For most of 2020, marketing budgets and plans were subject to rapid market changes. In other words, they were outside of marketing’s control.
But now marketers are moving back into the driver’s seat. We can control where we invest, and if we drive business impact, can make the case to control a bigger part of the budget. Unfortunately, 65% of marketers don’t have confidence in their ability to measure the impact of their marketing investments.
It’s time to change that.
Consistency Creates Clarity
It’s surprisingly common for marketing organizations to operate in silos, with each team using separate processes (or none!) to manage their marketing investments. Chaos results when there’s a lack of consistency.
The first step to eliminating confusion is to implement the same structure for all marketing budgets. Let the hierarchy of your marketing organization, how teams are organized and how funds are allocated, dictate your budget hierarchy. This creates an intuitive structure, for a better marketer experience.
The second step is to have a defined process for managing changes between budgets: namely reallocations and transfers. Unfortunately these can be messy, time-consuming, and difficult to track. Too many marketing teams overwrite original entries during budget transfers and lose important metrics such as:
- plan vs. forecast – to help stay on budget
- plan vs. actual – to see how accurate the budget planning was
Moving funds should be as swift and decisive as shifting between plans, which is why we’ve added new agile functionality. With built-in approval workflows, marketers can efficiently reallocate or adjust budgets from within Allocadia.
Having a clear marketing budget structure, and processes to keep budgets within that structure, creates visibility into marketing investments which is absolutely necessary for measuring and comparing program performance.
Define Success Before You Start
Marketers can’t measure the success of their programs, unless they know what success looks like. Defining the KPIs, targets, and goals during the planning process will help you measure the ultimate success of your marketing investment.
Defining success is not solely marketing’s responsibility. Marketing is one of the biggest areas of spend in the entire company, it’s no wonder that the finance department wants to know what those dollars achieved. It’s important for marketing to know how finance understands and approaches the business, and vice versa, to build your shared alignment.
In our report, “The 4 Actions of High-Growth Marketing Teams,” we found alignment with finance was a key indicator of whether a marketing organization received post-COVID budget increases. Two-thirds of marketing teams with post-COVID budget increases of 25% or more were aligned with finance on KPIs and metrics used to evaluate marketing performance. We recommend finding a partner or two in the finance department to meet with regularly and discuss how you’re measuring progress.
We also found that marketing teams who paid close attention to investment data were more likely to receive post-COVID budget increases. Focusing on the same areas as finance earns their trust and results in higher budgets for marketing – everybody wins.
Every dollar needs to count towards improving company growth, so it’s critical to have a robust and agile marketing investment strategy. But measuring alone won’t change marketing’s impact, unless you adjust your investment strategy based on how you’re measuring against your goals.
Agile Marketing Investments
Most marketing organizations typically plan their budgets by iterating on the previous year. But as we’re all acutely aware, last year was no ordinary year. Reusing last year’s budget is not an option for this year – and shouldn’t ever be again. McKinsey found marketing teams that recycled plans were often allocated similar budgets year to year. In other words, there was no room to grow. So do your marketing organization a favour and adopt a better method for marketing investment planning.
But if there’s one thing marketers should carry over from last year’s budgets, it’s flexibility. Being able to pivot at a moment’s notice is paramount. Agile is more often used when talking about marketing plans, but that’s only looking at half of the picture. To execute on plans, marketers need the flexibility to move funds around as scenarios shift. When it’s not possible to move dollars quickly, progress stalls, and you can’t respond to market shifts.
Part of your investment strategy should be scenario planning and getting ahead of the changes as much as possible. If your program budget gets slashed by 10% which programs could you run on a smaller scale? On the other hand, if you suddenly receive an influx of cash and a mandate to accelerate pipeline, what programs are your best chance at maximizing the new investment?
The fastest route to budget visibility is frequent forecasting. By regularly tracking spend status, your team will know exactly how much budget they have leftover to invest at all times. Frequent forecasting helps avoid overspending and, arguably even worse, underspending. Conversations around budget and spend receive more scrutiny during these times, so marketers must work with the most up-to-date budget information. Our recommendation is to update forecasts at least once a week.
Control What You Can Control
2021 is still a period of flux. But it’s reassuring to remember that not everything is outside our control. Marketers can take control of their marketing investments and drive impact. And now that you know how to measure the impact of your marketing investments, you can start to ask for – and control – more.