We’re living in an age of unprecedented change. We experience with Oculus Rift, invest with Acorns, consume video through Hyper, tune into Pandora and navigate with Waze.
As we approach the end of the financial year, marketing budgets are likely to be subjected to reviews and re-evaluation. But according to several experts, marketers often fall victim to making critical mistakes early in the year that lead to ending the financial year over budget.
Here are the three big issues and what you can do to avoid them.
1. Lacking the foresight to adapt
Gartner’s CMO Spend Survey 2015-2016 revealed while investment in digital commerce is surging, and the blurring of physical and digital worlds is allowing to create and test new digitally led experiences, only 56 per cent of marketers ranked customer experience in their top five marketing technology investments.
A lack of foresight is definitely one of the first blunders when you’re caught in the moment and focusing on the things you can buy and what you need to do, according to global marketing director for digital consulting firm Squiz, Robin Marchant.
“Look at what areas you are going to invest in your customers, to keep them happy and retain them,” he advised. “Look at areas like customer care and growing your customer base. And watch for trends, one year everyone is investing in social, and then next, you’re looking at keeping up with digital drivers. Those things will fluctuate but the fundamentals will remain the same.”
Full Circle Insights CEO, Bonnie Crater, also advised marketers to avoid doing the same thing over and over again.
"There are so many changes happening – changes to your customers, changes in the market and your competition, changes in the products that you’re building – you have to continue to innovate and experiment,” the marketing campaign metrics company spokesperson said. “Even if something doesn’t work, it’s OK because it’s feedback on what you’re doing.”
Hyland’s APAC marketing manager, Dianne Gruneklee, agreed marketers need flexibility in their budgets in order to keep up with the rapid evolution of the digital space.
“A lot of marketing budget spend is often allocated on the basis of what was done last year, or has always been done, or perhaps is perceived as should be done in a specific industry,” she said. “Whereas, like all industries, marketing is affected by rapidly evolving technology changes, our channels to market are changing and growing too.
“We need to really investigate the most appropriate and effective channels for our products and services, based on what you are trying to achieve. As new channels become available, we need to investigate and trial these new channels to understand their potential value, or not, for the organisation.”
2. Mismanaging ROI
Experts agree marketers often make the critical mistake of simply getting their priorities wrong, especially when it comes to critical activities that will lead to a greater ROI.
OKI Data Australia’s A/NZ marketing manager, Antonio Leone, advised marketers to measure return on investment as much and where possible as he saw a lack of ROI, and the means to measure it, as the biggest flaw.
“Allocating insufficient funding for core/critical activities and too much to activities of less importance and those which offer lower return on investment can be common budgeting mistakes,” he said. “Also, not factoring in buffer funds for unexpected items and not frequently reviewing/tracking actual against planned spending can be commonplace.”
CMO of software company Promapp, Sarah Berkowski, also said marketers need to stay focused and avoid spreading their budgets too thin.
“Most marketers need to make trade-offs either in terms of who they’re targeting or how,” she said. “So you need to understand the ROI you’re expecting before you commit the dollars. If you don’t know what sort of return or results you’re expecting, it will be difficult to measure the success and return on your investment.”
According to CEO of video production startup Shoostsa, Mike Pritchett, too many companies set their budgets based on assumptions, without checking how much their ideas will actually cost to produce.
“When it comes to producing video content the traditional way, small changes can make a large difference, and often companies can blow their budget very easily with seemingly minor changes,” he explained.
"In our industry, you also need to avoid scope creep. So if you're creating Hero video content for example, it can be very easy to get excited about a big idea or concept, that you simply can't afford, once you start down the track, it's very difficult to stop it. You also don't want to try and produce a big budget piece for a small budget, this never ends well for either party.”
3. Failure to collaborate
Collaboration, transparent communication and keeping partners closely aligned are also critical elements in preventing budgeting misalignment, said Rakuten Marketing’s APAC managing director, Anthony Capano.
“You need to partner with vendors who understand the product and marketing lifecycle,” he explained. “Most will understand the impact of key seasonal periods however also providing marketing partners with key upcoming launches, potential test activity or changes to strategy where marketing spend may be varied, allows for budgets to be adjusted accordingly, and is a great way to use budget flexibly.”
Marketers also need to ensure vendors provide real-time reporting into program and campaign performance to help the budget stay on track, Capano said.
“The real-time nature of the data will signal when budgets may be approaching a danger zone, enabling time to reign it in and reprioritise activity,” he added. “Communication is also key, and marketers need to provide partners with clear budgets and timelines, as well as insights into any possible deviation to budgets. Partners should also be able to supply expected forecast and results for each activity, thus allowing the marketer to accurately assign budget and results.”
Read more in our series on marketing budget management:
- Why planning early could save you from budget disaster
- The dangers of misaligning your marketing budget with business goals
- 5 secrets to tracking your marketing spend