In defence of the marketing budget
If you’re on this site and reading this blog, I can say with a reasonable degree of confidence that you fall into one of two categories: you either perform some type of marketing function, or you’re my mother. Ignoring the latter category (although dinner next week would be nice, thanks Mum), I’m also reasonably confident in guessing that you’re being faced with budget cuts at the moment, and if they haven’t happened already, they’re on the immediate horizon.
But I think it’s time we marketers (excuse me while I clamber… one-handed… up on to this platform… clutching my megaphone… in the other hand) fought back, and took the message to our FCs that it’s not all about the GFC, it’s about the ROI. Please cheer loudly if you’re in agreement: ‘Bring back the budget! Measure by ROI or die!’
Yes, it’s a tough time for companies. Sales may not be what they were 12 months ago; if they are, margins possibly aren’t so high. It’s time to watch cashflow, to cut back on certain expenditure. But it seems that the powers-that-be think they’ve stumbled across a golden answer: Why don’t we strip our marketing budgets?
Why didn’t they think of that sooner? Surely we’ve been pouring bucketloads of money down the drain on this ‘advertising, research, promotions, etc.’ nonsense for years; now seems as good a time as any to stop. Better yet, let’s all look for other jobs, because they’ve finally realised what we have long been afraid of admitting: marketing contributes nothing to the bottom line of companies.
Excuse me for a moment while I wipe the drippings of sarcasm from my keyboard. I mean, seriously. Is the marketing concept still that misunderstood? Why is it that when the scythes are swung, our budgets are often the first to be slashed?
I don’t know about you, but I’m doing my little bit to raise the profile of marketing among The Rest of Them. About once a fortnight, I have the opportunity to give someone a lesson about how it works. It’s conducted in a fairly impromptu fashion, somewhere between my office and where I get my lunch. My unwitting students are the ones that approach me armed with clipboards and a ready supply of guilt trips, sporting the uncamouflage of a bright yellow t-shirt, having plotting their assault on me from the moment I made accidental eye contact. They are The Charity Workers. Not the genuine, volunteer-type ones though (God bless those Salvos), but the ‘backpacker with a quick answer to everything, who’s being paid $20-an-hour plus a commission, and who thinks they can guilt me into contributing to their charity over the various others I currently support’ category.
At some point, they will invariably take great delight to inform me that a certain high-profile child sponsorship agency I may have chosen to support ‘spends almost 20% of its donations on marketing’. When I enquire as to why this is a problem, the response is amusing:
‘Because we spend it on helping people, not on advertising, so more of the money goes where it is needed.’
‘Oh,’ I say, drawing in a large breath, ‘you obviously haven’t heard of the concept of ROI then… pull up a little square of pavement and let me tell you a little bit about how these things work.’
The concept which has hitherto escaped the fertile minds of my young students seems also to have escaped the somewhat more educated brains of the FCs out there. Surely the validity of the marketing spend should be determined by the return it generates? The fact that a nominated charity spends 20 cents from every dollar I donate on marketing is OK with me – provided that they are generating a positive ROI. The net effect is going to be greater awareness of their cause, more donors, and a subsequent overall improvement in the lives of the people they exist to serve. A similar rule applies with for-profit companies in relation to their marketing objectives.
Of course, there are limitations, and the concept of ROI is subject to the law of diminishing marginal returns. In these times, one might be inclined to taper things back to the point before this law starts to take effect; additionally, as demand starts to taper out for some products as a result of the GFC (I hate myself for using that acronym twice today), the law of diminishing marginal returns may set in sooner.
However, I’d argue that the rules shouldn’t have changed at all: monitor the ROI from all areas of your spend as closely as possible, then reduce expenditure in the underperforming areas and focus more on those that have a proven history of results. While it’s always good to have room for experimentation, there should be no excuse for carrying areas of poor investment – no matter how favourable the overall climate is. Each dollar is either wisely spent or not, period.
So, don’t be afraid to stand with your comrades and remind everyone that it’s not the size of your budget, it’s what you can do with it that counts.
And before you tell me I’ve oversimplified a complex and sometimes delicately negotiated subject (I can’t hear you over my megaphone anyway), I know it’s not going to be that easy a sell to swagger into your FCs office tomorrow armed with the bleeding obvious and expect the budget to come bouncing back. Which is why I’m giving you the option of handing them a yellow t-shirt and a clipboard and sending them to me for a little lunchtime chat.
Don’t say I never offer to help.
I’d be interested in hearing what sort of budget cut-backs people are facing, and what successes, if any, people have had in finding ways to justify their budgets to those in control of them. Leave your comments below.