The 7 Secrets of a Good Marketing Budget

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by: Alain Thys

By now you should be close to having all of your top-line budgets approved and be heavily into the detail of spending the marketing funds you’ve just been entrusted with. Yet before you rush off to fill the pockets of agency wizards and media-moguls, I’d like to stir things up a bit. For this post, I have come up with 7 budget recommendations against which to benchmark your decisions.

While the exact % split is indicative, I’d be interested in how many of you agree this is the way to go (and if you don’t want to comment publicly, feel free to drop me a mail).

Here we go 🙂

Spend 10% on aligning the people in your organisation to your strategy
Even though you think you have explained it, most employees around you are oblivious to the brand strategy you have developed. At the same time, they are expected to deliver on the promises you make in your marketing initiatives. As marketer it is your job to ensure they are capable of doing so. This means you need to get involved in employee communication, people development and alignment workshops and initiatives. Most HR departments won’t be able to do or pay for this by themselves. So join forces and if required “take the lead”.

Focus 10% on research yet shed the orthodoxies to focus on metrics that matter
These days it’s perfectly possible to predict the impact of GRPs bought on the sales of the brand. To truly understand what drives consumers, rather than make guesses based on focus groups and surveys. To measure the impact of customer satisfaction on word-of-mouth and future sales. To connect your marketing initiatives to your bottom line. Yet the number of companies that do so remains embarrassingly low. Break out of the research orthodoxies and focus your budget on metrics that allow you to make more money and differentiate your business. De-clutter your life and get rid of all the rest.

Allocate 10% to boldly go where no marketer has gone before
We all know that the existing marketing model is out the window, yet no one knows where it’s going to land. The only sensible thing you can do in this situation is experiment. Try new things and see what happens. Explore branded content, do in-game advertising, launch a blog, go into Second Life, open a flagship store. You didn’t join the marketing profession to rehash the same media-mix each year, so use the opportunity to break new ground. And if for financial or political reasons you cannot go it alone, join a lab or consortium with non-competing brands. The important thing is to start.

Take 15% to spread your online media across the long tail
As online marketing budgets grow, most advertisers will flock to the same media. This will reduce effectiveness and drive prices through the roof. You need to break the mould and spread your investment over an as wide, yet relevant net of digital media as possible. Most media buyers and even some advertising groups won’t like this. After all, existing commission structures and some people’s creative skills aren’t really structured for truly “unbundled” advertising. Still, there is no other option. In the world of the long tail, even Yahoo is only a “blip”. So put your foot down, and if required renegotiate your agency compensation package (let’s be honest on a 1-2% buying commision, no one can do a decent job).

Focus 45% of your spend on traditional media, yet break with your GRP addiction
With all the unconventional moves above, I’m not saying you should stop doing traditional media. Still, the big step to take is to let go of the illusion that media planning based on GRPs actually has any value (and yes, we’ve got the numbers to back this statement). With some planning and research it is quite do-able to cut 20 to 50% of your traditional media budget without affecting your sales line. This should fund a lot of the actions I described above, and allow you to focus your traditional spend where it really matters. And if you have some left, remember that the real action is in customer service, sales support and point-of-sales. Any penny you can save should go there.

Keep 10% in reserve for when the next YouTube comes along
Don’t spend it all. While even before the internet I’ve been a strong proponent of keeping back some money to make agressive moves when opportunities arise, these days this is more important than ever. This time last year no one would have imagined YouTube to be what it is today, yet chances are a similar “something” will crop up in 2007. When it does, you want to have the funds to move fast and hard, so you can be first to leverage whatever the new medium will be.

So, does this look like your 2007 budget?