Budget allocation

Will ArnoldArticle

Budget AllocationI once watched a balloon debate in the nineties featuring sales directors from different types of (old) media pitching to media buyers. After each round one of the media would be voted off. Magazines, thanks in part to a witty and ingenious defence (close relationship, trust), clung on till finally losing out to TV (big audiences, emotionally powerful). Media fragmentation then meant the nascent satellite and cable channels and more radio stations. Those look like simple times.

They were the days when appearing in Computing and Computer Weekly in the UK, for example, reached over 90 per cent of IT department decision makers. As Paul Doran, MD of Switch Communications in the UK, puts it: ‘For marketing managers the range of options now is hugely exciting, but also often quite bewildering.’ Planners are having to factor in the need to reach a more fragmented set of stakeholders (found to be the major challenge for communications directors in the recent Brands2Life Communications Directors Survey), the effects very different media have on an audience, and the difficulties in measuring the audience reached.

Given that budgets are finite marketing managers are faced with difficult choices in selecting the media to back. So, what steps should they take? ‘The starting-point is: whose minds are you trying to change?’ says Claire Walker, MD of Firefly, a European communications agency. ‘You have to ask what difference you are trying to make.’

Picking the right media to achieve this comes next. The problem can be that people are not always sure what they are trying to achieve and can approach things in the wrong order. One agency tells of a client for which they devised a campaign to change perceptions of customer service: research had shown this to be a significant problem amongst prospects, but not amongst users; detailed plans were drawn up and the client was enthusiastic. Then at the last minute the client said they realised they did not have a mobile app and the budget needed to go on developing one. The agency was tasked with finding the objective for the app.

Doran – a passionate advocate for increasing digital and social’s share of the budget – points to the cultural problems that need to be overcome in achieving the right balance in spend: ‘You can have stakeholders in the business that would think this kind of discussion was Latin. Some stakeholders are risk averse.’

Because of the lack of experience, Walker says companies do have to be prepared to experiment and then scale. Measurement is critical within this: ‘There is no place for people that don’t measure. You have to know where you’ve made an impact and then be able to follow up,’ she says.

Doran also points to problems where companies try and spread themselves too thinly. ‘You have to be careful that you’re not trying to do too much, too quickly; the danger is that companies can end up not doing anything properly.’

To assess how they allocate their budgets, companies are having to be increasingly aware of the different sorts of returns they are achieving, or might achieve. Ultimately – and to go back to Walker’s point about changing minds – the common currency for the different media is the impact they have.

There are practical steps to take to do this. But it remains an imprecise science, with perhaps the most egregious (a word Latin scholars always like) example being the challenges companies face in having to try and weigh the return from building long-term brand awareness and values against the return from shorter-term lead generation activities.

Will ArnoldBudget allocation