Transcription:
Building Your Marketing Budget

Mark Mathis: Heh everyone. This is the AMPED UP podcast from Amperage Marketing and Fundraising. I'm Mark Mathis and I'm with Bryan Ernest. And we're going to do some exciting budgeting today, Bryan.

Bryan: Yay.

Mark: So I know you've been busy, putting the budget together for the agency for next year, but, what are your kind of macro thoughts about how businesses and nonprofits and anyone else should think about their marketing budgets?

Bryan: Well, hello, Mark. Good questions. Yes, it is that time of year, as we think ahead to the New Year and think about how we put together a budget. And unfortunately it's a necessary evil of any organization, right? To have a budget, your revenue budgets, as well as your expense budgets. And I think what we're talking about primarily today is that expense side of what do we spend on marketing? You know, as I thought about that, and I think all the work that you and I and our organization have done with our clients over the years, as we think about how their budgets are put together, the best ones are those that are aligned with the organization's goals and objectives.

So when we sit down with a client over the years and this time of year, we sit down over a hot cocoa or whatever it is and talk about the New Year. It's always talking about those new focus areas for the next year and how I think the best budgets are those that are really tied to what is it that we're trying to accomplish next year.

So if their goals and objectives are around expansion and, you know, moving into new markets, acquiring new sectors of the market, then the budget should align with that. Also we've seen clients that have a focus area. Maybe they really want to improve their web presence this next year. And so does the budget align with the goals and objectives? And I think the best ones do that. And I think the other thing from a big macro level to think about is a trap that so often organizations fall into is that the budget becomes just copy and paste from the year before. That okay, here's what our budget is, it's in these six categories. It's our people costs. It's our media cost. It's our production, it's our printing and other fees. And pretty much they might go back and go, well, I've got 5% more. So I just bumped them all up by 5%, as opposed to really thinking through a couple of things. One, do they align with goals and objectives, but the other one is I think it's lost on a lot of the organizations we work with that the costs of a lot of things in the area of marketing and advertising go up. Right now we're seeing that across the board, the cost of media, especially both digital and offline media is increasing. As the tools are getting better, the media is finding ways to increase their costs. And so not enough clients are just allowing for that cost increase on an annual basis. So Mark enough from me, I know you have a completely different idea on how to budget for marketing. So share it with us.

Mark: I think it's in line with what you were talking about Bryan, because, it does have to do a little bit with goals, but what surprises me is people treat their budgets like it's not a portfolio of investments. And just to your point, yeah, I'm going to put another 5% in that. Well, would you do that if your stocks weren't doing well? Or would you change those stocks and would you move your money around? And so the small business associate administration, they recommend spending about 8% of your gross revenue for marketing and advertising. And that's for businesses, I think that are smaller than $5 million.

So it's a small business number. But if you're using that number, if you go to the SBA and you go, well, they must know what they're talking about on a $5 million business, you'd be spending 400,000 a year on marketing. And I know a lot of companies that are even larger than that, that don't spend that kind of money on marketing. It's a huge pile of money. But it's not a benchmark. It's like you were saying, it's just a number and you put a percentage again, it, and you're really testing whether you are measuring yourself against national averages, which is nice to do, but I don't think it really says anything about how successful your marketing budget is.

So the percentage just tells you if you're indexing against higher or lower against other businesses. Which some people like to use, but I think you should be forecasting against an ROI. So, if you don't know what your marketing's doing, there's a problem. And if you do know, then why are you continuing to invest in things that may not be yielding the kind of results that you want?

So that's really my different look at it. Maybe even put a not to exceed number at the beginning of the year, but you should really be moving that money around. That's my thought on it, Bryan, but I think we should all be thinking about how do we become more successful in marketing. How are we being judged? What are those benchmarks? We use the branding line, move the needle. What moves the needle? And in order to know what moves the needle, you've got to have some benchmarks to measure against.

So it's easy to budget with just one big marketing number. But what do you think are some of the key areas, Bryan, that as people are thinking, about what they should do in the future with, with budgeting?

Bryan: This is a great discussion, Mark. I think you and I have very similar thoughts about this is I think the bottom line is really some deeper thinking on the part of organizations with regards to budgeting. I like what you said about what are the things that really move the needle? What are those things that you're investing in, in your portfolio of activities that are producing results? And I think we have a lot of organizations that we work with that I think that they have allocated budget at times to maybe try things or dabble in things without really understanding what it takes to properly invest in that area.

A couple that come to mind is organizations maybe that haven't done a lot of digital marketing, or digital advertising yet, SEO or SEM either on the paid or organic side. And instead of really understanding going into a budget year, what it takes to do that well instead dabble a little bit. Another one that I find is CRM. Kind of being only partway in on CRM and it's not a good way to implement that. It's a sizable investment for organizations to do that well. I think there's a couple that are just forgotten completely Mark. I know you'll probably come up with a few more, but you know, I think quite often, PR is just completely forgotten about as something that should be part of your budget.

It quite often is something, oh, we'll just handle that internally until it's something bigger than your internal team can handle. And I guess one that comes to mind for me is the time and resources it takes to do certain things around internal communications. And especially we're finding with organizations, I don't think we're really ever past COVID are we, but in this new phase of COVID, how important internal communications and internal engagement are and thinking about down to that level, what is it we really want to do? And how will we move the needle this year in that area? And are we budgeting appropriately for it?

We may need to do some things in our budget that we hadn't planned on in the past to keep employees and vendors and other things like that fully engaged. So, we can keep going down to the micro level, Mark. I know I mentioned a few, but what are some of the other things that you see people forgetting to include in a marketing budget?

Mark: The three that strike me are always research, of some kind of any kind of research out there. The biggest one that always comes up is website updates or refreshes of the website. It seems like we wait until the thing is so out of date before we do anything with it that, you know, if it had a little bit of work every year, or even every six months, you'd be so much happier with your current website and it would look better to anyone who's going to it.

Bryan: It's like the people who, we've all done it. We've moved into a new house or we built a new house. And just thinking that our expense ends there. There's going to be something that's going to need to be updated, fixed, tweaked, cleaned, improved, whatever it might be. It's the same way with a website. It's a constant investment. And unfortunately, too many organizations have just underfunded that area of kind of continuous improvement of their web presence. So, sorry to interrupt you, but I think it's it's such a glaring problem for so many organizations.

Mark: Well, when people leave, I mean, just keeping track of that part of your website alone would take some kind of investment to if you're not in like a WordPress environment where you can easily make those changes. You've got to pay someone to make those, and you should be budgeting for that. The last one that I think relates back to the website would be photography or videography. So let's take that first real quickly. I think there's so many media outlets out there that are in constant need of like visualization of an issue or some photo that can speak louder than all your words or some video. These become true assets. And I think you need to treat them like that and you need to invest in those assets if you're going to compete.

The marketplace is pretty cluttered and it gets pretty fast when you realize, well, those photos are all iStock. I've seen all those photos that are on your website. I sure would like to see some that had your real people in it. I think that's a number one thing you should have budgeted is great photography.

It doesn't take that much to have some photography that really says we care about how we look and we care about our own people being in that. And then web work, of course, I mean, there's so much, but think of that updated photography flowing into your website, new look, new people, studying those analytics, adjusting your website accordingly. I think that's what the web was really designed for, was to be a living and breathing marketing tool. And I just don't think we're thinking of that, especially at the budgeting time. And then finally is, is research. And the more you know, I think the better you're going to perform. I watch a lot of football this time of year. And I can't imagine a modern football team not doing any research on the team they're going to play, not watching tape, not looking at their plays or how well they've done, just ignoring it and saying, well, we're just going to play them. Right? We're just going to wing it and you're flying blind. I mean, you just, you've got to have some kind of baseline research.

And I think that goes back to the measurement idea and having ROI. What are the changes you want to see? How do you budget against it? Well, put some research in to really know what those benchmarks are. So those are the three things I'm kind of thinking. Bryan. What else, what other are you thinking about?

Bryan: Well, we have a good list going. I think those are all great suggestions. I love what you said about research. You know, research is as we discussed in one of our other podcasts, it's such an important tool, right now especially, as there's so many dynamics changing of how consumer behaviors are changing. Patient behaviors are changing. Student behaviors are changing. Investor habits are changing. It just in almost every industry you can think of there's change happening and so taking the pulse regularly is critical. So I like what you said about research. The other one is the other piece that goes along with that, that comes to mind for me is planning and a strategy and analysis.

I like what you said about the analysis of a football team, looking at let's look at tape, let's look at what we're doing well, but let's look, what are our opposition is doing. You know, we hear a lot of people come to us and they knock on our door and say, we need help with SEO. And they want immediate results.

They want to be, improve their rank. They want more traffic immediately, et cetera, et cetera, but they're not willing to take the time to look under the hood, do the analysis of what's good, bad, and otherwise currently about your web presence. And it goes beyond your website. It's your web presence. It's your Google places.

It's your social media content. All of it. It's your video content that you've got out on YouTube. It's the links you have. I mean, we can go on and on and on and talk about SEO, but you have to do the analysis first to figure out where you are deficient. You don't just magically say, well, flip a switch and we'll have greater SEO presence that it will be more optimized by flipping a switch. It just doesn't happen that way without doing the analysis on the front end. And there's lots of examples like that. Yeah, those are a couple of them. I think those who invest dollars in planning and strategy have a budget then and objectives as they go into a new year, into a new budget cycle, they actually have a plan to work from, as opposed to, as you said earlier in this podcast, just the big number.

Well, that's our big number. We'll make it work within that. Having a plan to work from and investing the dollars there can really make that budget go further. So, Mark, what if you don't have a marketing budget? How do you get started?

Mark: I do know a lot of organizations that don't have a marketing budget, a lot of, especially nonprofit organizations that it really is a, when an emergency comes up, that's when we spend the money and we'll find it somewhere. But the first step for anyone is to really look at your sales cycle. When are the busy times, when are the times you do need to make an investment and, you know, for a nonprofit, it would be so easy. The majority of money contributed is in the fourth quarter, you need to have more money invested then for not only your mailings, but also just getting ready for that, that set of mailings, making sure that you've got the right communications.

So everyone has a sales cycle times when things ramp up, times when things ramp down. And so looking at that first, understanding how to allocate dollars against that sales cycle, I think is, is probably the most important part and then determine your goals and really put the money down based on the goals, rather than just trying to put a bag of money out there and say, this is all we have to spend, set investment levels, match your expectations for those results.

Yeah, you can use the 8% of revenue. But even like a nonprofit, what's revenue at a nonprofit? It's typically the money raised and I'm not sure you could take 8% of that every single time and survive. So, you've really got to look at what those key metrics are that you're trying to reach. And then make sure you got adequate money set aside for those, and then that should make up your budget.

Even if you don't write it all down perfectly in a spreadsheet, you could certainly write it down in a planning document and start that way. So, all right, Bryan, we've been talking for a while now about budgets. What do you think is the one thing people should remember? What's the most important thing that we've talked about today that people should remember?

Bryan: Lots of good points to reminders shared today especially from a couple of old advertising guys, not necessarily finance guys. And so, I think the one people listening to this, what I would hope they would take away is budgeting from goals, objectives, a plan and priorities for the coming year. Have a game plan.

What is it we're trying to do? How are we going to do it? What's our plan for getting there? What are the most important things we need to tackle this next year and building that budget from that. Not just percentage of sales or percentage of revenue or 2% increase from what we did last year, but instead, really having a game plan for how you will invest that budget for the next year. That's where I would start. So I think that's probably the, the one big thing.

Mark: Yeah, I'm right with you, budget the marketing dollars for results, not to a particular number or percentage. Yep. I'm right with you. So that's today's episode of the AMPED UP podcast. If you liked the insights that you've heard or you're interested in Amperage, please visit us at amperagemarketing.com.

And if you get a chance, would you please rate and review us? We would certainly appreciate any feedback you could offer us. So for Bryan Earnest and me, Mark Mathis, thank you for listening.