With the new financial year on the horizon, many start-ups and small businesses around Australia are turning their attention to setting their budgets. The budget is often the white elephant in the room during the early stages of marketing comms planning. However, it’s important that candid discussions are had around it upfront to ensure objectives can be met.
In general, we find there are four main ways of setting a budget:
1. Client led
In this situation the client tells us how much money they have and we work backwards from there to determine the best way to achieve their objectives. If we don’t believe we can meet those objectives for the budget, we’ll have a meeting with the client to discuss either readjusting the budget or expectations.
2. Agency led
Sometimes when dealing with start-ups or smaller brands, clients will ask us what we think the budget needs to be in order to meet their objectives.
3. Contract led
When dealing with retail brands, there is often a set percentage from the turnover allocated for marketing comms. Usually this is set somewhere around 2% to 4% of total revenue. There are advantages and disadvantages to this approach. One major challenge is that when a brand is struggling and has declining sales, this approach results in a smaller available budget to turn things around. This can create a downwards spiral. In this particular circumstance, it’s absolutely vital that you have creative that can cut-through.
4. Performance led
Particularly in online retail, we believe in demonstrating conversion with a test and learn model. In these cases we use multiple micro-budgets to not just drive sales, but also to determine where to put future spend. We then keep optimising our creative and media spend to have everything performing at its best.
Naturally, delivering ROI is always the most critical factor, no matter how you decide to set your marketing comms budget.
Find out how we can make your budget stretch further.