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Prove it or lose it: 3 ways to secure your marketing budget for 2023
October 18, 2022
Marketing budgets are, by default, a critical part of a marketing team’s ability to drive successful outcomes for their brands. With budget season in full force, Acxiom’s Tate Olinghouse, chief client officer, shares three actions marketing departments can take in order to secure their fair share of the budget.
It's fall, and for many countries that means it’s Halloween season, so here's a scary story that’s been on my mind. It's a true story, and it takes place in a meeting I attended with a large brand. The brand's CEO looked at the CMO across the table and asked, "If I give you an additional $10 million in marketing budget, how many more customers can you get us?"
"Or if I take away $10 million, how much revenue will that cost us?"
Again, the CMO had no answer. Within six months, the CMO was gone.
Okay, so it's not quite a fright-night classic, but it's a very real, very scary situation for any marketing leader to find themselves in. And it proves just how high the stakes are.
The moral of the story is this: prove it or lose it. If you can't prove the value of your marketing budget, someone else will decide it for you.
Prove it or lose it
Fall is budget-planning season, when marketers, like everyone in their organization, find themselves competing over a finite pool of cash.
The CMO in the story made a fatal career mistake. They forgot the two basic premises that anyone building a case for budget needs to master. First, budgets should be set according to the stakeholder value they’ll ultimately deliver. And second, value should be demonstrated with empirical facts – actual business results.
Marketers must be able to tie proposed strategies to specific business outcomes. And those outcomes can usually be boiled down to customer acquisition, customer retention, customer growth, or some combination.
It sounds pretty formulaic, and that's the point. If you can't prove with logic and data that you're creating value, then good luck securing any budget in the future, especially in a market with potential economic uncertainties.
Acxiom CEO Chad Engelgau recently wrote an article about choosing the right CDP, and his advice applies to any marketing investment that requires significant budget. He said, "It’s imperative you understand the business goal you’re trying to achieve and the technology gap you’re trying to fill."
Here are three ways to make sure you have a successful budget planning season, and ultimately a successful marketing strategy:
1. Focus on what you can control (and measure)
The logic is clear. To make better, data-driven investment decisions, you must define your business goals, execute proven strategies against those goals, and fuel your feedback and learning loops with the right mix of response data.
While easy in theory, how do brands set themselves up for success? It’s about knowing what you can control. The following should be part of any marketing process:
● Understand the data that matters to your chosen business challenge or use case.
● Connect your customer engagement data with a persistent identity spine to get a complete view of your customers and how they interact with your brand.
● Use a privacy-compliant environment where you can leverage the data and examine it in a way that's not only compliant but, importantly, respectful of consumer privacy.
● Build the analytic models that give you the insights needed to prove what works and, perhaps even more notably, the ability to pivot your strategies to tactics that have proven successful.
These pieces give you the numbers behind the strategy, i.e., the proof you need to validate your budget requests.
2. Don’t be dazzled by the tech
What causes marketers to lose sight of the facts? I’ve worked with hundreds of brands, and I’ve seen too many marketers get easily distracted by shiny new toys hitting the market or making a splash on the LUMAscape.
It’s not a new story – marketing tech will always be evolving. DMPs entered the scene, and people rushed to invest in them – even if they didn’t fully understand them. Same with CDPs. Same with clean rooms.
Don’t get me wrong. These are amazing tools. But they’re just that – tools for specific jobs. They’re great at what they do, but they don’t solve for everything. Marketers must be very clear about what they’re trying to achieve – the business outcome – and they must know what success looks like, so they can show that it worked (or didn’t work) farther down the line.
The stakes are simply too high. Facts must guide investment decisions. It’s why tried-and-tested direct marketing methods are still popular; they have a history of proven, measurable effectiveness. Demonstrating which channels and technologies perform for your business is not just about reach; it’s essential to managing your investment decisions.
When it comes to new tech, make sure you’re not adding line items to the budget simply because of FOMO (fear of missing out).
3. Experiment sometimes, measure always
Of course, marketers will always want to explore the newest trends and technologies – and so they should. Innovation should be part of your investment equation.
There’s no one-size-fits-all rule that says you should spend 5% or 25% of your resources on experimenting with new solutions or innovating new proofs of concept. For example, if you’re a smaller organization, you may have to commit more, relatively speaking, to create a meaningful innovation budget.
No matter your split, it’s important to treat everything like a formal experiment. You understand the business outcome you want to achieve, and you measure, measure, measure – so you can demonstrate success before making those all-important investment decisions.
It may not be easy, but it’s worth it
Proving your strategy, tactics, and spend will result in desired outcomes for your brand is Business 101, but that doesn’t mean it’s easy.
Smart marketers (and smart budgeters) use a combination of data and technology to know what’s working and where they need to invest. They also leave some room for experimentation and innovation. But perhaps most importantly, they’re committed to measuring always - even if the results show room for improvement. It’s how we all learn and get better.
If your CEO asks you what outcomes you’ll deliver with the budget you’re asking for, will you survive the grilling? It’s best to define your strategy now, to avoid the risk of a boardroom horror story of your own.