How to manage your marketing budget (in inflationary times) - N°29

Hi everyone,

Is your marketing a centre of cost? 💰 …Or profit? 📈

It depends on how you manage your marketing budget. It is even more true during inflationary times. So for this newsletter N°29, “The Marketing Orchestrator” focuses on “How to manage your marketing budget (in inflationary times)… and what can help”.

PS: Choose the effectiveness side.

Happy to read your comments!

Lucie.

#marketing #budget #marketingtips #marketingeffectiveness #inflation

{Budgets}

How marketers are responding to economic headwinds… in data

According to "The state of marketing budget" for 2023 consolidated by Integrate, the leader in B2B Precision Demand Marketing, with Demand Metric, 3 areas stand out with bigger plans to increase: 1 > Customer Marketing; 2 > Content creation & strategy; 3 > Digital.

However, nearly 60% of B2B marketers report current budgets being cut or staying flat, and two-thirds of marketers are expected to accomplish the same or more with fewer resources, but they remain optimistic.

Around 500 B2B marketers in the US and the UK took part in the initial survey, which gave birth to the 39-page report, containing a current budget and resource landscape, the budget strategies - namely in the MarTech - and some projections for 2023. This is an excellent reference to check how you are following the trends (or not) and reflect further.

{Spending}

Maintaining or decreasing marketing spend, this is the question

Published in April 2020, this article by Prof. Dr. Koen Pauwels remains actual during the current recession. You will find answers to the following:

• Is it true that cutting marketing spending costs you in the long run on average?

• Is it true that price promotions are less effective in a recession?

• Is it always optimal to maintain marketing spending in a recession?

Other questions?

{Advertising}

Best practices for marketers in recession times

Published in January 2021 on Linkedin, the article “Advertising in Recession — Long, Short, or Dark?” by Peter Field, is a guide on how leveraging the value of investing in the brand in recession times. Returning to lessons from the last recession of 2008, the marketing and advertising expert insists on continue investing in the brand, especially by relying on humanity and generosity in advertising and acts. The most exciting part is when he insists on the timing perspective, comparing B2B and B2C:

“Because the sales funnel in B2B purchasing is generally longer than in B2C, the arguments in favor of supporting long-term growth through brand building are likely to be even stronger in B2B than in B2C. B2B Brand associations created now are likely to bring the greatest sales benefit during the recovery period, precisely when the rewards are biggest. Brand advertising is not about profiting in recession, it is about capitalising on recovery.” - Peter Field.

Peter Field provides seven concrete recommendations. I especially liked the fourth one about investing in lower-cost long-term growth by increasing the share of voice.

{Budgeting}

Don’t forget this while budgeting your marketing invests

What are the three things to have in mind when budgeting? According to Dr Grace Kite on MagicNumbers:

1 > The sector has an influence, as it is related to the growth of your market

2 > The budget should follow the size of your business

3 > There is a chronic underinvestment in advertising

Simple, but challenging.

{Effectiveness}

Your ideal marketing budget in a few clicks

Are you spending your marketing budget as effectively as you could be? To help you answer, Tracksuit has developed a Marketing Budget Calculator. The tool uses Binet and Field’s 60/40 methodology and considers 5 variables to provide tailored results. Interesting to take distance…and to adjust your invests.

{Agile}

What we can learn from agile budgeting

Managing budgets in an agile environment is not the same that dealing with budgets in an unstable time, like recession and inflation. However, I think that checking the tips for effective agile budgeting and forecasting collected by Katie Shevlin, senior editor of the Toptal projects and product blogs, may be beneficial. With the participation of three experts in agile environments.

{Pricing}

Forget about discounts in recession

Relying on discounts may be a natural approach for marketers in times of inflation. However, this is a false good idea according to Les Binet, the "godfather of effectiveness", interviewed by Michaela Jefferson for MarketingWeek. Three main reasons explain the illusion of discounts:

1 > With discounts, only a tiny part of the sales is an incremental increase. In other words: the people who buy would have bought without any discount.

2 > Discounts reduce your profits. It is a direct consequence of the first point.

3 > You don't own the price anymore. Buyers do. This consequence accelerates the point N° 2 above.

Convinced?

{KPI}

Alert about the dangers of ROAS

Are you focused on return on ad spend (ROAS)? Maybe it is time to take distance, according to Tom Roach. In his article “Beware of ROAS, ROI’s dangerous digital twin” available on his website and first published on MarketingWeek, Tom tells us all that he thinks of the ROAS, alerting about its dangers can be even more significant than those with the ROI. He is not the only one thinking in this direction; Adidas's former global media director says:

“ROAS is a misnomer. It should be called ‘credit for ad spend’.” - Simon Peel.

Tom insists on the issue with the timing of measurement and the difference between sales and growth. Even more critically, he underlines the connection between the importance of ROAS due to the AdTech market and the strongly unneutral differentiation between digital vs offline channels:

“New channels will appear to have an advantage over established channels if people believe wrongly that the higher ROI or ROAS they’re seeing from them is a sign of their superior effectiveness rather than that they’re new and people aren’t spending much on them yet.” - Tom Roach.

A must-read for anyone working on effectiveness.

{TV}

Don’t bury TV: effectiveness will tell you “Thank you.”

Matt Hill, research and planning director at Thinkbox, the marketing body for commercial TV in the UK, showcases the value of TV in times of recession:

“Overall inflation and TV inflation aren’t really linked. But their relationship matters in terms of effectiveness.” - Matt Hill.

And in the end, TV still delivers results higher than you may think. Matt reveals the mechanisms of The Media Leader.

With the diversification of TV, namely with Connected TV, TV has a bright future.

{Brands}

Build a big brand, no matter the size of your budget

I must confess that at first glance, I fell in love with this guide by the Creative Business Company. Indeed, I sincerely believe that your success in marketing is not intrinsically connected with your budget; a big budget helps, of course, but it is not enough. That’s why I 100% welcome the focus on how to build a big brand with a tiny marketing budget. The study starts by reminding us that the unfair advantage of big brands is that they have the budget to tell a story through mass market media, while small brands rely too often on digital only, which doesn’t bring the expected impact. To develop a cost-effective brand building in the digital age, small brands should change their strategy and use digital media frameworks that mimic the effects of mass media campaigns at a fraction of the cost. According to the authors, if you combine this framework with the eight principles of marketing effectiveness, you will grow your market share and make your campaigns more profitable in the short and long term.

In this study, you will find concrete proposals of strategies backed with a lot of data orchestrated in excellent and convincing storytelling.

{Creativity}

Yes, creativity will save marketing from the recession

This is at least the opinion of Sir John Hegarty, an advertising expert who cofounded the creative agency TBWA in 1973. Interviewed by Jennifer Faull for The Drum, he says that creativity is the solution to overpass crisis, including inflation:

“If you can’t outspend your competitors, you can at least outthink them and that’s what creativity teaches you: how to outthink your competitors. How to be more effective with the resources you’ve got. Because you can’t change the resources, but you can change the way they’re implemented.” - Sir John Hegarty.

As a consequence, he recommends not cutting ad spending, so you make your brand visible among your audience when our competitors are not doing it:

“Now is the time to be buying. It’s time to talk about your great products. And the belief that people can’t afford it? They will be able to afford part of what you’re saying. Competitors won’t be out there so you’ll be able to take share off them” - Sir John Hegarty.

Overall, the marketing expert strongly recommends CEOs push their teams to define original approaches to overpass competitors (independently from marketing campaigns).

Don’t know how to put creativity at the centre of your growth strategy? Look at the “Business of Creativity” course for leaders that Sir John Hegarty just launched.

PS: all the pieces of content were published in the last three weeks unless otherwise stated.

If you reach these lines, it means you read my newsletter until the end: thank you!

I hope you enjoyed it.

Happy to read your comments!