Managing brands like an investment portfolio

When and how to try new marketing ideas, especially in the face of colleagues & clients who are reluctant to take chances, is something we all struggle with.  I certainly have.

But I had a little thought.  Has anyone tried stealing some language from investment advisors and positioning marketing ideas using risk vs reward tradeoffs?  Investment companies generally profile their funds on a continuum from Safety (low risk, low return) to Balanced (medium risk, medium return) to Aggressive Growth (high risk, high return).  And they usually recommend that people keep a mix of funds in the portfolio.  At least, the people that I keep my $4.70 in savings with do.

That seems like an intuitive way of talking about a marketing plan as well. It's OK to base a marketing plan around some low-risk tactics, but we should make sure everyone understands that low risk also inevitably means low return.  On the other hand, trying something radical and new has higher risk, but it also has the potential for higher returns. 

A good marketing plan probably also needs a diverse mix of the safe and the radical.  Do some stuff that you know will work, either because you've done it before or because you've tested it to your level of comfort.  I've often found that having a few safe & familiar options covered off gives clients (and agencies) the comfort to try something more radical with another part of their budget.  Then use that to try things that can't be tested, something that no one has done before, where you can only guess whether it will work.  Those are the things that might just pay off with exponential growth.

Is that a useful way of seeing things?  It's probably not all that original.  Maybe someone's already written a management book about it.  But even if it's not new I figure it's worth reminding ourselves that there's no such thing as a low-risk, high-reward strategy.

I guess this also suggests an approach for the client-agency relationship: starting the marketing planning process with a discussion, much as an investment advisor would, about their comfort with risk and their long-term goals.

I should make clear I'm talking about tactics here, assuming that the strategic underpinnings are solid.  Whatever direction we choose, there's no substitute for a good understanding of the problem, insights, target and objectives.

Comments

[beeker]

Taking risk seriously, seems like a very nice tactic to me for risk averse clients - playing them at their own game.

[Michael Karnjanaprakorn]

Jason - funny that you made a post about this b/c I use that analogy all the time. Often helps with non-traditional media options too. If you have 85% in safe media, why not use 15% to experiment with riskier options with higher returns? You can always say that your agency is like a hedge fund and that the clients shouldn't be investing in agencies that are similar to mutual funds.

[Leland Maschmeyer]

Hmmm..very interesting. I like this a lot. It seems a nice way to get alignment around what a campaign needs to do. More so, it's a nice way to force into discussion how much risk the client is willing to take on with the work - something i imagine would help an agency understand where the client's mind is.

Hope all the new business is going well.

[john grant]

Yes that's very interesting. I did a project with a wall st firm 5 years ago on the future of finance and it goes much deeper. You could for instance apply ideas like BRAND LIQUIDITY too.

I quite often advise clients in big companies to spend 80-90% of their budgets getting the bread and butter stuff done right, but to save 10-20% for the riskier, more out of the box experiments. It's an argument which seems to sit very well (certainly compared to telling them to revolutionise everything). and you can do a lot of good new stuff with 10-20%. now you've mentioned it, its exactly the sort of advice an investment advisor would use. :J