It’s that time of year again when businesses across the industry start planning their budgets for the next 12 months, and as usual, we continue to support many of our clients (with budgets ranging from £250k up to £5m), on the best ways to invest it.
It’s not breaking news that how we handled this process in the past has changed. The current climate we face means that budgets need to be flexible and malleable, but they still need to be set.
Planning a budget maximises the efficiency and success of communications activity, delivering the best possible return, so not planning would be counterintuitive and could cost you significantly.
The absence of appropriate planning and budget setting can cause you to launch last-minute activities that aren’t as effective as they could be. This doesn’t help your agency partners, your customers or your bottom line, because this approach results short term tactics, rather than developing a data-driven, sophisticated strategy.
So whilst we need to be malleable and flexible with how we spend the budget, the budget still needs to remain the same fundamentally.
What doesn’t work is a kind of upside-down budget planning, where quarterly performance dictates the annual amount.
Reducing your communications budget after starting your new financial year does not make sense. There are always areas you can invest, in communicating with your future customers, that will demonstrate a direct ROI.
Your communications budget should inherently drive the revenue of your organisation. If you don’t have a straight line between what you’ve spent on communications, as well as your return on investment and revenue, then the problem is more deep-rooted.
What you spend on marketing communications needs to attract customers who deliver revenue. To reduce that at any point is effectively reducing the overall revenue growth of your business. Taking this stance isn’t sensible for 2022, a year when consumer behaviours are changing, travel is more permanently opening up, and customers are looking for something different, something new - something you might offer!
During this budget planning phase, we advise our clients to do the following:
- Set the overall communications budget for the year. Lock in that figure.
- Provide clear ideas about the required ROI for the total budget.
- Split this into quarterly allocations and have deeper quarterly planning to review success, and optimise quickly where required.
- If there is ever any discussion about budget reduction from other stakeholders in the business, prepare a solid business case stating why this is a bad idea (and work with your partner to support this data).
- Commit! Be confident and go for it. 2022 will be difficult, but it’s also going to be an unprecedented time of opportunity to attract new audiences.
