How to Justify Your Marketing Budget to Management

Even in the best of times, getting approval for your marketing budget can be a difficult task, particularly if yours is a complex sale and tracking direct attribution is fuzzy.

Even in the best of times, getting approval for your marketing budget can be a difficult task, particularly if yours is a complex sale and tracking direct attribution is fuzzy.

You’ll likely find the path easier if you lay out your plans to include a set of key metrics and parameters that define success.

What Is the Opportunity?

Begin the conversation by outlining the opportunity you see available to your organization and identifying what happens when you win that opportunity. Do you increase market share? Improve profitability? Bump up customer satisfaction?

The opportunity better be based on a business metric improvement. You’re not likely to get far with a discussion of improved process metrics: more subscribers, likes, followers, etc. That said, it is worth tracking these things so that in the future you can point to them and draw a connection between improved engagement and increases in hard-dollar metrics.

You may also consider a defensive positioning — “if we don’t do this, our competitors will.” Or, “our competitors are already doing this, and we’re falling behind.” I’d be careful with this route, though, as it often leads to defensive thinking. And that leads to marketing resources spent to maintain the status quo. Sometimes that’s the smart path, but it’s not necessarily a popular one.

What Are the Opportunity Costs?

Corporate budgets are generally a zero-sum game. If you spend the money here, that money isn’t being spent somewhere else. You need to demonstrate an awareness of that and be prepared to discuss how and why the investment you are requesting will outproduce the one it is replacing.

How Long Will It Take?

Not all marketing activities are created equal. They have different payoff expectations. (Writing a blog post today won’t likely get you a new customer tomorrow. Launching a new PPC campaign just might.)

Be ready to discuss whether your marketing budget proposal is a short-, medium-, or long-term play and why anything that will take longer than this quarter to realize goals is worth the time risk involved. (Your organization’s culture will influence how important this question is, and perhaps even if recommending a long-term plan is an option.)

What Will It Cost?

This might be the first question out of a manager’s mouth regarding the marketing spend on a specific project, but I wouldn’t address it first if I could avoid it. Better to establish value and expected (positive) outcomes first. Then get into what the total cost will be, whether costs are front-end loaded or more evenly spread out, and whether some portion of your costs are accrued only when progress is being made. The more detail you can provide — particularly details that mitigate risk — the better.

How Can It Be Tweaked?

If it’s not working, what can you change? If it’s working, can it be improved upon? These are critical questions not only to be able to answer, but to get your management team to think about. Why? Because the condition on day one of your new initiative are not going to change, perhaps radically, by day 90.

If you can show that you’re prepared to make the adjustments necessary to keep your efforts pointed toward a profitable outcome, you’ll find greater success in funding your marketing ideas.



What Are Customers Really Worth? Turning the ‘Customer Data’ Concept Into Something Meaningful

What’s the value of customer data? What is its value to our political aspirants, a value measured by many different and often conflicting metrics, not least of which is the power of the elected to change society for better or worse? And often, sadly, as we increasingly see around us, for personal economic gain?

The headline, “Legislation Would Force Google, Facebook to Report Value of Customer Data to SEC,” in the Media Daily News got this maverick marketer wondering just what kind of a gargantuan task it would be to try and determine the value of customer data.

Imagine what you would do if some legislation or only your boss asked you to put a rational price tag on the data in your company’s possession? The easy way, if you are a direct-to-consumer marketer, might be to add to your total year’s profit, a factor for the likely future profit contribution driven by your knowledge or assumption of the lifetime value of your customer base. Or you could offload the task to your bean counters and let them have a field day playing with the numbers, instead of doing something more useful.”

Searching for what the British call a “bargain,” or the price at which a willing buyer buys and a willing seller sells, can be said to establish real value. The traditional way of determining a bargain for the acquisition of a data-driven marketing business is to pay a negotiated multiple of the number of customers, times the best guess of discounted future revenue from these customers. From there on, it’s horse trading. The fact is, we all may have ideas (usually over-optimistic) about data value, but few if any of us know for sure what it is. And today’s “bargain” may not seem so attractive a couple of years down the road.

That’s why you have to wonder if the financing of our political election system has gone completely off the rails. According to the Wall Street Journal, “Political Ad Spending Will Approach $10 Billion in 2020.” That’s an increase of almost 14% over the last time, which is far greater than the population increase during the same period.

Political ad spending will total $9.9 billion in 2020, according to the latest U.S. advertising forecast from WPP PLC’s ad-buying unit GroupM. That would be up from $8.7 billion in 2018, when midterm congressional elections were held, and from $6.3 billion in 2016, when President Trump was elected.

The growth between presidential campaign years is accelerating. Political ad spending rose by $2 billion between 2012 and 2016, according to GroupM, and by $1.1 billion between 2008 and 2012.

If we look at this against the number of likely voters, we can estimate the spend for each one. The Census Bureau estimated that there were 245.5 million Americans ages 18 and older in November 2016, about 157.6 million of whom reported being registered to vote. Historically, about 60% of those eligible to vote actually show up to do their democratic duty in a presidential election. This means that the actual number expected to be voting is 94.5 million.

If the political marketers were able to target only those 60%, the cost per voter would be $38.07. Because that kind of tight targeting of marketing spend is almost certainly impossible, and we spread the total spend against all the 157.6 million registered voters, the cost per voter is only $27.86.

A maverick marketer’s fantasy view is that it might be more cost-effective to use the $27.86 just to buy those voters not already committed to one party or candidate or the other, just as long as you could determine who they were.

Only $27.86 or $38.07 per prospect? That’s more than consumer goods and services advertisers spend in a year, a lot more. Proctor & Gamble, one of the largest FMCG companies spent $4.39 billion last year ($13.43 for each member of the population) or less than half the estimated cost per voter, and AT&T spent $3.52 billion.

What does this tell us about the value of customer data? (Or, in this case, potential voter data?) What is its value to our political aspirants, a value measured by many different and often conflicting metrics, not least of which is the power of the elected to change society for better or worse? And often, sadly, as we increasingly see aound us, for personal economic gain?

One thing it certainly does tell us is that in our society, where more than three-quarters of the total wealth is owned by the top 10% of earners and the lowest 50% own only 1.2%, valuing each cohort is extremely difficult. Ironically, at least in theory, every vote — whether from the 10% or the other 90% of the voting population — has equal value.

That’s a big difference from the relative value of segmented cohorts of buyers and prospects who make up the Google and Facebook universe, buyers who can be valued based on past performance and prospects, whose value can be guesstimated — based on other characteristics.

Ask yourself, “How much am I worth? And please comment below on how you determined the amount. It should be fun to share the different answers.