From our experience in optimizing about €5 billion in media funds around the world, we know that between 2 and 40% of any marketing budget delivers absolutely no value to the business. If you’d take a (kind) mean of 10%, this would mean that – globally – annually about $50 billion goes down the drain. Not counting the parts which deliver “little value” and the opportunity cost of lost commercial impact.
But then I’m not telling you anything new. In fact, I have never met any marketing, finance or CEO refute the numbers. Instead, I hear the century old lament that “we know half of our marketing budgets are wasted. We just don’t know which half”. While I typically state that all they need to do is find out, this typically evolves into a debate about complex metrics and how so-and-so disappointed them with another marketing ROI silver bullet.
While there are actually pretty nifty ways to optimize your marketing spend, the big wins for 2011 lie in the area of common sense. These still involve some data and analysis, yet most of what is required is a clear-headed brain and the willingness to do what is right.
So, if you’re interested in making sure your 2011 marketing budget is sound, ask yourself the following questions:
Do your plans match those of finance and sales?
This may have a big “duh” factor to it, but you’d be amazed what happens when you vet every marketing initiative against the way the business makes money. Bluntly put, do your marketing KPI’s actually contain financial numbers and sales parameters, or do they focus on marketing mumbo jumbo based on awareness and share of noise? If the latter is the case, sit down with your CFO and the head of sales to connect the dots for 2011. By aiming at the same goal, you might actually hit it.
Are your efforts focused on your customer’s behavior?
Too many marketing teams slavishly follow theoretical marketing funnels and AIDA models. While they have (some) value, it makes more sense to map your customer’s journey and estimate the financial value of every step towards deeper engagement. By allocating your 2011 marketing funds to where the biggest financial gain can be made, you ensure you hit the points that matter most to your business, not what orthodoxy prescribes.
Are your plans understood/in sync with the business?
We all know the stories of campaign misfires and uninformed employees. 90% of the people in the business have no clue what the strategy of the company is about and which promises are actually being made to customers. After all, no one really told them. But in spite of this, they are expected to deliver against these promises. So provision the 2011 budget that make sure the people in your business are willing, skilled and able to deliver against the promises you make.
Are your agency and channel partners on the bus?
The risk of internal miscommunications get amplified as you move to other stakeholders. Too many media agencies still plan in isolation from the creative teams, leading to disjointed executions. Channel partners aren’t fully involved in initiatives, causing piece-meal implementation. Media partners are insufficiently involved or briefed, so they revert to the orthodoxies that fit the buying system. All these can be prevented by making sure that your 2011 budget includes allowances for a quality alignment effort between all these external stakeholders.
Do you actually get what you pay for?
Finally, and I know this is awkward, are you getting what you paid for? In this I’m not just talking about the creative financial math applied by parties in the business. But are the spots you bought on TV actually transmitted? Did the mailings actually go out as agreed? Were the POP materials actually deployed in the stores that you targeted? Even with the best intentions, a few percent of “budget shrink” can quickly occur. Establishing a quality control system may not prevent these things from happening in 2011, yet at least it ensures you don’t pay for what you didn’t receive.
Bonus Question: Am I shooting from the hip, or do I really aim?
All of the above are symptoms of not taking enough time to really “aim before shooting”. Some years ago friends at EMM International did a survey in which they found that senior marketing executives only spend 2% of their time on developing a quality media and communication strategy. In the old days of the Wild West, this was called shooting from the hip. While this always looks great in a movie, any marksman can tell you that the chances of hitting what you aim for are pretty slim.
So overall, taking 5-10% of your budget and your time to aim before you shoot, may be the most valuable thing you can do for 2011.
Disclosure: As Futurelab offers a Budgetscan 2011 along the lines of this article I do have a commercial interest in spreading messages like the above. But rest assured, even if we didn’t, I’d still be saying exactly the same 🙂
This post is one of a series to accompany the launch of the #ChangeMarketing Manifesto. This is a call to action for marketers world-wide to change the nature of marketing itself. To reconnect the profession to the needs of the customers and the businesses they serve.
CLICK HERE to download your copy of the #ChangeMarketing Manifesto, or explore the #ChangeMarketing Tab at the top of this page.