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With Local Brand X we often receive inquiries about the size of a company or how many local partners it is financially worth to use a marketing portal. These questions are understandable, but still not so easy to answer. In every company, processes take place in different ways. For the ordering and creation of new advertising media, for example, a different number of feedback loops are involved, which affect the process flow in terms of time and cost intensity.
In order to determine what time and costs, for local marketing, is operated in your own company, a process cost accounting can be performed. Here, a process is divided into all individual process steps and based on empirical values and surveys, it is decided how much time must be estimated for these steps. In addition, all possible loops and iterations are identified to highlight the differences between an average process and the ideal process (without additional loops). Once the time has been determined, it can be converted into a cost based on the internal hourly wages.
It is important to work with the most realistic and accurate time units possible. Therefore, it is especially important to start with the process right down to the very last detail.
1. Which persons / departments are involved in the process?
2. How much time do people spend on each step?
3. Where do feedback loops need to be considered?
4. What is the probability that these loops occur?
5. How many of these loops occur?
6. Are there different hourly wages, depending on the department?
If these steps are followed and a precisely defined example process has been worked out, the process costs can be calculated as accurately as possible. However, it is important that you multiply these at the end with the number of local partners. However, as the costs of creating advertising media in the individual process are still considered to be relatively low, they can rapidly increase for a large number of partners.
Based on these calculations, it is possible to decide whether the use of a marketing portal is sensible and financially positive for the company. In addition, the calculation provides an overview of the running processes and the current resource distribution. This shows possible savings and can be taken into account for future personnel planning.
In order to conclude with a concrete example, we have carried out an exemplary activity-based costing for a company with 100 local partners. Based on the process of creating an ad and taking into account the ideal process (no loops), a significant savings could be noted by the marketing portal.
With 100 advertisements, the process costs using the marketing portal were only around 20% of the original cost. The difference in the time required was even clearer, with more than 95% of the total working time saved on the marketing portal.
You can read about the exact calculations and the individual steps of activity-based costing in our whitepaper: