2016 Marketing Budgets -- a Few Tips

It’s baacckkkk… Marketing Budget Planning

Glistening Christmas lights, the smell of cookies in the oven, carolers singing the traditional holiday songs and the task of getting your marketing budgets done.  A few thoughts on budgeting.

1. Inflation — take it into account on production, agency fees, etc.  I usually figure about a 2% y/o/y increase.  Media inflation can be a wild card, but check with your agency on an estimate. 
2. Zero based budgeting — I like it.  It helps me apply the appropriate amount of marketing funding needed to reach the sales goals of each product.  In addition, it gets those nasty conversations you must have with business groups which won’t receive financial support before you get into the new fiscal year.
3. Cut the fat.  It’s the time to look at results and make the hard cuts.  If something isn’t working get rid of it.  Stop wasting precious financial capital.
4. Staffing — get your plan together early.  Do you need to upgrade talent, cut non-productive employees.  If so, ensure you’ve budgeted appropriately.
5. Run Rates — get those campaigns aligned and your budgets as well.  Nothing is worse than the decision to create a campaign, but not have the money to carry it out.
6. Capital — work with finance to understand your capital requirements.  Does this get charged to your budget?  Or is it paid out of a “pool” of funds at the corporate level?  Retiring capital investments sometimes helps the company’s financials.  Taking on a new capital project not only impacts capital finances but also operating expense.  Not everything can get charged to capital… so ensure you have the operating expense planned for as well.
7. International — work with finance to understand the impact currency rates will have on your budget.  If the US dollar can’t buy as many UK pounds, you’ll need to budget more to have the same media impact, etc.
8. Agency negotiations — if you’ll be negotiating a new contract… take a look at my post on contract negotiation.
9. Tracking — setup very detailed tracking of your dollars.  The amount spent of different  media types, how much goes internationally, how much you spend on campaigns, business units, fees, creative, etc.  It helps in understanding profitability of marketing and will help you plan for 2017 budgets.
10. Special initiatives — they will come out of left field, so build some buffer into the budget and understand where it sits.  Finance loves to pick at the “miscellaneous” budget line.

Good luck in the coming year.

Scott

Marketing is Sales — Learn to Live With It

As Marketers we continually screw ourselves every time we open our mouths and spout out… the brand, advertising, radio, tv, print, events, digital, creative, marketing “expense”, media, etc.

All of those terms scream — Expense!  It reinforces the misconception that all marketing is expense… and people outside of Marketing (e.g. Finance/Sales, etc.) keep thinking “why do we spend so much money on this fluff.”    

Whether we like it or not, we Marketers have branded our work expense.  So every time the company needs to cut expenses… the Marketing budget is the first stop.  And the self fulfilling prophecy of cutting the budget which decreases the effectiveness/metrics gives critics more ammunition that Marketing just does “stuff”.

Learn to live with it folks… Marketing is Sales!  Yes, we are Sales People.  Damn it, we’re in Sales!  Why??  Every single dollar spend on Marketing should drive sales.  Think about it… why would Company Executive, Board of Directors and Shareholders support the expenses associated with Marketing.  Because they expect… no demand… that sales will be positively impacted by the expense.  

Marketing Research

Advertising

Creative

Media — TV, Digital, etc.

Direct Mail

Database Marketing

Marketing Operations

Technology

Web Sites

Headcount 

And the list goes on and on…

We must change the language first… we need to add the word “sales” into our vernacular.  

Sales drive by advertising

Sales Web Site

eCommerce

Web leads

Demand generation sales

Advertising sales / lead generation

Sales customer research

Events which drive sales leads

Sales metrics

The change in language starts to change the way our budgets are looked at.  Now we can start dialog around cutting budget cuts sales.  Finance and executives will now be forced to reconcile budget cuts on sales drivers vs. marketing expenses.  It’s a hell of lot easier talking about how those budget cuts will impact sales vs. how GRPs or brand awareness will be impacted.

Scott