Playbook For ROI-positive, Frugal Marketing

Piali Dasgupta Mar 31, 2023

It's time for some harsh truths. During job interviews, most Marketers are evaluated on the largeness of the marketing budgets they have handled in their previous roles. This gives the interviewer a sense of the scale of campaigns someone has worked on, the amount and range of media that has been bought, the mega-celebrities someone has worked with and so on. The bigger the numbers, the more the worth of a marketer.

It’s shallow, it’s sad. Also, true.

In the past few years, unicorns and decacorns along with other VC-funded promising start-ups burning huge money on their branding and marketing efforts have grabbed many a headline. Come IPL season, and the bidding frenzy for the title sponsorships amongst B2C brands is dizzying. Let’s not forget that we are talking about numbers that are in the range of 450 to 550 crores per season here.

And then there are the celebrity endorsements. Byju’s Messi, Puma’s Usain Bolt, Levis’ Deepika Padukone, Reebok’s Katrina Kaif, Audi’s Virat Kohli – the list is as envious as it is endless. Messi cost Byju’s between 5 to 7 million USD per annum.

It’s almost as if brands are in crazy competition with each other to throw cash around, rope in the biggest stars and increase their brag value.

But how much of this is bringing revenue back and helping build memorable, strong brands? If the ROAS numbers of most start-ups are anything to go by, it is in the range of 3 to 6. That’s a revenue of Rs 3 to 6 for every rupee spent on advertising.

These may seem like decent numbers, but they are not enough to make businesses profitable. Even after almost 15 years of operations in India, Flipkart, with a ROAS (Return of Ad Spends) of 6, is not profitable. In fact, in FY 2021-22, its net losses were over 4,300 crores, burgeoning Marketing investments being one of the main reasons for the losses.

At Columbia Pacific Communities, we garnered a ROAS of 16 in FY 22-23, and our average ROAS over the past three years has been 12. I share these numbers with a lot of humility.

Our annual budgets are probably less than what FMCG/ecommerce behemoths spend in 15 days.

So, how did we do this? Simple. We had the audacity to break a few rules, despite being a new brand in an emerging category. I could go on and on about a lot of things we did. But let me talk about all that we did not do. Here’s what is not in our playbook:

PR-worthy, glamorous endorsement deals that don’t necessarily benefit the business. These are great for PR and brag value, but may not be so for the business, if the numbers are anything to go by.
Mass marketing and blocking all possible media – from OOH to television, print to radio. We are all about niche, targeted marketing through channels that give us high returns at the best rates.
High value, large-scale, big-budget productions. Our productions are done with shoe-string budgets, often in-house, with people that are inventive and have the knack of telling great, evocative stories and landing a message, without spending huge money on hiring actors, locations, large crew etc.

Our campaigns, despite being done with minimal resources, have gone on to win many prestigious Marketing awards.

Heavy discounting for the sake of acquiring the next million customers. We are not in the business of discounting, because what we are building is world-class and irreplicable. Our customers respect our brand, have a deep connection with us, and value the product we are building for them. We are not in a race to acquire the next million customers by burning cartloads of marketing moolah.
Appointing large network agencies with huge retainers for the snob value it lends. Large agencies prioritise large brands. Mid-sized independent boutique agencies, on the other hand, are hungrier, raring to go and give emerging brands the attention they need.

Frugality is an attitude. In a few organisations (not many), it’s a part of their culture. The quest for positive ROI and the pursuit of a healthy bottom line is cultural to us. Our three-pronged philosophy called TMA (Test-Measure-Act) forms the fulcrum of everything we do in Marketing. Yes, we are a bit risk-averse. That probably makes us quite boring. But we would rather be safe and boring than daring and irresponsible with our Marketing spends.

I am sure this would be considered an unpopular opinion. But the thousands of layoffs we are seeing all around us are, to a large extent, a result of faulty manning plans and reckless Marketing investments by many companies. Both are avoidable.