NEW YORK: Brands can gain potentially huge benefits from rethinking spending on consumer promotions and engagement (CPE) and bringing the same rigor to this area that they apply to above-the-line activities.

CPE is often relegated to the ‘other’ category in marketing budgets and consequently is frequently overlooked and undermanaged, according to McKinsey & Co.

But optimizing CPE “can help companies realize up to 10% to 30% in marketing spend, which can be reinvested to fund growth initiatives”, argue four senior executives from the consulting firm.

Further, say Biljana Cvetanovski, Stacey Haas, Max Magni and Cathy Wu, “improving CPE can also drive better awareness for new products, improve consumer engagement and loyalty, and supercharge other advertising and trade efforts”.

There are significant benefits to be gained – one global packaged-goods company realised more than $150m in savings, the authors report – and marketers can usefully reassess where CPE sits within their structures.

The CPE budget may be split over several departments, for example, resulting in a fragmented approach. “Optimizing governance can lead to 5% to 10% savings in the immediate term,” the authors claim.

At the same time, CPE design can be rethought, since it tends to be more focused on short-term issues like meeting a sales target rather than part of a program to influence decision making at all the critical junctures of the customer journey.

And rather than adopt a scattergun approach, such as sending out thousands or millions of coupons to a mass of consumers marketers should apply personalization principles to tailor campaigns to local demographics.

The authors also advise that CPE efforts should be kept simple, since effectiveness is based on being clear about objectives. Thus, “in-store displays and fixtures can drive awareness and trial. But if used primarily to build brand equity, displays typically won’t deliver”.

Similarly, marketers should avoid giving consumers so much choice that they end up confused by which particular offer is best for them.

Finally, CPE leaders need to codify best practice and learnings, developing playbooks of which activity to use when and which activities complement each other or erode value.

Sourced from McKinsey & Co; additional content by WARC staff