Imagine you are a marketing executive tasked with introducing a new product. Your sales force will do the selling, and your team will support them with promotional communications. You know your advertising agency will jump in when you call and you need to control the costs.
There are four methods available to you for budgeting promotional expenditures: the percentage of sales method, affordable method, competitive parity method and objective/task method.
The percentage of sales method allocates marketing expenditures based on past or anticipated sales. Using this method, you will be required to forecast sales to set the budget and limit the tasks you undertake to keep costs in line. The affordable method allows a company to invest what it can afford toward advertising. You can use the P&L to set the budget and limit the tasks you undertake to keep costs inline. The competitive parity method attempts to match spending to competitors’ budgets. If your competitors are large companies and you’re smaller, this option is expensive.
The major weakness in all three of the budget methods above is that they fail to clearly define: “What is IT that you want to have happen?” In other words, how much will “it” cost, depends on what "it" is.
The objective/task method of budgeting starts by defining objectives and allocating promotional expenditures based on what tasks are necessary to meet the objectives. This method is superior to all other budgeting methods because rather than eliminate tasks to control expenditures, it eliminates objectives if the budget is not available. While the objective/task method can be combined with the percentage of sales method or the affordable method to define total dollars available, the cost control variables are reversed and the focus is on planning for success.
The process starts by prioritizing objectives based on a strategy and measuring the results to ensure objectives are achieved according to plan.
Here’s an example wherein a railway equipment company and client of ours used the objective/task method to develop a plan to introduce a better product for stopping trains.
Objective #1 – Install and field test the product on 100 cars. Tasks: Develop adequate promotional materials to launch the product internally and incentivize the sales team to introduce the new product to a select group of customers.
Objective #2 - Quickly penetrate the market for new rail cars. Tasks: With opinion leaders now using the new product, an SMS Rapid Rollout was undertaken with a goal of selling several thousand units.
Objective #3 - Retrofit and upgrade 100,000 older railcars with the new product. increasing brand preference and revenue. Tasks: Ongoing campaign to build awareness of benefits with railcar owners and generate inquiries and sales.
A campaign strategy with clear and achievable objectives is the key to effectively using the objective/task budget method and will help you give direction to your advertising agency so they can help develop a plan. Once objectives are defined, your agency, working closely with product line managers and internal marketing staff, should be encouraged to look at a variety of different actions -- price each task -- and let each task or creative idea compete for dollars using judgement to prioritize the task options as well as develop a budget that is both affordable and adequate to achieve the objectives.
When complete, an objective/task budget will allocate both the money and the time needed for success and answer these questions:
Once this is done, you can answer this question: "What is my investment going to do for my company?"
En route, of course, your advertising agency is or should be an important partner in this process. Using history as a guide, your agency can price Videos, press releases, brochures, surveys, white papers, print or online ads, social initiatives, among many other tactics.
Looking at the formidable challenge of budgeting your next project or even an entire year's worth of activities? Hopefully this has been helpful. And, of course, give a shout if you need some help (and a free consult focused on) defining what it is you want to have happen! Doug@onlinesms.com
Here we go, joining thousands of other internet authors. Adding our two cents worth to the blogosphere. And seeking to establish ourselves in a subject matter both dear our hearts and well-aligned with our core competency... In this case, the nifty niche of marketing.
Why undertake the task, and frankly, the commitment of writing a blog when there are already so many out there? As we'll do with all future installments of MarketingMinds, we'll keep this simple and short.
Here are 6 reasons to write your own blog.
1) Blogs are a relatively cost- and time-efficient way to create useful, fresh, and compelling content for your website -- which, at a topmost level, makes your site a more interesting and beneficial place to visit, interact with, bookmark, and share. Think of it as simple way to ensure there's some "there" there.
2) Digging a little deeper, it's also clear that useful, informative, compelling, and thought-provoking blogs are critical to helping people who are interested in your subject matter, products, or services find you when they are actively searching on the web. (A popular ingredient in many "inbound marketing" programs -- rich content like blogs are the internet equivalent of placing magnets throughout your site, attracting readers by 'matching' their search queries.) Once they arrive, you have a few precious seconds to engage them.
3) Blogs help establish you as a subject matter expert or thought leader in your industry, essentially becoming a credential that can add cache to new-business presentations, speaking engagements, or your own resume.
4) A good blog opens new opportunities for exposure, like speaking engagements; guest-blog invites from potentially higher-traffic sites (here's an example of a guest-blog I authored on wireless sensors when I worked for our client Anaren, before joining Smith!); or even traditional article- and book-publishing engagements... Each of which yield their own street-cred, networking opps, and potential new-business leads.
5) Well-followed blogs can yield advertising revenues and income in their own right.
6) And, perhaps my favorite benefit of all, being a blogger helps to keep your gears going by forcing you to stay current in your field, be a more observant and thoughtful professional, and a better communicator.
Some key considerations when starting a blog.
1) First up, be certain your subject matter is in your wheelhouse -- so your advice, observations, and commentary on the subject matter have credibility. Who wants to read a fashion blog written by a plumber, unless it's for chuckles?
2) Second, keep it current. This doesn't mean you need to blog every day; it does mean you should set your readers' and followers' expectations at the onset and then deliver on those expectations. (Tip: Add a regular, recurring 'blog-writing' appointment on your calendar and stick with it.)
3) Cite and link to examples that support and substantiate the points you make. Case in point, here are three good examples of blogs authored by businesses (vs. trade publications) who utilize blogging the way I've described here:
- Rockwell Automation -- brought to you by this leading provider of factory automation services, software, and systems, this blog covers anything and everything a plant or operations manager might want to know about plant automation, IT, safety, and more.
- Clifton Larson Allen -- offered by an accounting services company, this particular blog focuses on financial issues and accounting practices/principles of agriculture and farming concerns, which CLA lists among the key vertical markets they serve.
- Broadcom -- followed by electronics and software engineers, this one covers a vast array of industry segments and applications where semiconductors are employed and deployed. (Search for our client "Anaren" when you get there!)
4) One of the best ways to win paying customers is to offer a little free advice first. Sell wood stoves for a living? Given how important and costly these appliances can be in a home (re: reliable heating, aesthetics, safety) -- you're more likely to be viewed as a trustworthy professional if you augment your website with fact-filled blog-posts like "5 easy ways to tell if your wood stove or fireplace is safe to use this winter!" -- than if you do nothing but hawk your wares on price.
5) And finally, be sure to provide potential followers with an easy way to sign up for whatever blog your write. Speaking of which: Click the RSS feed icon at top-right to be notified when we post new blogs. Or send us an email to subscribe to our e-newsletter (which will also notify you of new blog posts!)
Welcome to the official blog of Ithaca, NY-based Smith Marketing Services. Authored by members of the SMS team (we take turns or just chime in when inspiration strikes), MarketingMinds offers up