I was recently asked how I would spend a small marketing budget most effectively. For me, there are three interesting elements within this seemingly simple question.
Firstly, every marketeer I’ve ever met believes their marketing budget is small.
It’s relative of course…I’ve met marketeers who feel that a mere £20m is small compared to the £30m their competitor is spending, all the way down to start-ups who can barely afford to spend a few grand on pack design to improve their brand impact. Most marketeers, being a pretty creative bunch, can generally come up with umpteen ways to spend the budget they have and then some, but…
The smart ones know that it’s not really marketing budget at all.
It’s a simple enough concept, but one that many marketeers and a good few Financial Directors struggle with. Marketeers I can understand to an extent. In organisations where everyone else refers to marketing budget, there can be a strong tendency to see it as spending money, which is burning a hole in their pocket. But it’s the FDs that see marketing budget as just another cost that really drive me mad.
It’s not a cost, it’s not spending-money, it’s an investment.
The deal is: For every pound invested, you should expect a profit return greater than the pound.
Ultimately, that is the purpose of marketing investment. An investment in activity to drive a consumer response and deliver profit in excess of the original investment (if you want a more text-book explanation).
Now, it’s not always easy to measure and I’ve certainly seen some very creative interpretations of projected return on investment in my time. Don’t expect your resident bean-counter to always agree with your view of the world. But, if you can’t demonstrate that you expect a measurable return on your investment, you should keep your wallet in your pocket.
But what about creativity and trying out new activities that don’t have a proven return?
But try out new activities alongside those that you already know work. Do this wisely and your overall return on investment should still be sound. Just don’t bet all your annual investment on one unproven activity unless you’re as happy being hailed the new marketing messiah as you are looking for a new job.
Ultimately, while marketing is a blend of art and science, if you want to deliver real results for your business and be taken seriously, using the cloak of ‘art’ or ‘creativity’ as code for “I’d quite like to spend some money” (be it someone else’s or even worse, your own) just isn’t the way to go about it. After all, if you don’t have clarity that you’re investing to deliver a more profitable return then you are simply a cost…and that’s not sustainable, it’s reckless.
Ok, to the final piece of this particular puzzle.
How do you ensure that your proposed investment is effective?
I assess marketing investment effectiveness in two ways.
What are we trying to achieve with the brand?
If I invest in this sampling campaign (or brand ambassador programme / epic TV ad / ground-breaking use of twitterfacetube etc) to engage my consumers…will it actually deliver the change in consumer behaviour I’m trying to deliver?
In simple terms: Will the proposed activity help me deliver my marketing objective?
Can I measure the return and how does it compare to other activities?
What can you define as targets for this activity that will demonstrate you’re achieving your objective? Sales performance? Brand share increase? Coupon redemptions? Increased web traffic? Quantity of samples delivered to your target audience? If you have no other measures available, simply tracking sales performance before, during and after the activity is a great place to start.
After all, if you can’t set targets or measure impact in any way, it may be a cool idea, but how will you know if it’s a success? Should you run it again? Should you invest more behind it next time? How can you tweak it to make it even more effective? Over time, you will also be able to compare activities, identifying which are most effective in delivering strong returns.
So, while the short answer to “how do you spend a small marketing budget most effectively?” is… “it depends”…the long answer is to remember that you’re seeking a profitable return from your investment and in answering the two questions above you won’t go far wrong.
Please feel free to share this post and leave your comments below. I’d love to hear your views on marketing budget vs. investment.