two cents: marketing budget under fire
As published on Bazaar Magazine monthly article: Loaay’s Two Cents
My marketing budget is under a lot of pressure at the moment from my Finance Director. How can I prove to him that cutting the marketing budget is the WRONG thing to do now?
If your name was Jean-Pierre, and you spoke French to Yan, the Chinese young man working at Starbucks in Beijing, and you ask him whether or not their milk is organic, do you expect Yan to understand you well enough to give you the right answer? The answer is NO. Citizens of Planet Marketing have always struggled with the simple fact that the Finance Race is a completely different species that lives on Planet Show Me the Money. Since their planet is closer to the Sun than yours, you need to get closer to them to enjoy prosperity. You’re probably thinking, “I don’t know ‘Financic’, the secret language of Finance.” Relax, it’s easier than learning Chinese.
Your Finance Director understands numbers. From his point of view, when sales are decreasing or not increasing at best he needs to reduce cost to minimize the damage. Words like campaigns, creativity, gut-feel decisions, etc, translate to more uncalculated risk, more expenses and less profit in his mind. The entire business world, globally speaking, made a fatal mistake long time ago by putting Marketing under ‘Expenses’. Rent and auto lease re expenses. Marketing Budget is an asset. Why? Because, unlike rent and your delivery van lease, Marketing – when done correctly – helps generate revenue. That is the definition of an investment. This statement can cause more arguments with your FD, so I wouldn’t recommend opening with that. However, the purpose is make you, Marketing, understand the kind of mindset you need to maintain.
Show him last year’s data. Highlight revenue drop when you spent less than usual or when you stopped completely for whatever reason. Most likely, the data will show a parallel relationship. Next, paint a dark picture in his mind about how revenue can be worse than now if you stop your Marketing activities or reduce it to an ineffective level. On the other side, explain how you need their help in making the budget more ‘accountable’ by using metrics to measure the Marketing ROI. Don’t worry; they know how to calculate these. By demonstrating your commitment to work together and to be more responsible for the budget, Finance will come around. Worst case: you’ll have your budget reduced, but not killed…and that’s just my two cents.
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