A large portion of your marketing budget is inevitably wasted, especially if you’re a small-to-medium-sized company. How do you recognize and separate out the wasteful elements and figure out where to reinvest to get the most out of what you saved?
A famous marketing expert once said, “Half the money I spend on advertising is wasted.” Fair enough. Marketing isn’t an exact science and you can never know for sure what will work and what won’t. But losing half of your investment isn’t the problematic part here, it’s figuring out which half you lost. Companies that don’t end up investing over and over again in the same areas that didn’t, and probably never will, produce any results.
Hmmm… sounds suspiciously like the infamous definition of insanity. So how do businesses fall into this trap? Usually, especially in small or medium-sized companies, a marketing budget is set more or less at random and divided up arbitrarily at the beginning of the year between various agencies and efforts that do different things. Even the digital revolution, which increased scientific precision in so many other areas, didn’t really allow companies to manage a dynamic marketing budget with a pulse or give them the ability to make any substantial ongoing changes. Everyone gets a fixed share, and not always for the right reasons. As a result, many aspects of marketing simply come to a standstill.
Identifying problem areas
Start following your efforts and their results on a regular basis. Experiment based on what you find. Cut 30% from one area and see what happens. You’ll definitely be met by a few surprises. Don’t forget that some things aren’t measurable with 100% precision (take brand awareness, for example) but even in these areas, it’s important to set goals and continuously examine your progress so you don’t discover two years later that you invested tens of thousands in likes from Indonesia. Whatever you saved one month can be put into something that did produce results next month. Then you’re improving results without spending one cent more.
How to save
1. Prioritize – don’t spread out your efforts across too many platforms if you don’t have a big budget.
2. Take offline measurements as well – Collect statistics on phone calls, make use of tools to connect between digital and non-digital like QR codes or, if you’re a restaurant, print out all of your expenses and compare it at the end of the evening to your sales data.
3. Test and reconsider your decisions constantly. If you take $1,000 away from one area, what will change?
4. Try to restructure your budget at least once every quarter, or once a month whenever possible. Then make constant adjustments according to results.
And the most important question: What do you do with the change?
You could give yourself a nice little bonus, but assuming that the goal isn’t to put more money in your pocket in the short term, but to get more out of the budget you’ve invested, here are a few smart things you could do with the funds you’ve freed up.
1. Find opportunities
You could use these funds to launch a new campaign to reach a new audience – one that doesn’t know you yet and hasn’t been exposed to your brand. You could also try a new platform that you don’t know as well but where you suspect that your target audience could be reached. The biggest surprises often come from just such places.
2. Invest in your customers!
Most of a marketing budget is spent on advertisement, but have you ever thought of investing in customer retention? The way we see it, it’s always better to give a customer money rather than a platform. That’s why one of the first things we do for companies is to cut a little of the sides of advertising campaigns to put into improving the product and giving gifts to customers. That should absolutely be a part of your marketing budget. Start one campaign less and hand out more chasers.
An important note: Pay attention to what you’re offering. It needs to be something of value to the customer, but to you as well. Taking the example of a restaurant, instead of an appetizer that no one is interested in, you could offer a taste of your winter soups in the hope of creating habit among your customers and reaping the benefits in the future. Consider the results over time and see if it worked. If not, try something else.
3. Fewer leads, more sales
Most investment today goes towards improving leads to get them as hot and specific as possible. What happens after is usually thought to be less relevant. Here’s a suggestion: take part of your marketing budget and invest it in a good sales process. You might get fewer leads, but you’ll have more real-world sales.
4. Invest in your employees
With all due respect to strategy, those who carry it out are more important. Invest in them. If you chose them well, it will definitely be worth it. Save up for six months and send your employees on a cool trip; give them an extra half day vacation; or order take out on a Friday. There are an unlimited number of options.
Warning: Marketing content ahead
There’s no escaping from the truth: The most effective way of using your marketing budget is to manage it in a centralized way by putting it in the hands of one company. When you divide it up between several different providers, it’s very difficult to make ongoing adjustments, especially when it’s in the interest of the other party to keep the budget in their corner. Centralized management of the budget allows those in control of it to make cuts where needed and reinvest in channels that produce better results in real time. We just happen to know a company that does this work great! You can read more about them here.