In today's fast-paced business world, understanding whether your marketing efforts are truly effective can be a challenge for many company leaders. To shed light on this crucial topic, we sat down with Andrii Kariakin, the Chief Marketing Officer at RISK, to discuss how executives can gauge the health of their marketing strategies and ensure they're on the right track.
Andrii, thank you for joining us today. Let's start with a fundamental question: How can a company leader determine if their marketing is working as it should?
Andrii Kariakin: It's a great question and one that many executives grapple with. The simplest and most transparent way to assess your marketing effectiveness is by looking at the ratio of marketing expenses to revenue. This metric gives you a clear picture of your overall marketing strategy.
If your marketing spend is between 5-10% of revenue, it generally indicates that your marketing activities are at a maintenance level. This might be satisfactory if your business strategy is focused on maintaining current results. However, if you have higher ambitions, it's a sign that you need to increase your marketing investment.
On the other hand, if your marketing spend is over 30% of revenue, it suggests an aggressive marketing strategy. This is common for startups aiming for rapid growth, where the percentage can even exceed 100% in the absence of significant revenue.
Andrii, you mentioned different approaches to marketing. Can you elaborate on how companies can structure their marketing efforts?
Andrii Kariakin: Certainly. When it comes to structuring marketing processes, I like to think of it as a matrix with two axes. On one axis, we have the question of whether to build marketing entirely in-house or to outsource it completely to an agency. On the other axis, we have the strategic approach: performance-first, where everything is digitized and measured, or a brand-focused approach, where we're building a brand and creating a blue ocean strategy through differentiation.
How does RISK approach this matrix?
Andrii: At RISK, given our specific industry and complex structure, we tend to lean towards hybrid models. However, our priority has always been a full in-house approach with a stronger emphasis on performance marketing. We like to know that for every dollar invested, we can measure the return precisely. This approach allows us to build predictive business models and have answers to all our questions.
That being said, we recognize the value of brand building as well. As David Ogilvy, the father of advertising, once said, "Every advertisement should be thought of as a contribution to the complex symbol which is the brand image." So while we prioritize performance, we never lose sight of our brand's overall image and positioning.
That's a comprehensive approach. How would you advise other companies to use this matrix?
Andrii: I'd encourage companies to assess their current position within this matrix and consider if it aligns with their overall business strategy. Are you a startup needing rapid growth? A performance-first approach might be best. Are you in a saturated market needing differentiation? Perhaps a brand-focused strategy is the way to go.
The key is to be intentional about your choice and ensure it supports your broader business objectives. And remember, as your business evolves, your position in this matrix may need to shift as well. Flexibility and regular reassessment are crucial.
Speaking of performance, how often should companies analyze their competitive landscape and their own product?
Andrii: The frequency of analysis depends on your marketing budget and strategy. At RISK, we operate on a daily, weekly, and quarterly analysis cycle. Daily, we monitor traffic, conversion rates, and expenses. If everything looks good at this level, we follow our strategy and review dynamics weekly.
When problems arise, such as a drop in conversion rates, we gather for operational-tactical decisions. We analyze the issue, determine if it's widespread, and communicate with other departments to find a solution.
As for competitive analysis, it becomes crucial when you encounter problems or when entering a new market. Otherwise, quarterly research is usually sufficient to keep a finger on the pulse of the market.
Now, let's talk about strategic planning. What's a healthy timeframe for marketing strategy in your opinion?
Andrii: Given the volatility of markets today, a five-year plan is often too long-term. At RISK, we find that a one-year strategic marketing plan is most effective. We set annual growth targets and make quarterly adjustments. Anything longer than a year becomes speculative, while shorter periods don't provide a true strategic view.
How do you approach this annual planning?
Andrii: We allocate budgets, distribute resources, set expected results, and monitor overall performance each quarter. This gives us an objective view of our global progress. It's crucial that the annual plan is grounded in reality, based on historical data and insights.
The challenge comes when entering new markets without historical data. In such cases, we rely on experience, make educated guesses, and are prepared to adapt quickly based on real-world results.
That brings up an interesting point about new markets. How do you approach competitive analysis when entering a new market?
Andrii: When entering a new market, competitive analysis becomes crucial. We start by identifying the biggest players and those with the best reviews. We analyze their advertising, which channels they're using, their offers, and their communication style.
We gather all this information, analyze each brand's approach, and use these insights to refine our market entry strategy. It's about finding that balance between our vision and the realities of the market.
I'd like to emphasize that effective marketing is a balance of vision and adaptability. The key is to have a clear strategy, constantly monitor your results, and be ready to adjust when necessary.
Before we wrap up, do you have any final advice for business leaders looking to ensure their marketing is on track?
Andrii: Absolutely. First, always keep an eye on that marketing expense to revenue ratio. It's a simple but powerful indicator of your marketing health.
Second, be clear about where you sit in that marketing matrix we discussed. Are you in-house or outsourced? Performance-focused or brand-focused? Make sure your position aligns with your overall business strategy.
Third, establish a rhythm of daily, weekly, quarterly, and annual reviews. This multi-tiered approach allows you to be responsive to immediate issues while still maintaining a long-term perspective.
And, finally, remember that marketing is both an art and a science. Always keep your customer at the center of your strategy, no matter which approach you take.
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