2021 saw a record low in the proportion of business revenue being allocated to marketing.
In 2018, the average marketing budget was 11.2% of total revenue. By 2021 this fell to 6.4%, and is seemingly slowly making its way back up - last year this figure was 9.5%.
It’s no wonder that budgets have been all over the place: we’re living in a period of incessant political, social and economic change.
In all sectors, spend has been limited, and it seems that marketing has taken one of the hardest hits from this.
At the same time, we’ve seen a increase in the number of channels and areas of specialism a marketer can now spend their budget on - making it even more difficult to know how to maximise your marketing budget. Undoubtedly you want to extract the most value from your agency partnerships whilst also increasing the efficiency of internal processes.
At StudioLive October, we asked four senior marketing leaders from well-known brands for their advice on all things marketing budgets, and their answers did not disappoint.
We spoke to the experts…
Our panelists for the discussion covered a range of brand and skill backgrounds, but have one key thing in common: they are all experts suited perfectly to offer advice on maximising marketing budgets.
One panel member was Pam Conway, Marketing Director at Biffa (after having worked at large-scale brands such as British Gas and 3Mobile), who has experience in both B2B and B2C, where budgets differ drastically and unpredictably.
We next heard from Tina Fegent, founder of Tina Fegent Limited and a Global Marketing Procurement Consultant, whose views largely covered the procurement element of marketing budget allocation.
Also offering invaluable advice was Andrew Fox, Head of Digital Marketing and Paid Media at Aviva, who specialises in delivering innovative and creative hyper-growth strategies in the online realm.
Last but certainly not least, we heard from Jo Lloyd, who is currently acting as the Customer and Propositions Director at AXA Insurance, and whose skills lie largely in customer-oriented communications and marketing.
We thought we’d share 5 of the key takeaways from the discussion, which we believe will be helpful for any marketer looking to take control of their budget in what are undoubtedly shaky economic conditions.
Takeaway #1 - Learn the language of the boardroom
As a marketer, you need to be able to explain to the board exactly why the budget needs reviewing and altering, in a manner that is both efficient (it needs altering quickly) and effective (it needs altering!).
Tina offered some great advice for these instances: “marketers need to speak the language of the boardroom. […] Learn to speak about your budget.”
After all, being able to communicate effectively about the intended outcomes of your project, and why you deserve the proportion of budget you’re asking for is, at the end of the day, what is going to guarantee you the allocation.
“If you’re going to get buy-in from the other parts of the business you have to speak their language. […] You’re not there just to create exciting campaigns, they have to have an outcome,” added Pam.
Takeaway #2 - Expect the unexpected
Learn to expect sudden change and be able to adapt your communication with the board accordingly.
Being organised is great, but it must be acknowledged that things are fast-changing, particularly at the moment. Sometimes drastic changes can occur last minute, and in marketing this is often the case when it comes to viral content and trends - we all know the pace and pressure to move at the speed of culture, for example.
There’s no point planning to come out with Barbie content in 4 months’ time when your competitors are already firing out hot pink content left, right and centre!
Takeaway #3 - Choose your agency carefully
Also discussed at StudioLive was the changing procurement environment, especially post Covid.
For Tina - the procurement expert on the panel - a lot has changed. “I come across many more marketing procurement people in smaller organisations that I’ve ever done, which is brilliant,” she noted.
The distance between agency and brand also seems to have lessened: with the vast amount of agencies on the market (over 25,000), selecting the right one is a process that requires analysing the details and getting up close.
However, with so much choice, it’s almost guaranteed that there will be an agency (or agencies) almost perfectly suited to your project.
Conducting extensive research to find that perfect match (that’s where we come in!) is thus necessary to ensure your budget is stretched farthest and with the best results.
This leads us neatly onto tip #4…
Takeaway #4 - Assess what can be done internally more efficiently than externally - be ruthless!
Our panelists held largely similar views on balancing internal and external teams in order to get the most from your budget.
For Jo, having a balance of internal and external marketeers works best from an efficiency perspective.
“What’s nice about having the experience internally is [that] they understand the processes, they’re closer to the team. […] That said, I like to use agencies to bring in that fresh thinking.”
An internal team for, say, copywriting, is more likely to understand the brand tone of voice, and can produce content quickly and without needing to go through the same processes.
But it is often necessary to gain external perspective, especially in terms of digital marketing, and from ‘younger’ agencies which remain on top of online trends and can deliver that exciting new idea.
Andrew Fox, our digital marketing pro, expressed similar views to Jo on the topic: “we’ve definitely leaned on a blended approach of actually implanting agency resource to build up capability within [internal] teams like SEO and social media, particularly on content creation.”
In fact, many of our large clients have favoured searching externally for help with social media and content creation over the last few months.
Our most recent Marketer’s Most Wanted report found that the largest amount (18.8%) of briefs coming into our platform in September were searching for agencies with these sorts of skills.
The panelists emphasised heavily that it is possible to hire an agency for help with a particular process, engage closely with them in order to learn the skills required for the process, and later implement this process internally!
Andrew added that it is necessary in instances of budget limitations to be ruthless in recognising what will be more cost-effective if done without the help of external teams. Sourcing an external agency for content help one month doesn’t necessarily (and shouldn’t if your budget is limited) mean you will need to outsource this project every month!
Looking laterally is also important in terms of getting the most out of your agency spend: Pam mentioned that thinking specifically about the skill that you need (such as storytelling), rather than the type of media or the direct outcome of the project, can help ensure you’re hiring the right agency for the job.
As an example, a journalist might be more suited to your ad campaign than someone with direct marketing management experience. It’s always worth thinking outside the box!
“It’s the skill set that it comes down to and I think that industry experience is not necessarily needed now,” confirmed Jo.
Takeaway #5 - Set aside time for ‘test and learn’
The final takeaway offered by our panelists was to set aside a part of your marketing budget for testing and learning.
Though this may not necessarily (and probably won’t) deliver an ROI, experimentation is vital for assessing the value of new tools and skills which could hugely benefit the company in the future. You’ll also become aware of where your team exhibits ‘failures’ which can then be addressed and built upon.
Whether this testing be technological (Gen AI is being tested by a huge proportion of big brands, and will likely be a necessary device to stay afloat in the near future) or else, adaptation and open-mindedness are key for any business to retain success.
In conclusion, the fluctuating marketing budgets amid socio-economic uncertainties necessitate astute strategies to maximise returns. The insights shared by our seasoned marketing & procurement leaders underscore the importance of speaking the boardroom’s language to secure adequate funds and being adaptable to rapid changes. Additionally, careful agency selection, optimising the balance between internal and external teams, and allocating resources for experimental ‘test and learn’ approaches are crucial. These practices not only ensure efficient budget allocation and utilisation but also prepare businesses to thrive in unpredictable market conditions.