Defending Your Marketing Budget for the C-Suite

Budget concept stock photo

By Nancy Smith, President & CEO, Analytic Partners

Marketers are facing a looming recession driven by a multitude of factors including war, supply chain disruption, increasing oil prices, and more. The result is, perhaps predictably, that marketing budgets are being reassessed — one third of the brands we speak with are being asked to cut their budgets — and yet marketing teams continue to be under pressure to deliver results.

No marketer wants to cut budget, and analyses of hundreds of billions of dollars in ad spend across thousands of brands over 20 years proves that this instinctive response is the right one, particularly during a recession. Analytic Partners’ ROI Genome research demonstrates that marketing is a crucial tool for delivering business success and that the biggest driver of this success is the level of investment.

During the last recession (following the financial crisis), 63% of brands that increased media investment saw ROI improvements. And this wasn’t just over one year but in back-to-back years. The flipside is equally compelling — the impact of any reduction in spend is compounded by competitors’ decision making. If a competitor doubles marketing spend, the average brand will lose approximately 15% of its overall business.

Using data and research to know, and accept, that reducing spend is going to have a direct and measurable impact on sales is just the first step. To successfully convince your board to maintain, or even grow the marketing budget, it’s essential to provide a real analysis of what will happen in the case of reduced budgets, and then how to maximize the impact of whatever budget is agreed upon. The best way to build confidence and sway decision makers is with detailed, holistic analytics that considers multiple scenarios and evaluates marketing’s impact across the entire business by taking both internal and external factors into account.

Here are some tips for how to gain and build trust in your decision making, ensuring you can continue to invest in both short- and long-term success.

1. Evaluate the impact of all potential scenarios

It’s not enough to plan for what you think, or hope, will happen. Any marketing plan will be improved by a comprehensive understanding of the risks and opportunities inherent in a range of scenarios.

This should not only include scenarios that you can control but also those over which you have no control and which cannot be accurately predicted. Economic uncertainty, supply chain disruption, or even larger socio-economic changes are just three examples of external factors that impact marketing decision-making, and over which brands themselves have no control. Marketing planning and measurement must account for this — and rarely does.

By testing and planning for a range of potential outcomes, you can be prepared for changing situations both from within and outside of the business. Doing this analysis and planning in advance gives firms a far greater ability to adjust the levers of their marketing plan in a dynamic and responsive way, leading to better outcomes and, for the purposes of your C-suite, confidence in marketing decisions.

2. Balance short- and long-term needs

It’s easy to cut the budgets of programs that are designed to build long-term success in the form of brand building. Allocating budgets to short-term gains can seem easier, and certainly, measurement appears to be both clearer and more immediate, often in the form of pay-per-click tools.

However, the importance of long-term brand building should not be underestimated. Our data shows that brand messaging performs better than performance messaging 80% of the time. In addition, the total impact in both the short and long term of upper-funnel tactics outweighs lower-funnel tactics, even if the latter appear to have a more immediate impact.

Marketers tend to work on yearly or even quarterly planning cycles, so while the high value of brand building over time is generally understood, budgets do not reflect this. This is especially true in times of uncertainty. A data and analytics-based decision-making framework that looks at measurement over a much longer time period is essential for properly assessing and analyzing budget allocations.

3. Layer for synergies

All aspects of the marketing plan must work together. The best way to ensure that this is done appropriately is to take a measurement approach that looks at your business and marketing strategies at a holistic level.

Analyses of marketing spend show there’s a strong case to be made for a combined multi-channel approach – the more ways you connect with your customers, the more likely the individual pieces will have an impact. At its simplest, this is not an “either/or” situation, but rather a “yes and….” approach. Demonstrating this level of data analysis and preparation increases confidence in the marketing budget and strategy.

Take your analysis to the board

By leveraging scenario planning and data-driven decision-making, not only can you prove that reducing budgets during a recession is a short-term tactic with negative long-term impacts, you can also demonstrate how marketing spend and plans can be adapted at speed to take new conditions into account.

Holistic measurement — viewing all business drivers both internal and external — provides clear evidence of the importance of marketing spend on sales, alongside a well-articulated plan to leverage this data for increased performance. You can take that to the board!