What To Do With Your Extra Marketing Budget
Believe it or not, it’s happened to anyone who has worked in advertising. It usually comes in the form of a happy phone call or positive email: you find out that you have more money for marketing efforts than previously thought! Whether it’s a shift in corporate strategy, or a sign of good faith for previous efforts, somehow, someway, there is more money allocated for marketing than originally planned. While it’s not an everyday occurrence, marketing budget windfalls do happen, especially toward the end of the fiscal year. But what should a marketer do with their new allowance?
Should you invest your new-found money on more marketing tactics? Strategy? Nothing?
In a recent AdAge article, Hugh Kennedy (EVP, Planning and Partner here at PJA) argues that… well… it depends. I chatted with Hugh about his thoughts on the matter, and how the value an agency adds comes from being a true partner who can provide sound advice on business decisions.
Devon Dawson: In your AdAge article, you note that marketers finding money – a client or brand reallocating more money toward marketing initiatives than originally planned – seems to have decreased over the last decade. In fact, you say the opposite is true: a lot of times marketers have their budgets restricted or tightened as the year goes on. Why do you think there's been a shift?
Hugh Kennedy: It's interesting because when I proposed this headline to AdAge – about what to do with your marketing budget windfall – they subtly insisted that I needed to put a little rejoinder in there to make sure that I knew what I was saying; because everyone talks about marketing budget cuts. I think the fact that budgets are now so tightly controlled upfront, especially at the beginning of the year, and that marketing spends tend to be split across so many different channels, a lot of clients end up not using their budget in all the channels they had originally allocated.
It's also the case that we've made presentations to our clients' managers, or boss' boss, and they've been so impressed that they've asked, "What could you do with an extra $100,000?" In large corporations and smaller software companies alike, there's usually promotional money hanging around somewhere that's been put aside, perhaps forgotten about, and is looking to find a new purpose.
Devon: What’s interesting to me is how you propose that money finds its new purpose. You don't necessarily advise marketers to spend their money on marketing tactics. Yet this is money that's often allocated for some sort of marketing effort. It’s very anti-agency speak.
Hugh: There are so many things that impact marketing but don’t necessarily feel like marketing in a traditional sense. I think as an experienced group of marketers here at PJA, we've seen too often that we can put together a great integrated campaign and then it fails in the executions, in the marketing automation system, or that there wasn't enough budget upfront in the project to do some true A/B testing so we can get a sense of what's truly the most effective call to action, next action, headline or imagery.
In other cases, it may be that you know the client's back office deficiencies well enough that you can suggest directing it to another place.
Devon: Let's talk about those other instances. In your article, you talk a little bit about brand strategy; you talk about updating customer journeys. Do you think brands ever have a hard time spending surplus money on strategies versus tactics, just because we live in an ROI-centric world, and we all know that with something like a brand strategy or customer journey, you're basically recommending to spend money on something that doesn't have an immediate, data-specific output on the other side?
Hugh: Right. Although, with refreshing your brand strategy, it continues to strike me that our world is more and more commodified, and it doesn't matter which space you're in. If you're in a new space, you can check back in a month and there are five more companies there or there are five extensions into adjacent industry spaces. I think the need for a brand strategy that makes you stand out is greater now than ever because there are fewer and fewer places to do it. Look at the similarities in web technology and web platforms – and the way IP is either randomly copied, stolen or emulated.
A Brand, in some ways, is all that's left in terms of how you differentiate because all technological edge or advantage is truly temporary these days.
Devon: That's an interesting point. That sounds like something a marketer or CMO, or someone, might understand. But it might not necessarily be what a CFO wants to hear. I’m guessing there’s sometimes resistance there. What you're discussing is long-term ROI, long-term goals. Do you think it's the agency's role to become advocates for their clients’ marketing team––to help tell the story of why something like a brand strategy is valuable?
Hugh: You do hit that resistance sometimes, but I think you must continue to make the point that brand does build value, and all you must do is point to famous purchases that have been made or acquisitions of great brands. You dig underneath a little bit and you realize that a lot of the purchase price is based on strength of the brand.
Brands are what help companies stand up and stand out. Especially given that everything is crowd-sourced these days, especially with reviews and input. A brand is something that exists to outlive all of that, and so you may not be able to make a huge investment, but I think it's like supplementing any good investment. You're going to see a long-term return, and it's something I think any CFO who knows about asset allocation would understand.
Devon: I imagine that’s difficult, though. When anybody finds $20 in their coat pocket, they don't necessarily go and run to the bank.
Hugh: I think agencies need to be advocates for those kinds of investments because they ultimately make sense. I've experienced it myself, that brands in a lot of industries, company brands that have been acquired and become product brands, take a long, long time to go away, especially if they're quality brands that people have trusted. They stick around for a long time, and that's a testament to how brands have a lot of emotionally compelling and long-term interest for us.
Devon: You give some specific recommendations for how to spend these budget windfalls, and you mention using that surplus to drive awareness of a physical experience. For instance, you mention promoting an event or booth at a conference or something like that, that might otherwise not get quite as much exposure. I think that's a great idea – and an example of using a new channel (or maybe a micro campaign) that amplifies an existing campaign, as opposed to simply taking that money and then funneling it into something that already exists. Maybe an analogy would be: you’re smartly suggesting building a separate micro-engine that helps create more efficiency overall, as opposed to simply putting more fuel into one engine.
Hugh: I think you can always flesh out the existing presence at an event with something that stands out. In part, because it can help participants co-create with you. If you're talking about needs states – unaddressed needs in the market that people are always happy to talk about and want to talk about – versus trying to create interest for a particular brand, that is. If the brand sponsors an experience, it becomes a powerful way for them to build their thought leadership. It shows the customer that the company cares about the pain points you're feeling, that we care about engaging with you. You know, unless you're on the speaking track or leading a break out session at an event or a conference, these experiences can be remarkably mute affairs, where you don’t have your voice heard at all unless you can maybe throw in a question at a session.
I think any way to make your brand's experience more hands-on at a show is a great investment that will go well beyond the event.
Devon: Lastly, in the article you mention that an agency can help a client figure out how to spend their money, and I'm sure everyone read that and thought, "Yeah, I bet an agency can help me spend money… of course they can!" Certainly, context of the article and that quote matters here though. The quote is not about gaining more fee, and more about being an actual partner – an advisor to the client. With that in mind, I'm curious. Do you think that's a role that agencies have taken on––acting more as a business partner as opposed to a vendor?
Hugh: Certainly the amount of time a company spends with an agency as their Agency of Record has been dropping. From an average of 15 years in the early '90s to just over two years now. I think it's critical that agencies think about themselves as good stewards of their clients' budgets, and I think they earn trust and become a partner rather than a vendor if they are able to make recommendations that go outside of putting the money into their own coffers for fees. I think it just makes good sense.
It may well be that there is a great piece of content or a great execution that you really think is going to make a difference, and if so, you should make a case for it. But marketing budgets are just getting squeezed so hard – squeezed into a smaller space, squeezed horizontally across more channels – if you do come across a budget windfall, you're never going to have a hard time finding the best place to put it. And sure, sometimes it will be in fee-based revenue to build creative. Sometimes it will be in a more thought-leadership consultative way. But other times it might be in more research or in more marketing technology. The trick is identifying what's best for the brand. Not what's best for the agency.