Albert Einstein is frequently quoted as saying that the definition of insanity was “doing the same thing over and over again and expecting different results.” Another not-as-famous Einstein quote is “We cannot solve our problems with the same thinking we used when we created them.”
Einstein’s book “Relativity: The Special and the General Theory” is probably not on any marketers bookshelf. However, we should pay attention to Einstein’s ideas particularly now that we are approaching our annual planning and budgeting cycle.
Marketing budgets tend to look the same year after year. It is not unusual for marketers to build their plan and budget for the coming year on top of the current one. A familiar corporate marketing budget processes might look something like this:
- Start with the current budget, adjust up (or in today’s economic climate, down) per directions from the Finance department
- Remove activities that were deemed ineffective from the budget
- Adjust successful activities to expand the activity and take care of rising prices
- Add one-time projects like product announcements and special events
- Try to reserve a little money to evaluate some new marketing technologies
- And, oh yes, don’t forget to adjust the personnel costs for salary and overhead changes
and … the budget is done! Actually, this is not a bad process, particularly in “good times” when the company is above plan. However, it does tend to perpetuate a “same-ol’, same-ol’” feeling. This process is basically mathematically engineered to meet the needs of the Finance department – not the needs of marketing. I’m going to avoid this rat hole, but a recent marketing study suggests that many CEO’s believe that marketers are not effectiveness-focused enough to generate incremental customer demand? Well duh – my belief is that this is because of how we budget and how we let the budget become our plan.
Results from a survey on marketing spending plans for 2012 show that the business objectives deemed most important in setting the marketing budget have been impacted by the current economic situation pretty much as you would expect. Overall sales, brand awareness and building loyalty are the top 3 goals for large enterprises with cost savings/efficiency coming in a close 4th. Email, print advertising and direct mail are still the most dominant marketing activities and are receiving budget increases in about 30% of the companies surveyed. SEO, social media and paid search are in the middle of the budget pack but are getting budget increases in approximately 50% of the survey audience. But from an overall perspective, many, many budgets are same-ol’, same-ol’.
One last note from the survey is that getting budget approval for the 2012 marketing budget (or any departmental budget) is going to require a detailed business case – another side-effect of the economy as organizations try to maximize results at the lowest possible cost. A side effect is that companies are creating marketing operations positions with a real emphasis on metrics for marketing and ‘marketing ROI.’
My only tip on how to avoid an insane marketing budget is “don’t fall into the ‘engineered budget’ trap.” To do this, you must start with goals that are agreed upon between Marketing and Senior Management. You must also agree upon how these goals will be measured at the end of the budget year. This all important 1st step can be the most frustrating and infuriating part of the budgeting cycle because all too frequently, there is no agreement between Sales, Finance, and the CEO as to what Marketing’s goals should be!
Once agreed upon, you plan and budget to achieve these goals. You do not budget to simply to fit within the Finance-provided percentages. If the proposed budget goes over the Finance guidelines, that’s OK. You go back and review and reset the goals with Senior Management – as a good corporate citizen, Marketing must do its part to help the company meet its goals. But, to avoid going insane, you must not reduce the proposed budget without resetting the goals – that is an exercise doomed to total disconnect, finger pointing and failure. And you may be surprised when you actually get your budget target increased to achieve the goals that were initially agreed upon!
It sounds simple in a short blog post. It’s not! At TechMarketeers, we believe in goal-driven, measured marketing. Getting to this kind of sane budget is never easy, but is very rewarding in the end. And then you get to do it all over again – next year!