By Jeff Pollak
It is that time of year again when finance and marketing teams work that love-hate relationship in putting together the marketing budget for the new fiscal year. Whether you like it or not, it is as certain as death and taxes. Many small business owners and marketing managers often overlook the full potential of their marketing efforts.
There are many ways to go about creating a marketing budget, however, there is one common mistake most often made by business owners: projecting out a full year’s marketing budget appropriate to the expected results. Small business owners tend to be a bit conservative when projecting their marketing budget as well as their return on investment (ROI.) Allocating too thin of a marketing budget usually results in missed opportunities to grow their business as desired, or exceeding the budgeted amounts.
As a general rule of thumb, new businesses should appropriate 20% of the budget towards their marketing efforts. However, in today’s competitive environment and multi mediums of marketing, that may be understated. It is still surprising how frequently businesses fail to even allocate 20% of the budget towards marketing endeavors. Even if you have the best sales staff in the world, you need marketing. Whether it is used for producing professional collateral materials, launching a pay-per-click online campaign, or going full scale with a radio or TV campaign, money needs to be set aside to build and advocate the brand.
As any good marketer is aware, no one medium works alone. In my many years in marketing, I have come to know first-hand that communicating a clear message is essential to the success of a campaign. The message should not necessarily be that of your own preference, but that which will translate well to your targeted customer. As difficult as it may be, the marketer’s own predisposition needs to be put aside in favor of the preference by their customers.
Marketing should not be considered an expense but an investment in your business.
With any investment, the key decision component should be the return on that investment. This is where it becomes complicated. Analyzing the results can be clouded by different factors. First off, each individual medium contributes to the overall success. Let’s assume you are using radio and driving customers to a proprietary web address. The radio campaign has a call to action incorporated into the message. In a perfect advertising world, the customer acts exactly as we expect, the radio ad suggests going to a proprietary web page and taking action. In reality, the listener may simply Google the company name as a result of hearing the ad on the radio. That is how individual results become clouded with credit going to the online campaign over that of radio. It is clear that mediums do not exist in silos and instead work in concert to enhance one another’s own success toward the common goal.
Slicing and Dicing
In addition to the overall budgets being too thin and often less than a 20% allocation, the budget is sliced and diced across mediums, promotions, times of the year and other factors. I believe in marketing because I know and I can prove that marketing (in our case Radio) drives business. Too much slicing and dicing diminishes the power of any campaign.
Calendaring
Media planners are very good at “calendaring” or creating a visual schedule for the fiscal year. This calendar should be multi-layered taking into account the seasonality of the business (if any), special promotional activities (sales) and the ability to take advantage of marketing specials. Take advantage early and get the worm; specials for 1st quarter begins now.
Longevity
Too often I hear “well that didn’t work” and it doesn’t matter what “it” is. Often the campaign was not long enough to build any significant momentum. Some campaigns are planned to be short in duration to promote a holiday or annual sale and a significant amount of the budget may be allocated to this campaign. I will go back to building and advocating the brand. This is not a short term goal, but a sustainable effort that builds on itself over time communicating a clear message that is essential to the success of a campaign and therefore the business. Give some more thought to the long-term goal over the demand on the budget of special sales and annual events.
It is early in the year so take another look at your budget with both short-term and long-term goals in mind.
