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A Broader View

A Broader View

November 27, 2004
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" This process might seem overly simple (or perhaps not!) "

One of the many things that I concern myself with is the search for innovative ways to increase profits while mitigating expenses. Sometimes this search involves "thinking outside of the box," and looking for ideas in unexpected directions. Such contemplation recently led me to consider the potential impact of world currency exchange rates upon my operation's bottom line.

It was a press release from 2000Charge discussing their EU Direct Debit payment option that began my thought process in this direction. You see, unlike many Americans, most Europeans are reluctant to use a regular credit card for anything other than major (or emergency) purchases - that is, if they even have a credit card. Instead, for a growing number of European consumers, the EU Direct Debit card is the payment option of choice.

Functioning in much the same way as a typical domestic (US) debit card, the EU Direct Debit option allows card holders to pay for purchases in their native form of currency, the Euro, with the payment immediately deducted from the card-holder's checking account. While this is all pretty straightforward, opportunity - or conversely, lower profits - can be realized; depending on the current exchange rate between the Euro and the (US) Dollar.

The reason for this is that while American merchants can bill European customers for products and services in their native Euros through the vehicle of the EU Direct Debit card, the bank will settle the account with the US-based merchant in Dollars, so in the case of a strong Dollar against a weaker Euro, the exchange isn't as favorable, but (as in the current situation), with a weaker Dollar and a stronger Euro, increased profits may be realized by domestic merchants catering to a European market.

This same process can be mirrored across a variety of world currencies and regionally-preferred payment options.

The upshot of all this is that by monitoring currency exchange rates, global merchants are able to tailor their marketing plans in innovative ways - ways in which additional revenues may be realized, or potential shortfalls, averted.

For instance, in the current example of the Dollar vs. the Euro, merchants might want to increase their content offerings to the European market. A prolonged trend towards a stronger Euro would provide additional reason to have content professionally translated into the major languages in use throughout Europe, while even a short-term spike in exchange rates would justify an increase in targeted advertising buys, such as Pay Per Click (PPC) spots on regional search engines.

Conversely, a strengthening Dollar against a weakening Euro would signal a good time to down-size PPC buys on search engines targeted to the European market, while increasing advertising investments on domestically targeted solutions.

This process might seem overly simple (or perhaps not!), but it is an example of the ways in which taking a broader view of the marketing process can result in a stronger and more profitable operation. It is also the kind of competitive advantage that can help separate the successes from the failures in our industry.

Stay on top of what is happening around you, and look beyond the normal scope of your business to find new opportunities. ~ Stephen


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