Don’t Let Budgeting Be a Barrier to Marketing Innovation
By Lilly Wieber | 10.13.18
Steep competition. Countless customer touchpoints. Ever-increasing pressure
to prove ROI. Marketers have no option in this environment but to spend every penny wisely.
Although setting the right marketing budget is critical, the budgeting process is often fraught with problems. According to a recent Nielsen report, 63 percent of marketers agree that it’s difficult to determine marketing spend allocation across tactics in a way that will drive maximum ROI.
Of course it is.
Marketers must evaluate their performance from the previous budget cycle and make predictions about how future activities will impact the bottom line. But gathering accurate data about spend and performance is challenging. Marketers often have to estimate costs and can face resistance against increasing the budget for untested initiatives or be penalized if campaigns from the previous year didn’t perform as expected.
In addition, the process is time consuming. It’s estimated that senior executives spend 20 to 30 percent of their time on budgeting. But a lengthy budgeting process is a barrier to innovation and improvement. As a result, far too many marketing executives rely on hunches or simply settle for incremental changes from the previous period.
It’s time for a change.
Deciding how to spend potentially millions of dollars on marketing is challenging. But there are ways to make the process easier. Data, software, and external support can help build confidence, while making the entire budgeting process faster and more accurate. Here’s how:
Use data for decision making
Adopting a data-driven approach enables marketers to understand past performance and use those insights to inform their go-forward marketing strategy. Marketing mix modeling, multi-touch attribution, and other analytic approaches are powerful replacements for manual and error-prone Excel-based analysis for evaluating and optimizing spend decisions.
Marketing mix models use summary-level data to provide high-level insights on how to best allocate marketing spend between channels. Multi-touch attribution uses user-level data to provide daily, granular performance insights, so marketers can make tactical optimizations while campaigns are still in flight. Whether used independently or in tandem, both approaches will provide a better understanding of how to allocate marketing dollars across tactics to drive significant improvements in marketing ROI.
Leverage a scenario planning tool
According to Nielsen’s report, 60 percent of marketers lack confidence in their team’s ability to allocate marketing budget. Having access to software that runs simulations of various budget scenarios can help boost that confidence. Scenario planning tools enable marketers to forecast the impact of different spend levels in a virtual environment prior to making real-life budgeting decisions. Marketers who use scenario planning tools to guide their budget decisions are more likely to feel they’re getting the most out of every dollar spent, versus those who rely on spreadsheets or even on agency partners that estimate the impact of potential marketing budget allocations for them.
Tap external experts for support
Most marketers agree that successfully engaging today’s empowered consumers requires an in-depth understanding of each individual, their preferred channels, and the messages, offers, and tactics that influence them to act. When the expertise, data, analytics, and tools aren’t available within the organization to track, measure, and optimize this activity, consider seeking support from external analytics service providers. Consulting with an experienced vendor can help provide the insight marketers need to make better decisions and drive meaningful results for their business.
While determining the right marketing budget may be difficult, it doesn’t have to be a slog. By leveraging the right data, tools, and resources, marketers can save time and make smarter, more effective decisions about how to best allocate their hard-earned marketing dollars.
About the Author
Lilly Wieber is director of product marketing at Nielsen, where she drives
go-to-market, awareness, and thought leadership activities for Nielsen’s marketing measurement and optimization products. Prior to joining Nielsen, Lilly held positions at The Cambridge Group, Sara Lee Corporation, and Mercer Human Resources Consulting, specializing in the areas of sales and marketing strategy, market research, and brand management.