Blog for Practical Shopper Marketers

What Are Shopper Marketing Spending Principles?

Written by OlgaYurovski | Apr 29, 2019 12:19:32 PM

In the CPG industry, marketing has long been viewed as an “art,” driven by creative talent and sparks of insight that are hard to control, predict, and manage. This “artistic temperament” resulted in marketing often being unable to effectively manage activities, control costs, and conduct robust spend analytics.

Over time, this inability has caused erosion of marketing’s reputation and influence within the enterprise. To regain a reputation of a responsible spender and a good partner to finance and accounting, marketing leaders must establish strong accountability expectations for their teams. Granular cost controls and complete transparency of marketing expenses should be expected.

One of the foundational management tools that shopper marketing leaders should develop and leverage is a Shopper Marketing Spending Principles document.

 

SPending Principles document has three main purposes

  1. Enable guided decentralization that will empower your team to move fast and thrive in modern complex and volatile retail world. Your team can't afford to wait for case-by case approval and direction on any new type of spending initiative, if such foundational document doesn't exist.
  2. Ensure compliance with GAAP principles and regulations, such as Sarbanes-Oxley Act or Robinson-Patman Act. Setting up proper expectations and establishing a way to capture your team's spending activities will allow you sleep better at night because you will be audit-ready.
  3. Provide air cover for your team and help them confidently navigate gray areas. Spending principles document will save time and frustration in dealing with matrix partners. For example, it will allow them to quickly rule out any attempts to direct shopper marketing funds into "Trade-like” activities.

What Should Spending principles document outline?

  • Definition and purpose of shopper marketing, its philosophy and the spirit in which shopper marketing operates. In new, unprecedented situations, the spirit of the document will help direct team’s decisions.
  • Specific spending rules and explicit examples of programs and tactics that are in and out of compliance. Here are just a few suggested examples:

ALLOWED:

  1. All digital and in-store equity-driving shopper communications that help build awareness, trial and repeat purchases of company’s brands.
  2. All shopper incentives that require a conscious opt-in action, such as clipping a coupon, sending a mail-in rebate, downloading an offer to a card, etc.)
  3. Participation fees for any strategic retailer initiatives that closely align with brand’s strategies. For instance, if your brand’s mission and key priority is to eradicate hunger, fight breast cancer, or support sustainable business practices, sponsoring similar retail customer programs is not only allowed but encouraged.
  4. Joint communications and offers for complementary, non-competing products from other CPG manufacturers. Especially if they deliver a complete shopper solution and are rooted in shopper insights.
  5. Temporary display design and messaging development.
  6. In-ad recipes featuring company’s brands as ingredients.

UNALLOWED:

  1. In-ad price features.
  2. In-ad coupon redemptions.
  3. TPR expenses.
  4. In-store display placement fees.
  5. Temporary Display labor and corrugate.
  6. In-store display placement fees.
  7. Buy X Get $Y, or Mega offer redemption costs.

As you can see, we suggest that any "Trade-like" activity is explicitly called out as un-allowed to be funded out of shopper marketing budget. Please remember, these are just suggestions, your company’s unique portfolio, organizational structure, market position and internal culture will shape your version of this list. We recommend you consult your finance and accounting department when developing the Spending Principles document.

One way you can ensure proper implementation of and compliance with your Spending Principles is to instill complete transparency of planning by use of marketing planning technology like Shopperations. Allowable tactics can be coded in advance in Shopperations to ensure no “trade-like” activity seeps in.

Does your team have Spending Principles document already developed? If yes, please share in the comments how you approached this topic. If not, it's never too late start! Talk to us today about how we can help your team establish clear, fair and simple spending principles, get your team audit-proof and give them the tools and information to confidently charge ahead.