Why Dividing A Production Budget Should Be Like Betting on Horses
Ever been asked or asked yourself “how should a modern marketer divide a production budget?”
If you’ve bought into the value of the Blueprint, then this is question is as important for a comms planner to be able to tackle as well as a producer.
The Classic 90/10… Or Is That 80/20?
Despite valiant attempts to find the origin and reasoning behind the 90/10 or 80/20 media to production ratio, I’ve turned up very little sourced origins. Generally these numbers are attributed to the pre-digital era, but no one seems to know who first espoused them, why or why anybody continues to use them.
Beyond questions of having to know what the media buy will be and the production budget having to in ratio to media, I’m not wholly convinced the 90/10 split can be applied universally across differing media channels.
If a client has booked $1M in media for banners, does that really mean, the agency should spend $111,111 on banners? With the advent of programmatic and the need for banners to communicate quickly, it seems that 90/10 of a media budget may be too much.
But if not this rule of thumb, then what?
Aligning Production With Expected ROI
One potential alternative is to evaluate how much ROI a channel is expected to deliver. The more one channel is expected to contribute to campaign success, the more production budget goes into creating assets for that channel.
Media Mix Modeling (MMM) has long been favored by media agencies and clients, who want to add rigor to the distribution of media budgets, and they may offer some guide to managing production budgets too.
If a channel delivers 50% of the expected return, then let’s assign 50% of the budget to making assets for that channel.
This method tends to offer fairly common sense recommendations for production. TV is often the most significant contributor to ROI and often costs the most to produce.
However, one must have access to expected results by channel. I’d argue that we should always have some expected goal in mind, but it needn’t always be dollar return, though this is more ideal. Other results that can be divided are contribution to lifts in brand metrics or if looking for responses, contribution to response volume.
Aligning production budgets to the channels that are expected to deliver greatest value is like betting most of your money on the horse most likely to win and who wouldn’t want to do that?