“Management is doing things right; leadership is doing the right things,” according to Peter Drucker.
Flint McGlaughlin, CEO, MECLABS Institute (parent company of MarketingExperiments), quoted this when asked what digital marketers should consider when planning yearly budgets.
It’s a fantastic reference because it may just be a good idea to line the walls with Drucker quotes when furiously planning (and re-planning) yearly budgets:
“Knowledge has to be improved, challenged, and increased constantly, or it vanishes.”
“The best way to predict your future is to create it.”
“If you want something new, you have to stop doing something old.”
“Unless commitment is made, there are only promises and hopes; but no plans.”
The man was a veritable budget planning fortune cookie. However, while these quotes are inspirational, we decided to mine three of marketing’s current minds — Flint McGlaughlin, Tim Kachuriak, Chief Innovation and Optimization Officer, NextAfter and Michael Aagaard, Senior Conversion Optimizer, Unbounce —to give some more concrete advice.
Q: What are some general learnings or takeaways from 2016 that you would recommend digital marketers consider when planning upcoming budgets?
Flint McGlaughlin, CEO, MECLABS Institute:
Number one, doing things right isn’t enough, nor is doing the right things (a reference to Drucker), but you must do the right things in the right order. The simple application of this principle to our budget is this:
First you optimize the product (I am referring essentially to its value proposition.) Then you optimize its presentation (this is the web collateral or the primary place where people interact with your offer), only then do you optimize the channel and its related messaging. We do not approach these things with the proper priority, we try to do too many things too fast and thus do them in the wrong order. You can increase the efficacy of your marketing spend by more than 50% if you just pay close attention to this principle.
Tim Kachuriak, Chief Innovation and Optimization Officer, NextAfter:
Very similar to the last few years, in 2016 we observed that the Facebook advertising platform continues to be a powerful source of acquisition. And with some of the new ad targeting capabilities — specifically the ability to target by postal address and phone number, we will most likely see even greater investment into Facebook ads in the future.
Michael Aagaard, Senior Conversion Optimizer, Unbounce:
Your customers are the most important part of your business. Make it your number priority to find out what the world looks like from their perspective. That means actual outreach where you spend time conducting research and talking with them to find out the truth from their mouths — instead of your gut.
You can waste oceans of time sitting in a room with other marketers philosophizing about what your target audience thinks and wants. I recommend you ask them instead — in my experience that’s a lot more effective, although it seems less fancy.
My research toolbox includes quantitative and qualitative methods. My go-to tools are: web analytics, customer interviews, feedback polls, usability testing (both in-house and remote), surveys, click/scroll maps, session recording and form analytics.
Q: What reasons, methods, or data sources should digital marketers consider when evaluating new expenditures or increased spends?
Kachuriak: Attribution is always a challenge, but at a high level, basic web analytics can be the digital marketer’s best friend. We are always looking at the big three key metrics of visits (sessions), conversion rate and average order value across the key dimensions of campaign, medium, source and content. This helps us to quickly evaluate what investments are producing the most return and where we need to optimize. You can always dig deeper into segments, but I always find that this is best place to start.
McGlaughlin: First of all, I don’t like the word budget, I prefer the word rationale. A rationale is a series of reasons that contains both the how and why as it relates to achieving your objective. Marketing today should not be an investment that you hope to return in a vague way over some vague period of time. It shouldn’t be treated in the same way that we treat some of our other expenses or our capital expenditures.
The initial budget for a marketer should be a test budget and then evenly applying your money across various channels. One should test their way into the most effective means of achieving their objective. Once this is done, you double down those places where the money produces the most yield. I recently reviewed a channel spend and discovered that through a careful analysis this growing company that provides lifesaving medical devices could achieve 50% of its traffic level with only 13% of its spend. Moreover, much of its budget is totally wasted on traffic that will never convert. This kind of mistake is profound only when you consider what caused it. I am not referring to the common business problems that most of us face, I am referring to the lack of a framework of a rationale that helps justify each spend based on careful investment and testing.
Q: How do you approach balancing resources for long-term goals with current concerns?
McGlaughlin: First of all, you can spend your money in the short-term in such a way that it does not foreclose on the long-term opportunity.
I will give you an example of a short term spend: The company is missing its numbers, so they increase pressure on the sales force; the sales force doesn’t have enough leads, so they hit the phones and begin cold calling, annoying people, interrupting their live with selfish asks. You might get some business from this, but what you are losing at the brand level is priceless. This particular example can be multiplied across multiple channels and in multiple scenarios. What the marketer must do is focus on building proper relationships with all short-term activities so that the long term yield can be harvested.
Kachuriak: I think to balance both short-term needs and long-term goals, the Pareto Principle can be applied to the budget allocation process. This means I should be investing 80% of my resources in acquiring today’s customers while I invest 20% identifying, researching and developing my customers of tomorrow.
Aagaard: I think many companies are stuck in a “tactics grind” where they are in constant panic mode, focusing only on how to put out the most immediate fires. I think this has a lot to do with companies relying on marketers for the truth rather than their own target audience. If you are in tune with the market and the people who are using your products and paying you money, it’ll be infinitely easier to build an actual strategy that’ll help you keep you eye on the long term goals while still achieving success in the short term.
Q: What are the questions you believe digital marketers must ask themselves when building their budget, and explain them.
McGlaughlin: Number one, ‘What is my primary value proposition and what is my product-level propositions? Is it forceful enough? Am I trying to fix a product problem with marketing?’
Until you have a proper value proposition, you are surviving on pockets of ignorance. Making lots of noise is not the same as communicating effectively. When you have the right value proposition, clarity trumps persuasion. Don’t waste your time looking for more ways to get more attention to deliver more of the same ineffectual message.
Make no mistake about it, until you can articulate your value proposition, until every single person in the marketing department can articulate the value proposition, until every single person that represents your product can articulate your value proposition, don’t expect the market is going to understand it. You will waste major amounts of money while people try to make meaning of your confusing message.
Kachuriak: The first, and most important question that digital marketers must ask themselves is, ‘What is the best objective?’ If we have not determined the ultimate priority, then it becomes impossible to begin the budgeting process. Once we have clarity on the objective, the more tactical questions like ‘Who is my customer?,’ ‘Where can I reach her?,’ and ‘Why would she buy/give to me?’ become easier to answer.
• “Which channels are actually making us money?” This is a critical question you need to ask yourself on a regular basis. It may sound obvious, but in my experience, many businesses forget to do this type of critical thinking. The result is that you just keep on doing what you’ve always done, thus maintaining the status quo.
• “How can we get more out of the channels that are performing well?” Again, this may sound super obvious, but it is easy to become complacent and satisfied with the fact that things are “alright.” That is not an optimization mindset. You need to constantly challenge yourself and your hypotheses and look for new opportunities. I’m repeating myself now, but conducting research is the simply the best way to get past the local maxima.
• “Are there channels we need to ax completely?” Sometimes you need to kill your darlings to get to make things better. You may have channels that hold a special meaning to you, but if they are no longer providing value for your business and just draining resources, it is time to pull out the ax.
Q: What is the one piece of advice or guidance you would give another digital marketer for budget-building 2017? Why?
Kachuriak: Get started earlier! If you are reading this and you haven’t yet started the budgeting process, then you are already behind. Beyond that, I would say that you should do your homework. Sometimes simple math can help save your bacon!
For each of your marketing investments, identify the important key metrics and build a simple pro forma. For example, in digital fundraising an online donor acquisition campaign will have three key metrics that will tell me whether the campaign is going to be successful or not, and I often use benchmarks to help me plan my investments. I’ll build a simple pro forma into my budget plan, and I can adjust the metrics to run what-if scenarios. If I have to adjust my key metrics because the costs are too high, then I may test a smaller investment first and then have a rollout agreement if the performance is there. In any case, this is a great exercise because I have often used my pro forma to renegotiate better rates with publishers when I show them how the math works out. Plus, it helps give you (and your boss) a lot more confidence in the plan.
Aagaard: Stay away from shiny objects and focus on initiatives that will actually help you achieve your business goals.
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Published at Thu, 15 Dec 2016 19:01:05 +0000All our posts are curated for you by the guys at http://www.mindyourownbusinessuk.com we scour the web finding posts to enhance your small business and improve your day-to-day. The Mind Your Own Business Revolution; agitate dinosaurs, avoid extinction and evolve your business.