Saturday, 29 May 2010

Getting the budget numbers wrong

Marketing textbooks suggest lots of different ways to allocate media budget. Unfortunately people get in the way. Here is what normally happens. Budget gets assigned as a % of expected revenues. So if you are marketing lots of products and services you have assumed they all have the same scale of issues and challenges. Invariably your core product may require either less spend because it is truly established or it is so important that you have to chuck everything behind it but you cant because of how budgets are handed out. Then what else happens is parts of your product portfolio get enough money to be dangerous but not enough to sensibly achieve anything.

Here is an alternative, work out what is really important to the business like say the website or customer experience (or ideally which customers), invest in the resource to optimise the hell out of all the customer initiated touch-points. Organic search, call centre, collateral, CRM, loyalty then think how you can waste the rest of your budget. Interestingly b2b organisations tend to get this more right than consumer facing brands. Main reason is they have less money, so they don't have the get out of jail free big budget card. But also they don't have as hungry a call centre to feed.

PS don't forget to measure it.

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Just curious about marketing, psychology, economics, business, irrational behaviour, people, models, communications, advertising, market imperfections, b2b marketing. I work in the marketing communications industry for OgilvyOne.