04.29.04-1 ALLOCATING THE MARKETING BUDGET

Several years ago I had to really struggle breaking in a new client. The struggle was over the budget. For most campaigns there are two basic types of costs. The first are creative costs. These are costs to create the campaign elements and include, research strategy, positioning, art direction, photography, illustration, copywriting etc. The second are the costs to produce and place the campaign elements and include printing, postage, bandwidth and media placement expenses.

My new client was use to allocating 90% of his budget for production and placement costs. Leaving 10% for all creation activities. The struggle was generated by my allocation of a 50/50 split between creative and production/placement dollars. More specifically I was budgeting for a significantly higher expenditure for competitive analysis and message creation.Also, I knew that we could reduce his overall budget by better targeting prospects and by switching to a direct mail emphasis from his current trade ad bias.

The big numbers for the his campaign were $250,000 for a nine month campaign split 50/50 between creation and placement. The client had budgeted $300,000 for the campaign and the fact that I was saving him $50,000 off the top was lost on him. The only thing he could focus on was the fees he was paying for what he characterized as non-productive costs for research, strategy, positioning, etc.

Most businesses today still feel the way my client did - which is dollars spent on research, strategy and positioning are wasted dollars. Most large agencies reinforce this notion by giving away for free their research, strategy and creative via the traditional account review process - which is also one of the reasons why most campaigns fail. I was able to convince the client that research and strategy were the drivers of any campaigning effort. And with better intell we could immediately and materially reduce his campaign budget while significantly increasing the effectiveness of each dollar spent.

Maneuver marketing allows the astute practitioner to dramaticallyimpact their sales and marketing effectiveness. For many campaigns we have reduced marketing budgets on average 20%, and have increased revenue 50% - over an 18 month time frame. Here's a rough rule of thumb you can use in order to frame a maneuver campaign. Take your existing budget and cut it 20% - then allocate your remaining dollars on an equal basis to creation and production/placement categories. In other words every dollar you spend on media should be backed by another dollar for research, strategy, positioning and creation. Maneuver theory can decrease your marketing budget while significantly increasing revenue. Why? Because each dollar is targeted and accountable. The cornerstone of maneuver theory is competitive analysis.