Fake Budgets and Marketing Mayhem

The year-end planning for all the things that can change at a moment's notice.

The end of the year feels like a great time to start working on annual budgets and planning the new year's marketing spend. Planning is always a good idea, even at times that are arbitrary, except for the fact that you're hanging a new calendar.
Sometimes, plans are nothing more than a means to prove that you can't predict the future.

With a good marketing plan and a detailed content calendar, you can objectively identify all the times you got off schedule, the number of times you were short-staffed, the dollars you weren't able to spend, and the times you went over budget.

Sticking to the plan is also part of the plan. But you can't predict the mayhem that forces you to shift and weave. The best-laid plans often go awry. Matel probably didn't predict the level of hysteria that would come from the Barbie movie. Bud Light likely didn't anticipate a viral boycott of their otherwise reliable brand. Very few predicted the ways that AI would change their business strategy after the release of ChatGPT.

These events forcibly changed marketing strategies and probably marketing spending or the capital that was available to spend. That means even some of the biggest brands in the world had to go off-script and change plans. This happens to every business. Even when shifts aren't seismic, companies should be prepared to adapt before they are forced to. I'd like to give you a new way of looking at planning for the year.

Baseline Planning

Instead of planning a detailed marketing system, each tactic and every dollar for each month, start with something that serves as a foundation for all these. Start by establishing your primary objectives. Here are some examples of what those objectives might be.

  • Increasing add-on sales of accessories
  • Change the narrative of price and value for our product
  • Opening new marketing channels
  • Improve product-based marketing initiatives

The idea here is to identify what important outcomes to focus on rather than what tasks to do to achieve them. Usually, whether you have a typical budget year or a bountiful year with double the budget, your goals won't change. The tactics may change based on performance metrics, the budget might change based on business impact. God forbid, if you have a major budget crisis, you may have to cut spending, but the goals remain the same. This approach gives you a set of priorities that can shift as the reality of the year shifts.

Variable Budgeting

When it comes to budgets, it's wise to look at "all-in" costs. This means considering the following:

  • The cost of your team, including any agency partnership
  • The cost of production items like printing, labeling, or creative production
  • The cost of advertising media placement
  • Free lunch to say thank you for your agency's excellent dedication.

You can ignore the last one, but the idea here is that marketing is a department and a vital function that involves multiple line items. To be sustainable, you need to have a plan for all of marketing, not just a single contract or advertising channel. But this doesn't solve the problem of what happens when you go viral or plan on it and don't. To solve this, I recommend you budget a revenue-based budget. A percent of total sales.

Everyone says there are standard percentages for this in the business, but that's usually made up by people who want to get their hands on some of that revenue. You (or your CFO) will need to decide what makes sense for your business. If you know your cost of acquisition and your production capacity, it gets really easy, but if you don't, it comes down to something like a reasonable percentage of gross profit. That way, if sales grow, the budget grows. If they shrink, the budget does, too – but the goals and the marketing plan stay intact.

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Side Note: This can be a complicated process at times, even for sophisticated teams, so if you need help, let us know, and we can help you develop a plan that makes sense and matches your goals.

Remember Stability

So far, we've mentioned some guidelines for a firm plan with a firm budget while still leaving room for the changes that can occur throughout the year. Your marketing team will still need some starting point from which they can build. That's where you start with a minimum viable budget. A budget you are certain you can commit to, which will bring you a baseline of the results you need. This might include the following:

  • Our core staff
  • Our minimum contract partnerships
  • Our smallest, most important ad spend

Capital projects (like a new website) might come out of reserves you've already allocated for the project. Prioritize minimum viable marketing activities (routine marketing maintenance) and create a budget that meets and serves those minimum viable needs. Then, define the criteria that cover the flexible portion of the budget, which can expand or contract based on business changes.

In this case, you are starting with a base budget required for operating, and your revenue-earned marketing budget will provide a deposit each quarter, adding fuel to turn up the gas based on performance. But you'll reduce the suffering of an unexpected cutback.

Every business will do this differently, but the key is this: your baseline budget number needs to be in the Goldie Locks zone. Not too much or too little, but just right. At the same time, no marketing managers will emotionally spend money they later find out they don't have.

What Not To Do

Finally, you should consider what to avoid. I would advise you not to miss opportunities because the budget is already set. Things come up in the middle of the year (in my experience, every year). New product placement pays off, priorities shift, products sell out, and things go viral. Be prepared to capitalize on those opportunities. You could not possibly know what July holds when budgeting in December, and your tactics may need to change. So treat your plan as a reasonable wish list, and make changes all year long.

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