MARKETING BUDGET REALLOCATION

How to make cuts that don’t hurt your business.

Introduction

AGENDA

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Define the Problem

Review the Data & Tools

Develop the hypotheses

Share & Test

Gather results & decide

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Created Attribution multiple measurement systems from the ground up

Owned marketing strategy and $80M budget

Built and led analytics teams and systems

Managed eCommerce forecasting $1B for Citrix SaaS Business

Chief Experience Officer

Experience Strategy

Ethan Thomas

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HAND WASHING

● Ignaz Semmelweis was a Hungarian obstetrician in Vienna during the mid 1800s

● Noticed a difference in two wards○ Male medical students (3X higher mortality rate)○ Female midwives

● Understanding at the time - male students handled patients more roughly thus causing puerperal fever.

● A colleague of Semmelweis became ill the same fever symptoms after cutting his hand during a post mortem

● He required all doctors to wash their hands before treating patients.

● The mortality rate went down from 18.3% to just over 2% after.

● Unfortunately, he could not define the causal mechanism so germ theory came around in the 1880s

Spotting Patterns in the Data

https://www.wsj.com/articles/the-unsung-pioneer-of-handwashing-11584627614

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THE IMPORTANCE OF PREPARATION

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Cost OptimizationCost cutting

Structured OptimizationCut Expenditure

Reactionary

Short-term

Immediate Reductions

Strategic

Programmatic

Structured Improvements

Targeted Straight Line Radical Reduced Costs Improve Efficiency

Increase Productivity

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TRIGGERS

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When you know you need to assess budget impact

● Sales targets are lowered and earnings will be impacted

● Firms may still need to hit EPS targets and therefore lower expenses

● Sales team anxiety about hitting numbers

● Some channels may not perform or be available

● Slowness in market demand for your products

● Significant change to how you execute through channels (Events, channel partners, travel constraints, etc.)

How B2B Coronavirus-Affected Trade Show Budgets Will Be Used

“If your tradeshow plans have or will be modified due to the coronavirus, how will you reinvest your tradeshow budget?”

Published on MarketingCharts.com in March 2020|Data Source IEEE GlobalSpec

Will shift money to digital advertising

Will shift money to content creation

Will shift money to sales travel budget

We will not reinvest that budget

28%

14% 13%

46%

DEFINE THE PROBLEM

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DEFINE THE PROBLEM

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Budget Allocation / Reallocation is NOT just a data exercise

Each business has its own... ● business model constraints

○ HW/SW○ Retail○ SaaS / OnDemand / Subscription

● Activities aligned to buyers○ TV, Print, Radio (Direct to consumer)○ Search, Display, Content (Research)○ Events, Relationship selling (Group

Decisions)● and business priorities

○ Business or category growth○ Profitability○ New Product Introduction

● Modeling assumptions○ Diminishing returns○ Assisting channels (halos)○ Seasonality

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DEFINE THE PROBLEM

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Data will deliver insights consistent with your historical investment in it

What data have you collected and how have you aligned it with the buyer journey?

● Attribution Approach○ First Touch, Last Touch○ Multi-touch

● Marketing ROI○ Simple ROI, ROI Ratio, CLV:CAC

● Data Capture & Quality○ UTMs & Tagging○ Lead uploads, Event scans○ Sales Conversion to Opportunity

● Data Connectivity○ Funnel completeness and ID connects○ Lead to Account Matching

● Data Management & Reporting○ Data storage○ BI Tools and Visualization

REVIEW THE DATA & TOOLS

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DATA SETUP & FINANCE CONSIDERATIONS

Document spend that has been forecasted, committed, and spent. (This allows you to TRULY know what you can recoup and what you cannot.)

Take inventory and document the risk of cancellations or change within your budget. (Some will be obvious, but others you will just want to get ahead of or think more critically about.)

Reallocate dollars and create scenarios for future spend. (You will want to quickly make decisions and put dollars back to work, but also get ahead of future risk and put together "what if" scenarios.)

Allocadia Guidance

https://www.allocadia.com/resources/blog-posts/best-practices-for-marketing-budget-agility-during-crisis-disruption/

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YOUR DATASETExploration and Insights

Channel Spend $ Spend % LeadsPipeline Sourced

Pipeline Influenced

Cost per Lead ROI

Website $1,638,000 9% 2,929 $38,659,236 $72,072,000 $559 44.0

Social $2,548,000 14% 5,021 $66,272,976 $101,920,000 $508 40.0

Paid Display $2,912,000 16% 5,439 $71,795,724 $110,656,000 $535 38.0

Email Marketing $1,820,000 10% 6,694 $88,363,968 $76,440,000 $272 42.0

Offline Advertising $2,366,000 13% 5,857 $77,318,472 $77,604,800 $404 32.8

SEO $1,638,000 9% 5,857 $77,318,472 $68,796,000 $280 42.0

Paid Search $1,638,000 9% 4,602 $60,750,228 $72,727,200 $356 44.4

Event Marketing $2,184,000 12% 3,766 $49,704,732 $101,337,600 $580 46.4

Channel Marketing $1,456,000 8% 1,674 $22,090,992 $43,097,600 $870 29.6

Total $18,200,000 100% 41,839 $552,274,800 $724,651,200 $435 40.0

May also include multiple dimensions: Geography, Product, Segment, etc.

DEVELOP THE HYPOTHESES

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YOUR HYPOTHESES

● If I shift budget from Events to Digital Advertising, I will deliver the same or better Return on Investment

● Reduction in visits and new leads is being caused by certain industries impacted negatively.

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What changes can you make and how will you test them?

SHARE & TEST

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REVIEW & TEST

Design good hypothesis questions that deliver relevant insights. E.g. “If I shift budget from Events to Digital Advertising, I will deliver the same or better Return on Investment”

Set up the tests to answer your question. In the example above, you can’t simply release the budget to the Digital team. It needs to be activated in a way that is measurable.

Capture all the tests in progress in one place and collect results when appropriate (taking into account statistical sample sizes).

How can you improve your hypotheses and improve success

GATHER RESULTS & DECIDE

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YOUR RESULTS

Expect that some of your tests will fail. Each piece of information helps you paint a clearer picture of what’s happening and sets you up for the next turn in the road.

Communicate the results to the team and share the progress. Warning: the scrutiny can be uncomfortable. 😀

Keep building your skills, your measurement systems and the insights into your business!

How will you interpret the results of your test?