Your Marketing Budget Needs a Facelift
It’s time to spend your budget on things that actually work.
The New Year is already here and depending on how 2017 ended you’re either riding a wave of success or still trying to push a boulder up a mountain. Regardless of which camp you fall into, the start of a new year almost always begins with reevaluating what happened the year prior and, you guessed it, creating and allocating a new marketing budget.
Whether it’s your first time allocating a marketing budget or you’re a seasoned vet, setting a marketing budget provides a rare opportunity to gain some valuable insights into your company and the market you are addressing.
Looking Past The Numbers
Anyone who has managed a budget in the past knows that there are two main intricacies. First, you have to have the ability to actually spend the budget you are asking for. This might seem obvious, but at the end of the day, it can be surprisingly difficult to actually hit certain burn rates, especially if you start factoring in things like a delayed hire, a paid ad channel falling through, or even a canceled event. Second, your budget has to relate back to revenue growth. This is another obvious point, but you would be surprised at how much money is placed into things that don’t impact bottom line growth.
When you add these two factors in, your budget begins to tell the truth about what really matters, the state of your organization, and what you’re betting on this year. In this post, however, I want to focus on where you’re allocating budget.
An Honest Interpretation
When creating a plan to allocate budget, I take a two-phase approach. First, I start by identifying and clarifying organizational goals. Hopefully, these have been established by your CEO and agreed upon at the board level (you should have a clear idea about the size of your budget before this process begins.)
Once I have that information, I reverse engineer what I need to do to achieve those goals. At this point I’m not thinking about the budget at all, my main focus is creating a path to success.
TIP: Factoring in your budget at this point tends to create a wall in your mind that can limit your ability to successfully go from A-to-Z.
Once I’ve created my path, I’ll add 15% margin and start overlaying the costs associated with my plan. Almost every time I’ve done this, the cost far exceeds my budget by 50–80%. This is okay, because, the goal of my exercise wasn’t to stay inside my budget, it was to figure out how to achieve my goal.
The second phase is getting the two to align. This is where we have to get honest. My first step is to rate the items in my budget based on effort-to-impact (E2I) and cost-to-impact (C2I).
An example of good E2I would be attending a massive conference like Dreamforce where we walk away with a list of 10K contacts that we can market to. As far as effort goes, we pay a vendor to set up a turn-key booth and fly five of our team members across the country for a week.
On the other hand, though this type of a conference might cost us $150K. When we break down our list of 10K contacts we might find that 50% are not qualified and 25% are not in an active buying cycle or have purchased a competitor’s solution. This would give us a true cost-per-lead (CPL) of ~$60. Depending on your industry, this could be an acceptable C2I, but for most companies, it’s a massive gamble.
Love what you’re reading? Take a second and give it some claps! Claps help my posts get seen by more people here on Medium 👏 👏 👏 👏 — Thanks, Jesse
Low E2I + Low C2I = Opportunity
My goal is to identify the items that have low E2I and low C2I. When you find an item that achieves both of these qualifications there’s a good chance that you’ve identified a shift in your market.
This might seem overly simplified, but the truth of the matter is that we are unintentionally biased when it comes to creating a strategy like this. Additionally, we almost always become overly dependent on what we are comfortable with.
A perfect example of this would be SEO. Five years ago, SEO was a major budget item on every marketer’s list. Fast forward a few years and it’s no longer a quick win, in fact, most startups don’t even have a long-term strategy for it; the E2I and C2I were just too steep.
Fast forward to today and there’s real opportunity around SEO if you’re a startup in an emerging market and know what you’re doing, but I would bet that most young marketers reading this post would argue differently ;)
SEO still has a high E2I, but the low C2I and longterm impact make it an item that I will be investing into this year.
Looking for Scale
The last thing you need to do is identify which low E2I and C2I items are scalable. Some items won’t be able to scale, for example, there are only so many events that you can sponsor, there is only so much traffic you can run ads against, and there are only so many webinars you can co-market against.
Ramp up the items that you can in your budget and see where that get’s you. Are you inside your budget? Did you create a path to success? If so, you’ve just given your budget a nice facelift. If not, If not, it’s probably time to rethink your strategy and potentially research some other options.
FREE TIP:
If all else fails, consider investing in an optimization strategy. It’s amazing how much a 1–2% optimization at the top of the funnel can impact your bottom line. For example, if you average 1000 monthly web visitors, with a 4% conversion rate and 10% conversion to MQL, to reach a goal of 100 MQLs, you need 25,000 site visitors (+2x your current traffic.)
But if you increase your visitors by conversion rate by 1% and conversion to MQL by 1% you only need 20,000 visitors — 20% less!
All of the sudden reaching your target is much more attainable than you had originally thought.
In Conclusion
By paying attention to where you allocate budget you have a rare chance to find oportunites that your competitors might not be aware of. It also gives you a chance to refocus your efforts, trim off areas where spend is being wasted, and double-down in areas that have the potential of showing great returns.
About the Author: Jesse Williams is a young entrepreneur, husband, father, technologist, and SaaS marketing expert. You can follow him on Twitter or LinkedIn and learn more about him and his projects here.
