Marketing Budgets Depend on Measurability

Last week’s article about Are Marketing Budget Cuts Here to Stay? prompted interesting discussions about the role of measurability for supporting marketing budget proposals.  In the current scenario of declining or flat marketing budgets, measurability is a key factor that determines what is funded and what gets cut.

In recent years, marketing organizations have greatly improved capabilities to gather data, do analysis and produce meaningful metrics about most marketing tactics and activities.  This is all good – executives and other functional areas of a company now have a measureable view of marketing’s contribution to the business. Marketing has more insights into the effectiveness of what they’re doing and tracking their activities and results as never before.

Given the constrained business conditions and expanded availability of marketing metrics, it’s no surprise that executives are insisting on more measurable supporting data to determine what and how much of marketing budgets receive funding.  While this may seem like a reasonable approach on first impression, there are some concerns that marketers should consider to ensure that the right mix of marketing plans are approved in their budgets:

• Inbound marketing channels such as websites, search engines, blogs, social media, videos, etc. are online and have built-in data gathering capabilities to produce a vast array of metrics.
• Various research studies and anecdotal information from various marketers indicate a substantial shift of marketing budget allocations to inbound marketing from traditional outbound marketing channels.
• While there is substantial proof that inbound marketing works, is it possible that some of the budget shift is influenced by it being so easily measurable and therefore more quantifiable for budget discussions with executives?
• It’s generally more difficult to get meaningful metrics with direct correlation to outcomes from outbound marketing channels.
• For many B2B and IT companies, outbound marketing channels such as trade shows, conferences, live seminars, etc. used to be the staple marketing tactic to find buyers and engage with customers.  These are the areas that are being cut the most in marketing budgets.
• Although attendance at these type of live events have declined, are we possibly cutting back more than we should because we don’t have good supporting metrics?
• I have talked with many salespeople who lament the continuing trend of decreased participation in these live outbound marketing events.  For many B2B and IT salespeople, meeting people face-to-face and speaking with them at these type of events is still the best way to find qualified prospects.
• Although some metrics such as response rates, unique website visitors, clickthrough rates and others are easy to get and meaningful within a specific performance context, are they really meaningful for determining budget allocations?
• Many marketing metrics are primarily about measuring activities.  But business results are what really count in the end.  Are the metrics for supporting marketing budgets based on funding activities or producing results?
• What about funding for longer-term strategic marketing such as positioning, branding, developing market presence and credibility in target segments, engaging with influencers, etc.  These are vital for producing business results, but tough to measure and maybe more difficult to justify in constrained marketing budgets.

Are you seeing an increasing requirement and importance placed on metrics to get budget allocations and approvals?  How are you dealing with some of the concerns raised above?  Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Are Marketing Budget Cuts Here to Stay?

Talking with a number of marketers and business executives over that past several weeks indicates a common theme of continuing marketing budget cuts.  Many marketers are now facing a second or third round of budget cuts after widespread marketing budget reductions late 2008 / early 2009.  The optimistic outlook for many marketers is to hopefully retain current budget levels into 2010.

Research from various sources substantiates this anecdotal information:

• Marketing budgets were cut over 20% on average in 2009 versus pre-recessionary levels in 2007/2008.
• The number of companies that cut marketing budgets in 2009 is 25% higher than predicted in January 2009.
• In one survey less than 20% of companies are expecting marketing budget increases while over 40% are expecting further reductions in 2010.

In spite of these substantial and what now appear to be sustained marketing budget reductions, companies are still expecting marketers to deliver results and performance at levels similar to those prior to the cuts.  Marketers have generally responded positively to this challenge for accomplishing the same or more with less.  The following are some of the common approaches to this challenge:

• Restrictions and reductions for expenses such as travel, agency fees, contractors and other external costs.
• Staff reductions, organizational rationalization and other internal cost reductions.
• Eliminating or delaying new projects and/or campaigns.  While this is a good short-term deferral tactic, it does raise concern whether further delay of these projects/campaigns will eventually impact business performance and results.
• Reducing spend and attention on less effective outbound marketing channels such as print advertising, direct mail, tradeshows, etc.
• Increased focus on more effective and less costly inbound marketing channels such as websites, search engines, blogs, social media, videos, etc.
• In a fortunate confluence of circumstances and timing, inbound marketing is proving to be the primary means for marketers to produce good results with lower budgets.

Although overall marketing budgets are expected to decrease in 2010, the Forrester US Interactive Marketing Forecast predicts that social media, email, search and mobile marketing spend will grow significantly in 2010 and subsequent years while outbound marketing spend will decrease even further.

Marketers have cut expenses and refocused attention in response to budget cuts and mostly achieved performance goals and expectations during 2009.  The question is whether this performance can be sustained in 2010 with flat or further reduced budgets.

What are your marketing plans for 2010?  Do you expect your budget to remain flat, increase or decrease?  Are you going to shift more budget and attention to inbound marketing channels to meet your goals?  Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com