Tag Archives: marketing budget

A New Approach to the Marketing Budgeting Process

Ahhh Fall…For many of us it signals welcome relief from the summer heat.  Also, for many of us it signals budgeting season and that too many marketers will be submitting their budgets before even creating their marketing plan.  Yes, that does seem a bit backwards!  How can you know what to budget if you don’t yet know what you plan to do?  So what do we do? One common approach is to build the budget based on how the current budget is allocated across headcount, travel and various marketing activities, such as PR, Digital, Events, Training, and so on, make a few adjustments and hit the submit button.

While this may seem like a feasible method, it’s a dangerous one. The budget may be allocated against activities we intend to produce, but it’s unclear what impact or value these activities, and the associated funds, are going to have on the business in terms of new customers, retained customers, additional vertical or customer expansion, or contribution to the business from new products.  It’s no wonder our budget is suspect and immediately comes under fire, especially from the folks in Finance.  And this approach sets the stage for questions like these:

  • Why ads in these pubs?
  • Why so many webinars or trade shows?
  • Why so much money for the email automation platform?
  • Why so much money for new content?

Right away we’re playing defense – with others e.g. finance, suggesting ways we can reduce our spending.  And before we’ve even gotten out of the gate our budget is eroding.  If this isn’t your world, congratulations! If it is, here’s the shocker.  It’s your fault.

If those of us who end up in these conversations had taken a different approach, the conversation would have gone differently.  As marketers we need to think beyond the subaccounts in the cost accounting system.  We need to understand how the dollars we’re requesting are actually going to move business needles.  Businesses are based on revenue and profits generated by customers buying our products/ services, hopefully profitably.  This is the very essence of Marketing.  As a result, we need to think about our budgets in terms of the customers and what they buy.  So rather than submitting a budget for activities, what if you submitted a budget that allocated funds into buckets such as these:

  1. Marketing generated business from net new customers buying existing products
  2. Marketing generated business from existing customers buying existing products
  3. Marketing generated business from net new customers buying new products
  4. Marketing generated business from existing customers buying new products

Of course this would mean we would need to know how many existing customers the company currently serves, where, what products they buy, and how many potential customers there are for these products and where are these potential customers.  And we’d need to know what new products are going to market, the competitive situation, and what customers are most likely to buy these products.  And we’d have to have some targets for each of these categories.  Imagine though that we knew this information about our customers, products, and market.

If we were to budget in this fashion, it doesn’t mean our friends in finance wouldn’t be making a visit, but the conversation will certainly be different.  They will still want to know why we need so much money but instead of defending an activity that we don’t even know we will want to deploy since we haven’t created the plan, we’ll be having a discussion about the business – how many customers, which ones, how easy or hard it will be acquire, retain or grow these customers, our competitive situation, and our product innovation situation.  I’d rather have these conversations with the CFO or other members of the leadership team any day than a conversation about which tradeshows to attend.  And once we have clarity around marketing’s contribution via customer acquisition, retention and growth,  we will also have achieved better alignment with the business and gained insight into how to measure and account for our value.  Plus we will have created maneuvering room and the ability to select the activities best suited to achieve the result.

 

 

Streamlining the Marketing Materials Supply Chain

Improving the productivity of the marketing materials supply chain may not be near the top of your list of New Year’s resolutions for 2013. With most marketers facing strong pressures to drive increased revenues and maximize the economic return produced by every marketing activity, I can understand why they devote most of their attention to developing more effective marketing programs, creating compelling content, and generating more new sales, rather than to ‘mundane’ issues like the production and distribution of marketing consumables.

In reality, however, the marketing materials supply chain is a large, and largely untapped, source of cost savings and revenue-enhancing improvements. In most companies, the supply chain for marketing materials is fragmented and filled with manual, inefficient processes that result in excessive costs and a lack of both responsiveness and reliability. If not completely broken, many supply chains are dysfunctional and in serious need of improvement.

Read More…

Global Adspend Rises 2.4%

Global ad spend rose to $139 billion USD in Q2 2012, a moderate 2.4% gain over Q2 2011, according to Nielsen’s quarterly Global AdView Pulse report. In a continuing trend, emerging markets saw the most significant increases. The Middle East and Africa grew 19.6% compared to Q2 2011, and Latin America saw advertisers increase their spend 4.9%.

Ad spend is on a general upswing, with Europe remaining as the only region to see year-over-year declines. Despite growth in the United Kingdom, Turkey and Norway, conservative spending in markets such as Greece, The Netherlands and Portugal led to a downward shift of 3.8%.

Overall, regional inconsistency was a theme, with some countries noting large increases and others down year-over-year. In Asia-Pacific, for example, moderate overall growth (+2.9%) resulted from significant increases in countries, including the Philippines, Indonesia and Hong Kong, being offset by declines in markets like South Korea and Australia. In North America, the U.S. grew 2.4% while Canada declined two%. Ad spend in Latin America was also up (4.9%) despite decreased spending in Mexico.

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CIMA Conference: How Profitable is Your Marketing?

On November 14, the Chartered Institute of Marketing (CIMA) will host a conference on profitable marketing in London. This one day conference is aimed at finance and marketing professionals and will ‘evaluate the market, look at how to save money and improve results as well as lay a foundation for future growth.’ The conference focuses on questions and issues on the most efficient way of distributing the marketing budget and tackling issues concerning marketing accountability.

From the program:

Who will benefit

This event is suitable for chief executives, senior finance managers and marketing professionals in either a client company or agency who may be facing issues or concerns such as:

  • setting and distributing the marketing budget
  • doubts and uncertainties about marketing’s contribution
  • pressures to cut back marketing in the least damaging way Read More…

Mixed Outlook for Global Marketing Budgets

Marketing budgets are rising in both the Americas and Asia, but conditions remain rather more challenging in Europe, according to Warc’s latest Global Marketing Index. In the monthly GMI survey for March 2012, overall expectations for marketing budgets stood at 51.5 points, on a scale where scores above 50 points suggest an expansion, and figures below this benchmark point to a decline.

This total had come in at 43.9 points in November 2011, before gradually improving every month since that date, reaching 49.3 points in February 2012. Read More…

Expectations for 2012 Uncertain, but Marketing Budgets Up

Global senior executives expect to be cautious in 2012, according to a survey by Doremus and The Financial Times. Over 600 executives from a variety of companies and industries gave their views on the business environment for the coming year. Six out of ten respondents said that they expect a further decline in the global economy over the next six months, with almost half saying that they don’t believe the economy will recover until or after 2013.

Contrary to what the previous statistics would suggest, companies announced they expect to increase rather than decrease their spend, with advertising and marketing spend increased by 10% in 2011 already. A quarter of organisations surveyed plan to hire this year, with the same proportion expecting their company’s employment levels to decline. Read More…