The BCG Matrix, also known as the Boston Matrix, is a popular model to outline a company’s investment portfolio. It’s a grid that features all products and services, positioned in a way that shows their current state in terms of relative market share and the potential growth rate of the market.
There are four main categories:
- Cash Cows: Dependable cash generation. Don’t need extraordinary investments to turn a profit.
- Stars: Have the potential to deliver the largest percentage of profit, but investments are necessary to tap into that potential.
- Dogs: Possibly profitable, but don’t have a big market share nor a bright future. Only invest if the ROI is obvious.
- Question Marks: Might be future stars, might be utter trash. Require more monitoring and experimentation rather than a heavy cash injection
The BCG matrix is a pretty straightforward but proven model (even though it has its limits), and the idea is to apply a similar matrix to your marketing efforts. That way, you might have an easier time determining how focus and budget should be distributed.
Applied to Marketing
The medium might be different, but the strategy remains the same: Milk the cows, don’t waste money on the dogs, invest in the stars, and address the question marks with some experimental funds to see if they can turn into stars.
Instead of market share, the X-axis shows the current ROI or rather how effective campaigns are in reaching their targets. The Y-axis, on the other hand, shows channel growth instead of market growth.
Let’s go a bit more into detail about how these categories look from a marketing perspective.
These are your proven, battle-hardened marketing efforts. They won’t win you any awards, but they do the job. They’ve been set up so well; they can basically run just fine without much or any maintenance, ditto budget.
A good example of a marketing cash cow is a well-executed SEO strategy: Google has given your website the big thumbs up, your evergreen content is solid as a rock, your backlinks are firing on all cylinders … If the marketing department or agency has done its job well, you will have a steady influx of traffic without having to keep going back and adjust.
Your Star campaigns do a very good job of reaching their targets but require a considerable budget to maintain their level of effectiveness.
If we were to compare it to a common marketing approach, well-performing SEA campaigns would be a great example for many industries: As long as the money is fueling them, your campaigns are everywhere they need to be and are working like a charm. But SEA is like a steam train: The minute the fireman is out of coal to put into the engine, your locomotive will stall and might even come to a halt. So make sure your Star campaigns keep getting the budget they require.
Beware though, while SEA campaigns tick a lot of boxes to become a Star, they aren’t a sure thing. As with a lot of marketing-related strategies, the industry in which you’re active dictates a lot of what approaches will work and which won’t. Don’t be surprised if they turn out to be Dogs!
These are basically the first campaigns you might want to put to rest. Their effectiveness is very limited as is and the channel they’re active in, isn’t going to explode any time soon.
There are exceptions, though. It’s not because a campaign is located in the bottom left of the matrix, that you should automatically shut it down. Dog campaigns might still be profitable, after all. Though their return rate might be limited, the low costs might still give you a decent profit and give you a good enough reason to keep them alive.
Another thing to keep in mind is that Dogs might be hidden Cash Cows or Stars even. You might be dealing with a theoretically sound campaign that became the victim of bad execution. Are you absolutely sure they’ve been optimized to the fullest?