How to improve your marketing and advertising budget setting

I thought this would be a good time to remind you of your aspirations to finally evolve your plans from where they have been and make them more relevant to your consumers, while also building in some experimentation you’ve been saying you really want. Because, you know, you’ve had those intentions for a couple of years now but nothing really has changed.

Here are five rules to get you started:

Rule #1: Apply zero based budgeting

No brainer really. Instead of starting your budget with what you did last year, topped up with 3% inflation, or do what you did last year “because it was great so let’s do it again, but bigger”, let’s start fresh. Let’s make sure we have an understanding of the target audience going forward and the landscape they live, work and play in. If there were things you did in the prior year that demonstrably contributed to a positive result, they should be briefed “for consideration” with the caveat that they need to work against the objectives of the coming year. No sacred cows!

Rule #2: One Brief, One Plan

Most marketers today brief at least a few of their key agencies at the same time (e.g. media, creative and digital) and that is a good thing. Perhaps this is the year to try and accomplish two additional things: first, expand the number of agencies and include a few more that control an important chunk of budget (shopper marketing? Sponsorship?). And second, ask them to present One Plan instead of the media agency presenting the media plan to you and the other agencies, followed by the Creative Agency presenting their creative ideas to you and the other agencies, and so on.

Rule #3: Do not include any kind of budget split

Many marketers already refrain from breaking down the budget to touch points (e.g. 65% to TV; or a mandatory percentage X to digital, etc.).

But I would like you to take it one step further: don’t even break out budget to production vs. consumer facing expenditure (a.k.a. all cost associated with media and content). In today’s world budget metrics such as “working vs. non-working” do not apply anymore. Sometimes budgets break down to 80% production and only 20% media (video created for your website or YouTube channel for instance).

Rule #4: Brief your budget using 70/20/10

If you want to understand and learn from new touch points you need to budget for them. The 70/20/10 rule applied to budgets means that 70% of your budget should deliver the “bulk” of the target you need for your business. About 20% should go towards touch points that won’t make or break your “bulk” but that add context, depth and color to your plans. The final 10% should go to experimentation or “untried and untested”.

Rule #5: When cutting budgets, cut what you spend most on

Budget cuts are a fact of life. If they do occur, do not cut the 10% because you won’t have learned anything new (again) and the budgets are relatively small. It makes more sense to sacrifice a little of those media investments that represent bulk vs. those that represent small incremental reach for a modest cost.

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