A century ago, John Wanamaker famously articulated “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Since then, this sentiment has plagued the marketing profession, weighing on a marketing leader’s shoulders like a guilty conscious. We don’t want to waste a single dollar when it comes time to allocate budget, but many of us still over-invest in areas where we don’t know if it’s driving any impact.
The pressure for marketing to drive impact across the entire customer journey will only continue to increase. So, how do marketers optimize their spend to only focus on the most effective campaigns, programs, and activities?
In other words: Where should you spend your next dollar in order to have the greatest impact?
1. Better Understanding your ‘I’
“Marketing campaigns should not be evaluated exclusively based on total pipeline contribution. Without layering in some sort of financial data, the measurement exercise is ultimately meaningless.”
– Tim West, former Senior Manager, Marketing Operations, Box
At Box, their team had a full-time contractor to manage their investment spreadsheets and budget tracking, but they didn’t have actuals from finance. Spend data was three to four months old, making it useless for planning purposes. They were stuck in spreadsheets, and with such a large team, version control was a constant issue. Read more about how they solved this challenge in the full case study.
Nobody wants to admit that spending decisions are often based on assumptions and a gut feel, rather than data and insights. However, having accurate data by aligning budgets and investments with the actuals from an ERP system enables teams to get a transparent view into exactly what they’re spending and where.
2. Understand your Performers
To invest more in what’s working and less in what doesn’t, every marketer needs to understand the return they are generating. That requires all of us to understand the performance of our campaigns. Without a consistent way of measuring performance across the marketing department, and measuring the performance of different kinds of programs, it’s not possible to make informed decisions about what provides greater impact.
“At a leadership level, it’s all about having the intelligent ROI conversation. Not only managing our money, but also where we should be spending our money. That way, we can make better strategic decisions.”
– David Cohen, Director of Business Planning, Palo Alto Networks
The first step of this is to connect the accurate investment data we talked about in step one. The next step is determining what performance or ROI metrics a team needs to measure. No longer is a single equation enough. We need to be adept at all the various ways to measure marketing performance, which include looking at spend, pipeline contribution, awareness in key markets, and so much more.
3. Optimization starts with Better Management
If your team hasn’t taken steps to manage your investments, you’ll never be able to truly optimize your program investments and outcomes. That’s the final step on your journey to ensuring you invest every dollar for its greatest impact.
As Neenu Sharma, VP Marketing Operations & Analytics, GE Digital says:
“I don’t want to get stuck in the game of marketing needing to do more with less. I want to evolve the game so that marketing gets more because of how much we return on our investments and deliver on business objectives.”
You’ll be glad you did. Key benefits to optimizing your marketing investments include:
Visibility – Marketers who have visibility into their marketing performance and ROI know how they impact their goals, and where they’re falling short.
Better impact – Allocate your budget only to the most effective campaigns, programs, and activities, and you’ll drive greater impact. We’re talking more pipeline, more revenue, a stronger brand, and greater awareness. Talk about ROI.
More confidence – Know that your budget is being spent in the most effective way, and stop relying on gut feel to make your decisions. (That’s a sure way to change the perception from cost-center to revenue-driver.)
Agility – Change happens. When it does, and you’re in control over your spending, your team can quickly demonstrate the projected impact to the business of an increase or decrease in budget, or a re-allocation of funds within your campaign mix.
As analysts at SiriusDecisions are fond of saying, budget is the ultimate expression of strategy. Where we spend our money in Marketing is an indication of how well we manage our department to support overarching corporate goals. Today, it’s critical for marketing leaders to optimize what you spend in order to ensure your limited resources go only to the most effective campaigns, programs and activities.