (for the most part) CPL. But what if it could be better? In the past, engaging with content syndication meant dealing with multiple media properties, negotiating individual contracts, governing lead quality closely, and managing the entire channel—a time-consuming affair. Today, there are digital-native content syndication providers like True Influence and Madison Logic, whose innovative programs span multiple media properties and are infused with buyer intent data, which means that you have a one-stop shop to get your content put in front of millions of already-interested eyes across multiple digital locations. With the use of intent data, content is primarily promoted to companies that are already actively engaging with certain topics or keywords, such as exploring options for new enterprise content management software. Your marketing assets get put in front of prospects that have already shown a higher propensity to buy, and are likely actively researching the category of solution that you sell. This is a far superior and strategic way to leverage your content library, and you can craft your content messaging so prospects are carefully guided further down the funnel. The best part? CPL with this channel tends to be considerably lower than other conventional strategies (in the $50 range). What that means is that by shifting more of your spend to content syndication, you can easily maintain your current lead volume at a lower cost—instant savings without impacting results. Developing a healthy content syndication campaign is key to having a reliable channel for delivering high-quality leads that sales teams have a much easier time closing.

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The B2B CMO’s Playbook for Marketing Cost Optimization

Brand or demand gen? You can do both.

Brand for the sake of brand isn’t worth it — spend on demand gen instead.

Brand marketing vs. demand generation is an age-old battle for many marketers. Nobody disputes the value of an established brand, and brand-building efforts are worthwhile, but too often, brand marketing lacks ‘meat’ in the kind of content and value that generates viable leads. That’s why demand gen should be first priority, and brand the second. Even the very best brand messaging may not create the tangible revenue impact that demand gen does, whereas demand gen, when executed well and infused with strong messaging, can both create demand and reaffirm the brand. So it’s a no-brainer—focus your efforts on better demand gen campaigns that incorporate your branding, and trust in the quality of the content and value you provide to build brand growth while generating demand. B2B prospects value useful ideas, advice, and content. If you provide those things consistently via a well-run demand gen campaign, you’re simultaneously building a reputation as an informative thought leader and value provider—one of the most authentic ways to develop a strong brand!

The ad on the right offers an asset of concrete value, and it’s just as brand-forward as the option on the left.

The added bonus of this strategy is the cost savings. By forgoing brand advertising, you cut the expenses you’d otherwise have spent on brand efforts— which you can either retain as savings or channel towards demand gen, where it can produce more results and consequently grow revenue.

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Website optimization: Eliminating the bottleneck

Website demand generation

Website traffic

Website engagement

=

(x)

Don’t neglect the web engagement part of the equation.

When prospects land on your website, what do they do? How many minutes do they spend on individual landing pages? Are they immediately hitting the back button? How often do forms get filled and content requested? When did you last look into your website visitor-to-lead conversion rate? Improving that website visitor-to-lead conversion rate is a low-cost and relatively low-effort way to immediately get more impact out of your existing marketing. A conversion rate improvement as small as 1% can equal a significant increase in lead volume.

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Here’s what you can do:

Don’t overlook design.

Get a UI/UX designer involved regularly to eyeball your website. Something as simple as a font change and better navigation menu can help boost visitor-to-lead conversion.

Ensure every page and asset on your website is primed for demand generation. That doesn’t mean bombarding visitors with forms and subscribe buttons, but it does mean strategically and consistently seeding calls-to-action appropriately around the “free” content experience.

Offer something of value, but ask for contact information in return for a bigger item. Provide excerpts of a white paper for free, but gate the full paper. Offer bite-sized clips of your webinars to inform and entice, and have the full-length webinar behind a form. Use every blog to inform a reader on the primary topic, and also offer a longer gated content item to learn more.

Every time your website is talking about a service you provide, accompany that with a relevant piece of content that you can offer. Readers may not be ready for a contact us or a demo request just yet, so serve up a thought leadership content item to educate and add value as an interim step.

Over time, this keeps your brand top-of-mind thanks to a consistently positive experience (“Oh, I remember that company’s excellent infographics about technical debt that made it so simple my CFO understood our need for it—maybe they’re the right fit for our needs!”) Dive into the minutiae of your website analytics. Examine bounce rates and drop-off rates. Are there any odd trends or aberrations you’re noticing? Perhaps there’s a particularly unhelpful service page that has a high bounce rate. Maybe your blogs on certain topics have the highest time on page, so you can seed additional gated content assets within them.

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The next step: marketing as a service

The four ideas described here—examining digital ad spend, leveraging intent data for content syndication, infusing demand gen marketing with branding, and website optimization—are actionable tactics you can put into play immediately. With them, you can achieve considerable cost savings, and the difference may just keep you in the black for the year. But incremental improvements, while they do add up, aren’t enough. Not anymore, not in this economic climate. Businesses that take great leaps are the ones that will make it across the chasm we find ourselves in this “new normal”. Common sense dictates that if you’re looking to tackle a budget problem, you start with the biggest expense, and for CMOs, that’s labor. Offshore outsourcing is the natural answer, and it’s likely that your CEO, CFO, or board of directors are already thinking about it as an option. Making that suggestion first, and with a solution already explored, puts marketing in the position of strength in the discussion. Other business functions like HR and IT are already well-ensconced in the offshore outsourcing world, and this is now a trend for marketing.

CMOs who leverage MaaS are reaping savings of 50-75% of their labor costs

Offshore outsourcing allows CMOs to ramp up marketing programs and deliver even greater impact. That puts their business miles ahead of the competition that’s hamstrung by the expenses and limited agility of onshore operations. The result of the long game is easy to predict: survival of the fittest. Marketing as a service is the next evolutionary step. Are you ready?

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Contact us to explore how you can start your journey to cost savings and impactful B2B marketing with a MaaS operating model. ask@2x.marketing

1055 Westlakes Drive Suite 300, Berwyn, PA 19312, United States

About 2X With its global headquarters located outside of Philadelphia, PA, USA, and delivery operations based in Kuala Lumpur, Malaysia, 2X is a pioneer in B2B Marketing as a Service, which enables marketers to operate with greater impact at a significantly lower cost than the market average. Our unique operating model focuses on execution and operations, providing the agility and expertise to help CMOs solve marketing problems faster and smarter, with a world-class team of B2B marketers specializing in a variety of functions—frommarketing operations and data analytics to content creation and campaign optimization—as the building blocks to our success.

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