In the world of business, particularly in marketing, many people tend to focus solely on benefits while neglecting the risk aspect. Every action in marketing or business carries its own risks. If we ignore risk management, the consequences can be significant when risks materialize, potentially leading to the failure of a campaign or even jeopardizing the very existence of a company.
A recent example is an attempt of McDonald Vietnam to ride the trend of a meme, which backfired. Although McDonald’s issued an apology, it was perceived as insincere and offensive, rendering their crisis management a failure.
Risk management extends far beyond crisis management. While crisis management deals with addressing issues after they have occurred, risk management involves anticipating potential risks and taking preventive measures to mitigate or minimize their impact.
Diversification as a Risk Management Strategy #
One effective example of risk management that I implement for clients is reducing dependency on advertising through a single platform. Currently, many companies rely on advertising for over 90% of their revenue, often depending on just one or two platforms such as Facebook and Google. What happens when these platforms change their policies? Or when advertising regulations in general are altered? Can your company withstand a sudden 40-90% drop in revenue? Such scenarios have occurred and will continue to happen.
I recently spoke with an ad tech compliance lawyer who mentioned that third-party cookies will face increased regulation from both the US and European governments. Currently, US law requires an opt-out system, while European law requires opt-in. However, the US may soon adopt the opt-in approach, and Europe might eventually phase out third-party cookies altogether.
Browsers are also taking action. Brave and Firefox block third-party cookies by default (I primarily use Firefox). Safari restricts cross-site tracking, and Edge offers an option to block third-party cookies. Chrome will block third-party cookies in the third quarter of 2024.
Third-party cookies play a crucial role in many advertising platforms. Their reduction and eventual disappearance will significantly impact advertising. What has your company done to manage this risk?
Broader Risks in Marketing #
Advertising isn’t the only risk in Marketing today. Nearly every tool carries its own risks. Recently, Google changed its search engine policy, causing many websites to suffer drastic SEO rank drops.
Social media platforms initially boost interaction and traffic to attract users but gradually reduce reach, forcing companies to spend more on advertising.
E-commerce platforms such as Amazon often follow similar practices, sometimes even analyzing popular products and competing directly with the shops on their platforms.
Effective Risk Management Techniques #
One widely used risk management method is diversification. The more you diversify your channels and tools (ensuring no single channel or tool dominates), the lower your risk when one channel or tool encounters issues or changes.
Another common strategy is to build your own strengths, such as developing your own products, brand, website, and customer community. These are your assets, which help you withstand external risks from channels and Marketing tools that you use but do not control (advertising, social media, e-commerce platforms, etc.).
By integrating your assets with the tools and channels you use in a diversified manner, you create a robust integrated Marketing system that helps you manage risks effectively.
Don’t wait until it’s too late to manage risks! Be proactive in identifying and mitigating potential issues to ensure the long-term success and stability of your Marketing efforts and overall business.