When we talk about marketing and advertising, very often the topic “budget” is at the center of the most important discussions.
“Is this budget enough? Do we need more budget? And can we achieve these results with a smaller budget?”
It’s important to clarify that we are responsible for every £1 of investment and need to be as efficient as possible in managing marketing budgets.
That is why in this article I will try to tell you how we approach and seek to advise our clients and partners when we talk about marketing budget.
What is our goal?
We should always analyse the budget we have set for a campaign and compare it to the main objective of the campaign. The key is to have an idea of the relationship between the two themes and how they are dependent on each other. With their experience, the marketing team in the relevant category and business model should be able to clearly comment on whether the budget is appropriate for the target. But there needs to be a starting point and a benchmark budget that is subject to analysis.
Have an idea of the size of audience you need to reach and know where to find them.
We should always look at marketing as a tool over which we have control. There are specific mechanics that are based on statistics. And very often budgeting depends on the amount of people we want to reach, as well as where we’re going to find those audiences. Because of this, CPM (cost per 1,000 people reached) is a key metric for us to budget around. The key is to know how much it will cost us and what the competition is in the relevant media for the people we need, relative to the target we have set.
If you’re looking for and like checklists, we’ve added a few in this blog post of ours to help you work through these 2 points more effectively.
Prepare with different budget options to get a sense of the dynamics/variations of how the goal will be achieved.
I often make the comparison that marketing in a digital environment is becoming more and more like the investments we make on the stock exchanges. And the need for a diversified portfolio of assets. In our case, we’re talking about a portfolio of different forms of media and ad formats. Often audiences are scattered across various digital venues – social networks, websites, forums, email clients, phones, laptops, etc. Because of this, it’s also important that we can be as broad as possible in terms of opportunities to reach these people through different formats. And here comes the important point – to also be balanced in terms of priority between different advertising formats. That way we can get the most out of those we know would work for our business model and set goal.
Here comes the potential to have 2 options of high and low budget. This way we can have a clear dependency on how we would allocate our budget between different media and formats relative to the set business goal. Bringing the most important channels into focus and being more adaptive to the situation our business is in and the behaviour our target audience has.
You have to be flexible.
Deciding on a budget is a kind of risk we take (again with reference to point 3 and the stock market example). And the better we manage that risk, the more successful we will be. However, it is key for us to be able to make informed decisions that are in the best interests of our business as the campaign progresses and the results we achieve.
If we are successful, can we afford to increase the budget? But if we’re not, can we reduce the investment while we make the necessary changes to our business proposition, ad formats, targeting, etc.? We must always have a proper sense of managing the situation/campaign and make decisions that only add to the momentum that needs to build in our marketing strategy.
Be prepared for phases and build up.
When we talk about digital marketing, one of the most common pieces of advice we give is that we need to be “always on”, i.e. constantly visible to our audience. Or at least to the one that’s furthest down the funnel. The goal is ultimately to win the strongest micro-moments where our target audience is. But it requires proper budgeting and a sense of the different moments of activity in our business. For this reason, it’s a good idea to create a plan for phases with different moments of dynamics the business goes through during the year (seasonality, focus periods, new products, innovation, etc.), and set your budgets to match these dependencies. This will make you more ready and flexible to manage that budget.
Test and be innovative.
Digital marketing is constantly opening up new formats and approaches. Test. Be prepared for between 5% and 15% of your budget to go towards something new – be it a new ad format, a new type of content or a new audience. This can give you a very high level of return, but to do this you must be willing to test and get out of your comfort zone. In this case study on digital marketing of Lorelli baby strollers, you will be able to see how many tests we have conducted, how many marketing assumptions we have “challenged” and what we have validated.
It is important to have a process in place to analyze the effectiveness of your investments.
When we talk about performance evaluation and decision-making, we need to have as much qualitative information as possible. Because of this, you need a few key points. Have an analytics environment that your business can work in and allows you to properly analyze user behavior. Have clearly labeled/traceable key user actions that make your business profitable. And have a process, i.e., specific times of the month where you take time and analyze what people are doing and the dependencies that dictate that action. We recommend this interview with Ailita Liteva, Marketing Manager at Tesy, to hear what and how the company’s marketing team analyzes and how digital marketing supports the company’s marketing and sales goals.
Always think about the big picture
Too often, clients pay attention too focused on specific elements or ad formats and evaluate them as effectiveness without looking at the big picture. And this can play a bad joke when analyzing budgets and marketing effectiveness. The best advice we would give to any business is to always look at the big picture. People have a certain path they are comfortable converting from, but that doesn’t mean there aren’t dependencies that help it happen faster. Or you be the business that these people convert from. Because of that, watch the whole picture. How have business results risen in each channel? Are there dependencies in specific periods? Is advertising reflected in other channels beyond digital? Are there assisted conversions? Are there more phone calls? Are there more physical visits? Are they writing more on live chat? And the better and more focused we look at these dependencies, the better we can decide on the effectiveness of our investments and miss the chance to stop something that is working because we are analyzing the situation in the wrong way.
This, of course, can create a case study in your internal sales policies and how a particular team is evaluated. But this is the reality in which we find ourselves. And the better we structure our processes and optimize the relationship between sales and marketing teams, the more effectively we will manage our marketing budget.
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