Marketing
Iâm Joanne south and Iâm a client strategy director here at RocketMill, and my presentation today is called Stop the Tail Wagging the Dog, and itâs about planning and budgeting, potentially very exciting subjects, I know, but itâs so important that we get this process right. It is the bedrock and foundation for what we do, and for what we do ultimately succeeding, as well. And I think there are lots of issues in the way in which businesses and marketers go about doing their planning and budgeting. And actually, a lot of my thinking came off the back of some survey results which came out at the end of July, as well, which I wanted to touch on, too.
Why is budgeting necessary?
So to start off, as soon as I say the word âbudgetingâ, I think regardless of whether you work in marketing or not, it tends to create a sense of dread and fear among many people. Itâs visions of being shut in a room, lots of spreadsheets, lots of data, not necessarily understanding what that data means, most of the time, having to make it all add up at the end, somehow, and a bit of finger in air going on, as well, to be honest with it.
But why do we dread it so much? And I think a lot of it comes from this scenario, that most people will have at some point, again, regardless of whether you work in marketing or not, is that you are given a target. Youâre then told that you have the same budget as last year, or if youâre really lucky, youâve got some sort of inflationary level increase, and then what numbers do you need to hit that target? What youâre effectively being told to do is go fetch, give me a graph that goes up, and tell me what it is you need to do, within that base. And effectively, as well, itâs frequently being told to do more with less, as well, ultimately.
Whenever Iâve been in this position, there are always three questions that come to my mind with this.
Where did the target come from?
The first is about where that business target has come from. How have the exec and the board put that number together? What is the process theyâve gone through to come up with that number?
What are the benefits of the target?
The second one is what will achieving that figure allows the business to do that it canât currently do? And it could be something really significant, like being able to be of a certain size, where it could acquire another business in order to grow or to be able to float on the stock exchange, and lots of other things in between. But what tangible difference is it gonna make to the business if that number is and isnât hit?
Why that target?
And then the third thing is, why that particular number? Why not a percentage point more? Why not 10% more than the number theyâre putting together? Why that particular one? And itâs really interesting when Iâve asked these questions, too. Iâm really seeing in people within businesses, that sometimes, they canât actually give the most robust answers to these questions. And itâs either because the exec and the board havenât provided that information and explained it well enough themselves, within the business, or perhaps they havenât gone through the most robust process themselves, potentially, if I may say.
Who are the decision makers?
But what this really brings home to me is the fact that actually, some of the people who are probably least familiar with the market, the consumers, the blockers within the business, are setting the agenda for the rest of the business, when actually, theyâre not as close to it as some of the other people are. And therefore, for me, that is the definition of the tail wagging the dog. Regardless of how cute the dog is, itâs still the wrong way around.
And I think one of the other things that makes this process so wrong, in my opinion, is the fact that thereâs a huge investment thatâs obviously made within the resource that the businesses have, in terms of senior and experienced people, and their expertise and insights are not being brought to bear during this planning and budgeting process so much, because theyâre told, âThis is the target. What are the numbers you need to do to achieve that?â And that, then, flows through to the investment thatâs then made within agencies, as well, that you donât get even that external validation around what the market potential is, and what those issues and challenges are that need to be resolved, as well.
Statistics
So I wasnât surprised when I saw these survey results come out at the end of July, which was that 60% of marketers are not confident in their teamâs ability to effectively allocate marketing budget. So I wanted to unpick this slightly, as to where some of the issues were, particularly within marketing, but also what we can do to try and fix this, so that we do this better, and businesses do this better, as well.
So the first statistic is that 20% of marketers set their budget annually and they donât change it. What that tells me is that there is a fifth of marketers who are mystics and fortune tellers. They know what is gonna happen for the next 12 months, perfectly. They know what the marketâs gonna do. They know what their competitors are investing in and gonna be launching. They know every single consumer trend thatâs gonna be coming about. They know what technology is gonna be cost effective over the next 12 months, and they know about really macro trends, as well, around what is happening with the economy, and therefore, what is happening with consumer confidence around spending, for example.
So this year alone, this fifth of marketers will have missed things around the impact of Cambridge Analytica, the continuing rollout and impact around whatâs happening around GDPR, the attack thatâs been happening on the High Street, as well, with lots of really reputable brands disappearing, and the state of the Brexit talks, as well, in terms of confidence, as well, within consumers.
This saying really hit home to me when I was thinking about this, in the fact that madness really lies in doing the same thing over and over again and expecting a different result. This type of annual planning process really encourages safe marketing behaviour. It really encourages the status quo, rather than allowing people to really change, or for businesses to really change. So you maybe had to plod along a couple of years like this, but actually, itâs gonna ultimately fail, because the business isnât gonna be able to react and change what itâs doing to respond to all those trends, because itâs set and fixed. And itâs just a process thing that is stopping them from doing that.
The next statistic from the survey was that 57% of marketers use an internal spreadsheet to estimate their impact. We all love a good spreadsheet. They have lots of very important values. They communicate things really well. Love a good pivot table. But can we really communicate everything we do in marketing well in a spreadsheet? There are some things itâs great at, as I said. But there are lots of other things that cannot be communicated via a spreadsheet but provide a huge amount of value to the business and allow other departments and teams within the business to do their job properly.
So things like brand reputation, loyalty, brand advocacy, audience building. How do you communicate that onto a spreadsheet satisfactorily? But without those things, marketing canât do its job, and neither can most of the other departments within the business as well. So when theyâre planning and budgeting, itâs really minimising and reducing what marketing actually brings to the table within this.
And again, I think this is where the external agency involvement also comes in because it was an internal spreadsheet. It means agencies canât feed into that, as well, or certainly not very easily, so youâre unable to integrate data sources very easily. You donât get that external validation around what the market could do. And also, frankly, youâre trying to communicate this value to non-marketeers. Some basic data visualisation would surely help here.
How can we accurately budget?
So this really got me thinking about what is it weâre actually planning and budgeting against, when it comes to our actions, as well? This is a really tiny selection of potential KPIs, I should caveat within this one. But as marketeers, we work across the whole of the customer lifecycle. So everything from reaching eyeballs to interaction and shares, likes, right down to the pounds, shillings, and pence, as well. And actually, lots of the different bits of activity we do are to generate reach or to increase draw time or to increase views. So trying to always communicate that into a spreadsheet and put a pound sign against it just doesnât work. Thatâs not the KPI. Thatâs not why weâre doing it, ultimately. Sorry, itâs not why weâre doing it in that specific instance. Itâs to help someone else do their part of the job, as well. So if, for example, youâre talking about retention and the product, it relies on the product itself and customer service to feed in within this. Marketing doesnât work in isolation, basically.
I think when weâre talking about return on investment, weâre too keen to put a pound sign on everything, that actually, return on investment can mean lots of other things as well, potentially, and that relates to the KPI that the activity itself relates to, as well.
Budgeting with data and creativity
So the final thing itâs got me thinking about is this balance between the creative and the rational and the logical, if you like, within this, as well. Over recent years, marketingâs become ever more data-driven, which is definitely a good thing and a positive thing. We need to understand trends. We need to understand our audiences. We need to do the analysis. We need to be held to account and measure our success. All really strong and valid things. But what makes marketing a distinct discipline and a distinct department within businesses is our creativity.
We paint pictures. We tell stories. We use emotions to communicate with other human beings about aspirations and hopes, as well. That is not something that a pure piece of data will make you jump to, in terms of what that is. And I think, therefore, this whole process about how we plan, and using things like spreadsheets and being told youâve got a target, really limits some of that creativity. And thatâs the thing that actually unlocks the potential. You donât get IKEAâs Lion Man campaign without being a bit brave. You donât get Compare the Meerkat. You donât get Cadburyâs Gorilla campaigns off the back of pure data analysis. But if you looked at it on a spreadsheet and plan it to hit a certain target, thereâs a massive leap of faith that these sorts of campaigns will deliver that level of return that those companies needed. But you also canât argue that they didnât deliver that massive change for these brands, as well.
So I think the very nature of what we do, we need to test and learn. We need to be unapologetically creative, as well, with what we do, when it comes to planning out our activities. And particularly on the test and learn front, I think the only way we can really fail is if we donât learn quickly from this. So weâre mitigating the risks around it. But ultimately, we have to still be held to account, which is where the data and the numbers come back in within that.
How can we change this?
So how do we go about changing this? So there are four key things I think that we can do within this.
Think differently
The first is I think we need to flip this whole planning and budgeting process on its head. That we look at what the business goal is, and that may be visionary, rather than a number, but what marketing activities do we need to do to hit that number? And this is where somewhere cool like zero-based budgeting or zero-based planning, I think, really comes in, that you flip the system on the head. That weâre in control of our own destinies, as marketers. We decide what are the right things to do? What can the market deliver? What are the blockers? What are the issues? What are the different KPIs that we need to hit to get to that ultimate vision and goal?
Taking this approach allows us to integrate creative campaigns, to do test and learns, and to run different scenarios, as well. And thereâs obviously a balance here between what marketers think they can deliver, versus what the business necessarily wants, but itâs a conversation and a dialogue, rather than a dictation on either side.
Focus on product first
The second thing, which is really important and connected to that, is the sequencing and the ordering of those activities, as well. If thereâs a problem with your product and youâre being told to just bring in more leads and bring in more sales, so the bottom line still looks good, thatâs the wrong thing to do. Itâs wasted money. Youâre just gonna keep dropping people out the bottom of the bucket. Sort out your product first, and then invest in your marketing. Or if thereâs a problem in your sales team, thereâs no point in spending lots of money on leads, if they canât be converted. As long as you know the quality leads, of course. So itâs about getting that jigsaw of things together and planning more collaboratively, so that itâs more joined up, basically, within that, in terms of the ordering and how and where you spend your budget.
Combine data and creativity
The third thing is about joining that creativity and the logical side of things together, in terms of being able to communicate that impact. Weâre probably gonna be communicating this to non-marketeers. The stereotype is your finance director, who doesnât understand and just wants the number at the end. But weâre used to communicating things to people who arenât knowing they want to listen to us and thinks thatâs a part of marketingâs job. We can cope with some finance director, surely, if we come up with a slightly more ingenious way of how we communicate the impact of what we do.
Be brave
And then the last point is that we have to be prepared to be held to account. If weâre putting our destinies in our own hands, if weâre dictating and saying what we could do, and this is our set of recommendations, we need to be held to account with that, as well. And if something doesnât go right, learn quick. Move on. Whatâs the next steps from that, as well? Which I think is really important.
So I think those are the four steps to basically make marketers happy puppies. Thank you.