Do you determine how much to spend on marketing on the go, and on case by case basis?
Does your marketing budget fluctuate with monthly revenues and profits?
Do you base your future spendings on marketing activities on the successes of recent ones?
Do you cut future spendings on marketing if a recent activity has not proven as successful as you planned?
These are vital questions that help you determining your commitment to your marketing programs. Most companies, especially SMEs, do not have a budget officially allocated for marketing. No matter how small (or large) your organization is, if your marketing team doesn’t know how much they can spend throughout the year, they cannot do an effective job in planning out and executing long-term activities.
Here are five compelling arguments that support allocating – and committing – to an annual budget for marketing.
1. Commitment to marketing
When you allocate a budget to marketing, you commit your organization to supporting planned activities. Since a good marketing plan will be of an integrated nature, planned activities will not be canceled just because one particular program failed to yield the results you anticipated. On the contrary, the remaining budgets for unsuccessful activities can now be easily relocated to others that are more promising.
2. Long-term planing and impacts
Having an annual budget at their disposal, your marketing team knows that they will be able to plan some activities that yield results and impacts on the long term, and will feel comfortable in proceeding. Sure, it’s great when marketing produces immediate results. But life isn’t always that easy. The real important outcomes and impacts take creativity, energy, and most importantly time to kick in.
3. Reduced costs
When you know for example how much you’re going to spend on advertising, you can ask your media agency to pre-buy those radio spots in advance, and at a significantly reduced bulk rate. As such, you could either reduce your budgeted expenditures, or acquire more radio spots for the original amount you were planning on spending. At the same token, if you’re committing to a one-year social media marketing program, you can negotiate reduced monthly retainer fees that are based on a one-year engagement, or get 14 months worth of professional services for the fee of 12.
4. Faster and smoother execution
Your marketing team won’t have to keep waiting for management approvals in bits and pieces here and there. They know how much they can safely spend – provided their overall performance is in line with preset KPIs – and take advantage of sudden or unexpected opportunities by being able to react swiftly and fast.
If you don’t let your marketing team act and execute on a long-term plan, you can hardly hold them responsible for results. One of the first rationalization for poor performance you will probably hear is that “you haven’t given us the tools (budgets) we need to produce reasonable results. After all, that radio campaign that should’ve featured 50 spots won’t be able to reach the target audience when stopped after 10 spots, so don’t hold us accountable for that.
Successful marketing is all about diligent planning and subsequent meticulous execution. Along the way, you have to monitor, evaluate, and adjust of course. But the important ingredient of budgeting needs to remain intact and un-compromised. Give it a try for the next quarter; ask your team to design a three-month marketing plan that comes with budgets and KPIs, and make sure they understand that if they deliver results, they will get a whole one-year budget for 2015. Our bet is, you won’t be disappointed.
There are of course plenty of other convincing reasons why adequate budgeting is strongly advisable. Share your thoughts and recommendations with us in the comments area below.
About the Author
Pinnacle Business & Marketing Consulting is a results-driven boutique consulting firm that specializes in providing clients with practical and pragmatic solutions to their business and marketing challenges.
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