Marketing Budget is being wasted to the tune of billions – it doesn’t have to be that way
In a 2018 Rakuten survey of 1,000 respondents, marketers estimated that they waste 26% of their marketing budget. And, as everyone who’s ever run and managed marketing budgets has experienced, there are always things we wish we could go back and change. With global discretionary marketing spend exceeding $1 trillion per year, that’s a lot of waste. What are the causes of this huge cost, and how can that waste be recaptured and turned into an opportunity?
One contributing factor to waste is falling prey to so-called vanity metrics, which are those easy-to-track, but low-impact measures like page views, likes, subscribers, and so on. They’re alluring because they’re tractable, and they look great on charts. Because they can be traced and visualized, people start to confer weight upon them that is not merited. Instead, focus on key marketing metrics. You measure what you can measure, but that doesn’t mean you should.
Kaplan and Norton, and others have long shown the importance of linking budget to strategy, and how few companies actually do so (~60% don’t). A surprisingly large proportion of companies do not set clear goals with meaningful metrics, meaning it is difficult to know where to allocate marketing budget for maximum effect. Consequently, an aimlessly allocated budget drives wastage. A successful marketing budget has to interlock what you want to do with what you’re going to invest in doing it. And then they have to stay connected over the year (see Cause 4)
Companies that don’t pursue strategic alignment fail two-thirds of the time. Yet, research shows that more than 90% of employees don’t know or don’t fully understand their strategy. Clear communication of top-level goals and target results is centrally important to marketing – and business – success. With cloud-based applications supporting collaboration between and within teams, there is no reason today for strategies and data to become siloed.
According to Gartner, 89% of surveyed CMOs (n = 803) said their companies “embrace some form of agile”, but only 21% felt they were fully agile. This is hardly surprising given that most companies continue to manage their plans and budget separately (see Cause 3) and across disparate systems. A shocking number of companies continue to manage highly complex budgets across disparate spreadsheets, which is more troubling given the accelerating complexity and velocity of digital marketing.
When we built Planful, we built it to help marketers build and run better marketing plans and budgets. Our marketing performance management software helps marketers avoid the 4 key causes of marketing wastage because it:
Modern marketing doesn’t need to be wasteful – it just needs a solution designed for today’s dynamic, complex, and rapidly changing environment.
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