All you need to know to confidently create and present your next advertising budget.
October 30, 2020
There’s something about setting a budget that can be oddly comforting. A new budget is full of promise and hope. It fulfills a human need to project certainty upon an uncertain future. But you can also feel anything but “fulfilled” the moment you’re asked to come up with an advertising budget proposal for your manager, CEO or finance team. You wonder what to do and where to start. Sound familiar? Don’t worry, we’ve got you covered.
We’ve broken down the budget creation process for you in four simple steps:
Whether it’s becoming the regional market leader in your category or doubling sales to show fast growth to lock in the next round of funding — there are a number of frameworks you can use to help define your goals. Some of the better known processes include the OGSM framework and the Objectives & Key Results framework (OKR’s). What’s most important is that goals are SMART — Specific, Measurable, Achievable, Relevant, and Timebound.
The most common goals you’ll find across marketing teams tend to be around sales and new customers. However, consider using multiple goals to intentionally create tension and prevent short sighted decision making. For example, a sales goal by itself could be achieved with aggressive discounting, but if the company has a profitability goal, that option becomes less attractive. Likewise, a new customer goal could be achieved with first-time customer promotions or aggressive spending, so there may also be a goal targeting a specific first-time customer average-order-value (AOV) or an average customer acquisition cost (CAC) target.
If you’ve settled on your goals, it’s time to do some analysis and look at historical data. The more granular the better to start, but at a minimum, you’ll want to pull the following numbers for each of your advertising channels by week:
Once you have the above data, look for trends and answer the following questions:
For all of the above yes/no questions, it’s key to understand the what and why behind any “yes” answers.
Come up with a budget recommendation and have a clear point of view before you present a proposal for approval. This is where the rubber meets the road. It’s also where “it depends.” The ‘right’ budget structure and allocation will be determined by needs and the particulars of your organization. Here are some helpful tips & guidelines:
Tips and guidelines aside, the simple fact is that nowadays, it’s less important to fuss over how your budget is structured. What’s more important is simply ensuring that every dollar counts. You may be at an established company that requires a fixed annual budget, but the truth is, you have the option of skipping this step altogether. What matters is results, so armed with the knowledge from steps 1 and 2, you need to move as quickly as possible to the next step.
Today, ad budgets are fast-moving and ever-changing. They’re managed on the fly, in real time. They adapt as you learn, based on immediate results. They are dynamic, responding to incoming data to optimize where ad dollars are being spent. They’re smart and nimble, and they have to be, because unlike the days of guaranteed impressions representing success, today your ad dollars are directly accountable for business results that (you can know) matter. The real work isn’t the upfront negotiation of CPMs, representing weeks or months of planning. The real work begins when the first ads go live and you start processing results and making changes.
Here are some tactics to help you launch and be agile:
Structuring an advertising budget can be as simple or as complicated as you (or your organization) wants it to be. Of course, what’s simple is rarely easy, and it’s no different when it comes to planning and managing your advertising spend. Budgets by Jove and other tools like Insights can help ensure that your spend stays on track and that your ads yield results though. If you have questions or feedback on this topic, we’d love to hear from you at email@example.com
, last updated on
October 30, 2020
When it comes to managing money, whether its at the blackjack table or managing your ads, it's important to set a budget and put some rules in place to prevent you from getting caught up in the moment and losing it all.
Why statistically significant results are the wrong goal for many marketing teams.