Pretty obvious question, particularly at this time of the year when organisations are starting to think about the preparation of the 2017 budget.
In many enterprises, the marketing budget is set by the boss and the finance people.
They see marketing as a cost, so typically it becomes a percentage of revenue. They agree a targeted revenue, then apply a percentage.
What absolute bollocks
If marketing is a driver of revenue, then the more you spend, the more productive you should be, and when well done with metrics and sensible discipline, the more money you get at the top line as a result.
Therefore the challenge is for marketers to come up with sensible marketing plans, that promise to deliver on the strategic objectives agreed by the enterprise.
Marketing then becomes an investment, not a cost.
Zero based marketing will have its day, when the marketing planning is done reflecting the strategic drivers and priorities of the enterprise, and answers the question ‘what are the best ways to deliver on the objectives?’.
Do that and you generate the revenue, and marketing becomes an investment, the effectiveness of which can be measured.
Thinking about marketing as an expense is about the most common stupid assumption in the corner office, but is well ingrained because marketing people have lacked the balls and organisational grunt to back their convictions that it is otherwise. When confronted by reasonable, but difficult questions marketers without the necessary experience, knowledge, or intellect, break into generalisations, weasel words and fluff.
Use cascading S.M.A.R.T. goals to forecast and measure the impact of the tactics employed to achieve an outcome, any outcome, not just marketing.
Pretty sensible acronym.
Specific. Measureable. Agreed. Realistic. Time bound.
I know the BEHAG (Big Hairy Audacious Goal) crowd will trot out JFK’s BEHAG to reach the moon by 1969, that galvanised the space effort, but most of us do not have the resources of the US at our disposal, so lets just take a powder and be realistic.
Set realistic enterprise goals, then have them drive the allocation of resources to marketing, and indeed elsewhere, hold people accountable, and have continuous learning loops in place. Only a fool makes the same mistake twice.
I once had a very confronting shouting match with the MD of a business I worked for who drove the whole budgeting process from the bottom right hand corner of the P&L. Somehow, magically, a number appeared, and he drove budgets backwards through the business. It was a reverse auction between functions, who could promise to deliver the most for the least?
Problem was that the promises were extracted in a strategic vacuum, and meant little.
The shouting happened as the finance guy offered up a chunk of his budget that had been earmarked to integrate the reporting systems of several businesses we had taken over the previous year to deliver reliable and timely sales and margin numbers. At the time (it was over 20 years ago) I stated it was not worth spending marketing budgets if I could not track the outcomes, and the priority was therefore the sales information, not the promised revenue resulting from the marketing expenditure because it could not be reliably measured.
I smile now, but at the time, it was not fun, and was just another nail in my corporate coffin.
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