There’s no gentle way to put it: the days of budgeting marketing spend a full year ahead are gone.
Sure, there are still aspects that can be locked in; constants, so to speak, which CMOs are certain to bank on. Survival of the fittest is still a valid way to look at business expectations and goals, and your department is expected to be “fit.” Yearly budgets are a constant, and it’s unlikely that you’ll experience a $5,000,000 budget windfall in mid-June.
But effectively utilizing the yearly marketing budget you do have involves much more than a set-it-and-forget-it mentality. Agility is be the prevailing buzzword of 2015—thinking, reallocating, and implementing on the fly will be the differentiator between the fittest and the soon-to-be extinct.
Annual Planning is Dead — Even If Yearly Marketing Budgets Aren’tSo, how does a modern CMO explain this to the rest of the C-suite? That while you know how much you’re spending on marketing, January is too early to definitively announce how many millions you’ll spend on TV ads instead of mobile ads in June?
One of the reassurances of the old concepts of yearly budgeting is stability, because stability brings accountability. How do you convince the rest of the C-suite that a perceived lack of stability is a more efficient way to utilize your marketing spend?
Ask a simple theoretical question:
Say data and analysis show that a previously unused marketing method is now absolutely necessary to reach your customers. In order to keep pace with— and outmatch your competitors, your company’s marketing strategy has to be shifted on the fly. How much of our marketing budget can be reallocated within six weeks or two months?
The answer to this question can show you how flexible your budget is — and help the rest of the C-suite understand why your budget needs built-in flexibility. Having a flexible budget actually gives you more control: adapting to—and predicting—changes in the marketplace allow you to meet prospective customers where they are and maximize your marketing dollars.
Setting Aside Budget Isn’t the Only Option
Having a swath of your marketing spend earmarked for adaptive flexibility is just one way to make your budget more flexible. Beyond having the budget properly allocated, does your marketing department have the skills and technology necessary to respond to changes and execute them swiftly? The traditional virtues of effective marketing apply here—creativity and foresight are imperative.
What’s the Alternative to a Yearly (or Quarterly) Budget for Marketing Spend?
As for the technology to allow an agile marketing strategy thrive, this is inherent on where your company gets its data. Having the ability to pull data from multiple sources requires a provider that gives you both the raw material and the tools to break that data down into categorical positives and negatives. Analysis is nothing without timely and thorough reporting — and even real-time data is historical, because it shows what the market was doing, not what it will be doing tomorrow or next month.
Forecasting can further keep your budget more flexible, because it allows you to plan ahead for changes in the market. While marketing mix optimization can help you focus on spending budget effectively at one moment in time, robust forecasting will allow you to gain credibility from across the organization and prove that you understand how marketing impacts performance. Having certainty and confidence in your course of action will allow you to defend your budget to the rest of the C-suite, knowing that portion which is set aside for the adaptation of new and effective methods is advantageous and something which will separate your company from the rest of the pack.