This time last year, marketers and executive teams worked through great ambiguity of what 2021 may bring. Will there be a vaccine? Will the economy rebound? How will consumer behaviors shift? What extent of crisis planning is necessary? How much time and investment should we put towards growth? The list of strategic planning considerations went on and on.
As we approach 2022, just ask any CEO, what keeps you up at night? You’re guaranteed to get an earful, but in just one year the optimism is greater, the future is clearer, the deepest fears are beginning to fade, and a renewed focus on growth is increasing. Next, ask a CMO the same question. You’ll hear similar optimism, but mixed with concerns about managing and performing to high expectations of growth with slashed budgets.
A Forbes article cited a recent survey by The CMO Council and Televerde where marketers reported being responsible for 44% of a company’s overall revenue (five years ago it was 10%), and only 53% felt confident they would meet their goals. Ninety-five percent of CMOs said a lack of resources led to lost revenue opportunities.
And yet — despite the complex challenges of the last year, high performance demands, thin internal resources and talent, cut budgets, and still-unknown impacts of the economic recovery — the marketing responsibility can’t stop. CMOs need adaptive and nimble plans and budgets for what must happen and what might happen in 2022.
Here are four ideas to focus marketing planning and budgeting for the upcoming year.
Focus #1: Allow for some fluidity
The days are gone for CMOs and their teams assembling a marketing plan filled with an entire year’s worth of brand building initiatives, rigidly defined product campaigns and timelines, contracted media placements and spend and committed sponsorships. Today, CMOs need to assemble a plan and budget that balances both early planning cost savings and efficiency while allowing space for adaptability and nimbleness when necessary. No longer is “set it and forget it” an option.
The value of plan and budget flexibility increases when uncertainty and disruption increase. The challenge is striking the right balance. Erring on the side of too much rigid planning can cost an organization the chance to respond quickly and impactfully to shifts in consumer minds and environmental situations.
Likewise, erring on the side of too much flexibility with short-term or late commitments can lead to higher costs, such as media rates that are driven by inventory and demand. Waiting too long can increase costs and potentially take away opportunities to reach your desired target segments.
A balanced plan and budget with a mix of highly nimble investments such as programmatic display blended with longer-horizon investments such as title sponsorships will help achieve short-term outcomes and create long-term value.
A good guide to follow is setting aside twenty percent of your annual marketing budget for the contingency and distribute it equally across the first, second and third quarters. This will provide room to be nimble and adjust plans. For example, if the first quarter contingency budget is not utilized, spend it in the second quarter and so on. This contingency budget can be utilized for some experimentation to apply data insights and test hypotheses, personalization and engagement of key growth audiences.
Focus #2: Investment mentality versus spend mentality
The words we use matter. They shape how people think and feel. This is a major part of the branding and marketing: positioning is key. Marketers do themselves a disservice when they don’t position Marketing’s purpose and role as an investment rather than a cost center.
Eliminate the word “spend” from the marketing vocabulary. Replacing it with the word “invest,” and educate all departments on how that investment supports short- and long-term enterprise growth plans. Thoughtful positioning like this will help CMOs further legitimize the role and value of marketing, while also helping achieve strategic buy-in generally.
Focus #3: Plan for impact
In an environment of slashed budgets and minimal increases, marketers need to optimize each investment. Smart budgeting processes should allow room to scrutinize and challenge each budget line item and investment for expected impact. Challenging long held beliefs and practices using a measure for impact will help eliminate wasted spending and resources, freeing up budget for more deserving marketing investments.
When evaluating marketing initiatives, evaluate if it’s in the best interest of short- and long-term growth. Moving away from branding and brand awareness initiatives is a costly mistake. For example, brand and brand awareness initiatives ultimately drive consideration, trial and deeper audience engagement. It’s a critical piece of any high-functioning brand. Eliminating this investment will have an impact at all stages of growth.
The same may also be true about agency partners. A Gartner report illustrated the continued trend of bringing marketing internally, with 29% of work that was previously being done by external agencies having moved in-house in the past year. This increases the risk of fast-tracking group think. Reputable and experienced agencies often bring a depth of outside perspectives and ideas. Ending or pulling back on your agency relationship will accomplish a short-term spend decrease, but perhaps long-term return consequences. Evaluating agency partner investments is worthwhile if the value delivered is unclear. Your organization’s needs have undoubtedly changed and evolved in the last 18-months. The value you once received from your agency may be outdated, and a new agency partner may be a better investment.
Focus #4: Advocate for resources
Marketing budgets are the first to be cut and are the last to be restored. Gartner’s annual CMO Spend Survey of nearly 400 marketing leaders across a broad range of industries revealed budgets have fallen from 11% of company revenue in 2020 to just 6.4% in 2021. There has been a slow burn of incremental cuts, trimming and squeezing. A challenge now facing CMOs is that companies are optimistic for growth, and a big part of the growth comes from the capabilities that marketing provides — like brand awareness, lead generation, deepening engagement, accelerating onboarding, reducing churn, customer acquisition and more.
Marketers gain strategic influence and share-of-voice when they demonstrate and prove the value of initiatives and campaigns with measured performance and impact on growth. Exercising this discipline will serve as a significant advantage in advocating for and winning bigger budgets that appropriately support short- and long-term growth goals.
Lastly, road mapping clear strategic marketing and growth plans following a pandemic while preparing for the coming recovery, means you simply can’t do planning and budgeting processes as usual. It requires adaptive and nimble planning so that necessary moves are easier and swift.
For more information on planning for a successful 2022, check out this article, “The 5 Most Vital Strategic Planning Priorities for Renewed Focus in 2022.”