It was AdWeek in New York last week, which coincides with the height of marketing and media budget planning and allocation season for those companies that set budgets by the calendar year.
Mars was recently in the news when it announced it was changing its budget setting approach to accommodate for a more diverse media mix (when we talk about media mix, we are referring here to all touch points, not just traditional media).
Said Andrew Clarke, global president of Mars Wrigley Confectionery in Campaign: “It’s getting that balance right of providing enough space to innovate, but with some clear guidelines because you don’t want complete chaos,” he explains. “You want to scale things but at the same time, you want enough freedom to try things. It’s a rapidly evolving space.”
So what have Mars done? They have essentially repurposed the famous Google approach to innovation projects by allocating 80% for media channels with a proven return on investment, 15% for testing and 5% for innovative campaigns. Google uses a 70/20/10 model for projects, which was explained by then CEO Eric Schmidt as follows: “This was a principle that everyone should spend 70% of their time on their core job, 20% as part of another team, and 10% on something blue sky.” That way, Google ensured that 70% of time is allocated to “bread and butter” projects, while 20% of time is spent on projects where you learn something new from others, and 10% is allocated to “way out there” projects where success or failure is completely unsure, and the outcome is unpredictable.
If we judge Google, or as they are now known, Alphabet, by their success it is fair to say that this allocation model has worked well for them. What Mars have done is taken a lower risk version of that model by opting to allocate only 20% of budget to “riskier” touchpoints, where Google allocates 30% of time to “risk”.
This approach is of course just one of many ways to evolve your touch point mix. Here are five options for you to consider:
Rule #1: Apply zero-based budgeting. This is ideal if your plans have been stuck in the “same old, same old” mode for a number of years. Instead of starting your budget with what you did last fiscal year topped up with 3% media inflation, or just repeating what you did last year — “because it was great, so let’s do it again, but bigger” — let’s start fresh.
Let’s make sure you have an understanding of what worked and did not work in prior years versus business goals and let’s agree we stop doing things that do not work, or where there is no evidence they work. If there were things you did in the prior year that demonstrably contributed to a positive result, they should be briefed “for consideration” — with the caveat that they need to work against the objectives of the coming year. No sacred cows!
Rule #2: One brief, one plan. Most marketers today brief at least a few of their key agencies at the same time (e.g. media, creative and digital) and that is a good thing. Perhaps this is the year to try and accomplish two additional things: first, expand the number of agencies and include a few more that control an important chunk of budget (shopper marketing? Sponsorship?). And second, ask them to present One Plan instead of the media agency presenting the media plan to you and the other agencies, followed by the Creative Agency presenting their creative ideas to you and the other agencies, and so on.
Rule #3: Do not include any kind of budget split. Many marketers already refrain from breaking down the budget to touchpoints (e.g., 65% to TV; or a mandatory percentage X to digital, etc.).
But I would like you to take it one step further: Don’t even break out budget to production vs. consumer-facing expenditure (a.k.a. all cost associated with media and content). In today’s world, budget metrics such as “working vs. non-working” do not apply anymore. Sometimes budgets break down to 80% production and only 20% media (video created for your Web site or YouTube channel for instance), and there is nothing wrong with that if done for the right reasons.
Rule #4: Brief your budget using 70/20/10 or a version of this (see above on how Mars did this).
Rule #5: When cutting budgets, cut what you spend most on. Budget cuts are a fact of life. If they do occur, do not cut the experimental 10%, because you won’t have learned anything new (again) and those budgets are relatively small. It makes more sense to sacrifice a little of those media investments that represent bulk, versus those that represent small incremental reach for a modest cost.
If the plans that result from your current budget allocation are failing to deliver the business results your company is after, Flock would be happy to review your approach and share examples of other models. Please contact Julie – Julie.Marshall@flock-associates.com
Leave a Comment